Court Opinion

ID: 6890303
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:39:36.392109+00
Date Added: 2024-06-11T16:05:49.283764
License: Public Domain

FRANK, Circuit Judge
(dissenting).
1. To explain my reasons for dissenting, it is first necessary to state some' of the facts more fully than they are stated in the majority opinion.
The debentures provide: “After the payment of 2% per cent upon the face value of Class A Debentures, the stockholders of the Company are entitled to receive the balance of such net earnings until 2% per cent shall have been paid out of the same upon the par value of the said stock, and all surplus net earnings then remaining shall be paid to the holders of Class A Debentures and of the stock pro rata until five per cent shall have been paid upon the face value of said Debentures and upon the par of said stock for such year, and any surplus net earnings arising in such year which may then remain shatt be paid to and distributed among *780the holders of Class B Debentwes pro rata.”1
It is undisputed that the amount required annually for the preferential payment to holders of defendant’s stock and Class A Debentures aggregated $155,000 (i.e., $125,000 for the stock and $30,000 for the Class A Debentures). In each of the ■s 1924 to 1943, inclusive, excepting 1-1934, defendant, after paying this $155,000, had additional net earnings which aggregated $1,649,618.85. In those years, out of such additional net earnings, defendant paid to the Class B Debentures only $840,000, leaving an unpaid balance of $809,618.85. The figures, in detail for each of those years, are not at all in doubt; they appear in exhibits B and C attached to plaintiffs’ complaint which forth in a footnote.2
*781I see no basis for any suggestion that the directors are given any discretion in fixing the amount to be paid. The instrument expressly provides that it is to be computed by deducting from the net income the amount paid on the capital stock and the amount paid on the Class A Debentures. The resulting sum is to be paid to the Class B Debenture-holders. Nor are the directors given any discretion as to whether or not that sum is to be paid to the Class B Debenture-holders. The instrument declares that “the amount payable will be fixed and declared by the Board of Directors.” Under such a provision, a resolution by the directors would be purely ministerial. Cf. Crocker v. Waltham Watch Co., 315 Mass. 397, 53 N.E.2d 230; Wood v. Lary, 47 Hun 550, appeal dismissed 124 N.Y. 83, 26 N.E. 338; Burk v. Ottawa Gas & Electric Co., 87 Kan. 6, 123 P. 857, Ann.Cas.1913D, 772. The obligation of defendant to make payment of the amounts withheld is therefore, I think, complete without any resolution.
My colleagues, however, make this suggestion : Plaintiffs are here suing for monies alleged by them to have been improperly withheld in the years 1924 to 1943, inclusive; since this suit was not brought until 1944, the plaintiffs have “by long acquiescence” accepted as correct an interpretation of the debenture provision which precludes payments not expressly declared by the directors to be due, i.e., makes a directors’ resolution an indispensable condition precedent. Since here there is not (and my colleagues do not even intimate that there is) such delay as to bar the suit because of the statute of limitations or laches, my colleagues’ suggestion comes to this: One who does not promptly sue on a written instrument must be presumed to have acquiesced in an interpretation of it unfavorable to him. I know of no authorities to sustain that position, and my colleagues cite none.
2. It follows, I think, that the doctrine of forum non conveniens has no proper application here.3 For, in the circumstances, decision will involve no interference with the corporation’s internal affairs. We said in Cohen v. American Window Glass Co., 2 Cir., 126 F.2d 111, 113, that the ruling in Rogers v. Guaranty Trust Co., 288 U.S. 123, 53 S.Ct. 295, 77 L.Ed. 652, 89 A.L.R. 720, had been much weakened; and the facts here surely are far less strong than in the Rogers case,4 for here the contractual duty of the defendant depends solely on a mathematical computation easily made.
Accordingly, the case boils down to one in which the need for examination of Wisconsin “law” is the only ground for sending the action to Wisconsin for trial. In other words, my colleagues are saying, in effect, that whenever a question of conflict of laws arises, a trial court has discretion to reject jurisdiction. I think that such rejection constitutes abuse of discretion. Especially is that true here where the plaintiff is a resident of New York; five of the defendant’s six directors have their place of business in New York (at least two residing there and two in the adjoining state of New Jersey); two of the three members of the defendant’s Executive Committee (which is authorized to do all acts that the Board of Directors may do during intervals between directors’ meetings) have their place of business in New York; and defendant’s vice-president, its secretary-treasurer and its assistant secretary-treasurer have their offices in New York.
It seems to me that the doctrine applied here by my colleagues might well be called “forum inconveniens.”
3. There remains this argument, aside from the doctrine of forum non conveniens : The directors have failed to act, and, as they are not parties to the suit, the court cannot compel them to act. I cannot agree that that argument is apposite here. As already noted, on the facts, since the directors lack all discretion, their action would be purely ministerial. In such circumstances, their presence in court and a court order directing them to act would be the sheerest formalities. Certainly in a court of equity such action by the directors should not be a condition precedent to the corporation’s liability. For equity considers that done which ought to be done and disregards formalities. These *782maxims have been frequently applied in a variety of circumstances when dispensing with mere ministerial acts.5 And even in actions “at law,” conditions precedent of that character are disregarded on grounds of fairness.6

 Emphasis added.

