Court Opinion

ID: 5557415
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:43:48.547276+00
Date Added: 2024-06-11T08:35:22.313191
License: Public Domain

Tkippjd, Judge.
1. The resolution unanimously adopted by the stockholders abandons the charter and rules under which the company liad worked for sixly-six months. It was agreed that some equitable mode should be the rule for settling their rights inter sese. The particular plan which was reported and accepted by a majority of the members, was protested against by” the complainants as being inequitable, and an injunction asked against its execution. The bill, in substance, alleges that the spirit and intent of the first resolution and the object of all in agreeing'to it, was to have their rights determined according to some equitable scheme, independent of the rules of the body and under such as would govern in a settlement between creditor and debtor. If this be the situation, and these complainants allege that.it is, what would be such an equitable mode, would it not be one which would put all on a equality as far as practicable? Complainants are of the class called borrowers. Non-borrowers paid monthly $1 00, into the company’s treasury for each share they held. This was paid as stockholders. It was a burden attached to their stock. The borrowers paid the same, and in the same capacity, but when they borrowed and received money from the company, they paid an additional dollar per share as a payment for the loan. Take then two members. One has paid in $66 00 on one share and has received nothing; the other paid in the same sum, but as he borrowed at the first meeting, he has paid in another $66 00 for the loan. If those two had to settle between themselves, ought not the borrower to payback the sum advanced to him, with interest, less the additional sum with interest thereon which he paid by reason of being a borrower; when this was done, the amount on hand, after deducting their share of expense, could be equally divided between them. This is the principle adopted by the decree. It is that an equitable adjustment is to charge each borrower with the amount he received with seven per cent, interest; credit this debt according to the law of partial payments with *101the additional dollar per month that he paid by reason of being a borrower, let him pay the balance thus ascertained, into the funds of the association ; then let the entire amount on hand, after deducting costs and expenses, be equally divided among the stockholders. Let it be noted that this rule is not declared to be the one which any member of such a corporation could enforce whenever he might have a right to demand that the company should close its workings, and that there should be a distribution of the assets. In sucii a case, if there was no agreement between the members, the rules of the association and the law applicable thereto would govern the mode to be adopted. But under the facts of this case, the resolution of the company, the charges in the bill, and the proof adduced by the complainants, they cannot object to the decree as being unfair and inequitable. c.
2. Complainants charge that the plan of settlement which a majority agreed to, was not binding on the association, that under that plan a number of shareholders had been settled» with and discharged, whereby they had received an undue share of the assets, and set up that those members should refund the amounts they have received in excess of their proper portion. To effect this, such stockholders should be made parties, and complainants have-the right to amend and make them parties.
3. Those members who were charged as having received more than their portion, were made parties at the hearing, on the application of complainants. This did not prevent the ascertainment of the proper mode of settlement for those who were then before the court. It was ordered that all questions touching the liability of those who were' brought in at that stage of the case, should be thereafter adjudicated by a further decree. If they were not finally held to be liable, then the case would not in any way be affected by having made them parties. If they were decreed to refund any amount, that would only be an additional sum to be divided amongst the members. The non-borrowers who have been paying all the time and have received nothing, should not be délayed as to *102their whole rights until that matter can be determined. See Code, section 4201.
4. The court below held that if the officers of the association, in good faith, carried out the schemeadopted by a majority of the members, and settled with a portion of the stockholders in accordance therewith, they cannot be made individually responsible for such action, though it might be held that the shareholders thus paid off could be compelled to refund any excess they may have received over what they may be rightfully entitled to. An amendment to the bill was offered for that purpose, which was demurred to, and the demurrer sustained. The court held that there was no sufficient allegations to show such liability on the part of the directors; that there were no facts charged which amounted to fraud. "Without setting out this amendment, it is sufficient to say, we affirm the holding on this point. Under the power given the directors by the constitution of the company, and the authority of the resolution itself, it would be a stern ride to hold them guilty of a fraud in executing the scheme adopted by a majority of the stockholders: See 1 Strobh. Eq. R., 197; 11 Ala., 191; 1 R. I. Rep., 312.
Judgment affirmed.