 Exhibit “B’ " attached to complaint:
Net Earnings (after deducting reserves for additions, goner-Paid on Paid on Net Earnings at improvements and Capital Class A payable on Class Year depi'eeiation). StocJc Debentures B Debentures 1924 $ 197,883.57 $ 125,000.00 $ 30,000.00 $ 42,883.57 1925 194,964.16 125,000.00 30,000.00 39,964.16 1926 192,795.67 125,000.00 30,000.00 37,795.67 1927 219,592.97 125,000.00 30,000.00 64,592.97 1928 229,278.75 125,000.00 30,000.00 74,278.75 1929 235,211.65 125,000.00 30,000.00 80,211.65 1930 245,491.57 125,000.00 30,000.00 90,491.57 1931 180,482.28 125,000.00 30,000.00 25,482.28 1935 171,161.66 125,000.00 30,000.00 16,161.66 1936 242,763.66 125,000.00 30,000.00 87,763.66 1937 308,110.51 125,000.00 30,000.00 153,110.51 1938 173,017.64 125,000.00 30,000.00 18,017.64 1939 243,505.48 125,000.00 30,000.00 88,505.48 1940 253,497.69 125,000.00 30,000.00 98,497.69 1941 301,165.54 125,000.00 30,000.00 146,165.54 1942 304,250.05 125,000.00 30,000.00 149,250.05 1943 591,446.00 125,000.00 30,000.00 436,446.00 'Totals. $4,284,618.85 $2,125,000.00 $510,000.00 $1,649,618.85 •Exhibit “0” attached to complaint: Net Earnings pay■ Amounts Actually able on Class B Paid on Class B Net Earnings Year Debentures Debentures Withheld 1924 $ 42,883.57 $ 35,000.00 $ 7,883.57 1925 39,964.16 35,000.00 4,964.16 1926 37,795.67 35,000.00 2,795.67 1927 64,592.97 35,000.00 29,592.97 1928 74,278.75 70,000.00 4,278.75 1929 80,211.65 70,000.00 10,211.65 1930 90,491.57 70,000.00 20,491.57 1931 25,482.28 25,482.28 1935 16,161.66 16,161.66 1936 87,763.66 70,000.00 17,763.66 1937 153,110.51 105,000.00 48,110.51 1938 18,017.64 18,017.64 1939 88,505.48 35,000.00 53,505.48 1940 98,497.69 35,000.00 63,497.69 1941 146,165.54 70,000.00 76,165.54 1942 149,250.05 70,000.00 79,250.05 1943 436,446.00 105,000.00 331,446.00 'Totals $1,649,618.85 $840,000.00 $809,618.85

 See Dainow, The Inappropriate Forum, 29 Ill.L.Rev. 867 (1935); Blair, The Doctrine of Forum Non Conveniens in Anglo-American Law, 29 Col.L.Rev. 1 (1929); Foster, Place of Trial in Civil Actions, 43 Harv.L.Rev. 1217 (1930); 44 Harv. L.Rev. 41 (1930).

 Or the Cohen case which was stronger than the Rogers case. The Cohen case [126 F.2d 113], as we there stated, involved almost the most “complete interference with the internal affairs of a foreign corporation” imaginable.

 See, e.g., Theater Realty Co. v. Aronberg-Fried Co., 8 Cir., 85 F.2d 383, 387; In re Greenberg, 2 Cir., 271 F. 258, 259; Mutual Life Ins. Co. v. Corodemos, D.C., 7 F.Supp. 349, 351; White v. White, 194 N.Y.S. 114, 117; Farley v. United States, D.C., 291 F. 238, 241; 30 C.J.S., Equity, §§ 106 and 107.

 Williston, Contracts (Rev. Ed. 1938) | 806 (pp. 2262, 2263); cf. § 615 (pp. 2312, 2313); Kulukundis Skipping Co. v. Amtorg Trading Corporation, 2 Cir., 126 F. 2d 978, 990, 991; Restatement of Contracts, § 265; Adamson v. Alexander Milburn Co., 2 Cir., 275 F. 148; Friede v. White Co., D.C., 244 F. 272, 274; 17 C. J.S., Contracts, § 495, p. 1009.