Court Opinion

ID: 6596614
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:03:18.653081+00
Date Added: 2024-06-11T15:57:51.671890
License: Public Domain

Lareabee, J.,
dissenting. I shall proceed to examine the grounds of demurrer in their order:
1. The bill is said to be multifarious in this, that it is exhibited against the defendants demurring, with Weds, Weeks, Kneeland and Ludington, for several distinct matters and causes, in many of which the demurrants are not interested; and that relief is sought by the bill on several distinct matters, to wit: to set aside the subscriptions of the demurrants; to set aside the subscriptions of Wells et al.; to declare the election of directors void, and to compel the commissioners to proceed and hold an election pursuant to the statute.
The doctrine is now well settled, and the authorities sustaining it are numerous, that where a bill is filed concerning things of distinct natures against several persons, it is demurrable ; but unconnected parties may join and be joined in a suit where there is one connected interest among them all, centering in the point in issue in the cause. 5 Madd. 138; Story’s Eq. 284; Mayor of York v. Pilkington, 1 Atk. 284; Weale v. Middlesex Water Works Co., 1 Jac. & W. 360; Brinkerhoff v. Brown, 6 Johns. Ch. 139.
Now, let us see how far' the cause at bar is open to this charge of multifariousness. The plaintiffs claim to be the only bona fide stockholders of the Milwaukee and Janesville Plank Road Company, having paid one dollar on each share by them subscribed, and charge that the subscriptions of the defendants were made in fraud of their rights, in fraud of the charter, and with the design of fraudulently obtaining control of the company; that their subscriptions are wholly void for many reasons, but mainly because no money has been paid upon them, as is required by the charter ; that Blossom subscribed one hundred thousand dollars, Sweet et al. fifty-five thousand *347dollars, and Weeks et al. one hundred and fifty thousand dollars ; and that Blossom, Sweet and their friends entered into a fraudulent combination; and that Weeks et al. made their fraudulent subscription in antagonism to that of Sweet and Blossom ; and that all the subscriptions were in fraud of the rights of the complainants, bona fide subscribers. The bill seeks to establish only one claim of right, which is that the complainants and their associates may be declared the only stockholders in the company, as being the only ones who had bona fide made their subscriptions in pursuance of the charter. It seeks to restore them to the position which they occupied prior to the alleged fraudulent acts of the defendants. The 'object of the bill is certainly a single one, although, in seeking to enforce it, it became necessary to join several as defendants who have separate interests. The defendants also claim to be stockholders in the company, though then subscriptions were made at different times, and for different objects. But I can but think that they have all a common interest, not in each distinct charge or allegation in the bill, but certainly in the point at issue in the cause.
There is no good reason why the rights of all the parties cannot be litigated in one cause, and whenever this is possible, a court of equity, which abhors a multiplicity of suits, will compel all who are interested in the point in issue to be made parties. If the complainants are in fact the only bona fide stockholders — have the exclusive right to the franchise, an assertion of that right by a competent tribunal will quiet all other claims. The defendants are all charged with a fraudulent intent in making their subscriptions, and in usurping the franchise of a corporation, though, as between themselves, their acts were in antagonism to each other.
The reason of the rule in relation to multifariousness was founded upon convenience. It would be a hardship to make each defendant answer the whole bill when different and distinct matters were charged, in which he was in no way inter*348ested. But certainly no sucb hardship could be urged in this cause. The only question in this connection is as to the fraud upon the complainants and upon the charter; this decided affirmatively, there would be no difficulty in reaching all the defendants by one decree.
As to whether the demurrer should be accompanied by an answer denying the combination specially charged, I have no doubt. The rule is well settled that such answer must be put in to authorize the defendants to demur. Mitf. Eq. Pl. 181; Landsdown v. Elderton, 8 Ves. 526. In Fellows v. Fellows, 4 Cow. 682, although an answer was put in with the demurrer, denying combination, yet it was held that the demurrer admitted a knowledge as charged, on the part of all the defendants, of the particular facts upon which the charge of fraud was based. Indeed, the only distinction is this, that where there is only the general charge of combination, an answer need not be put in; but where there is a special charge, an answer denying the combination must always accompany the demurrer. Nor do I conceive the rale to have any the less stringency because several of the defendants chai’ged with the combination have joined in a general demurrer ; for if this were held, the rule in a majority of causes, would be entirely inoperative.
It may be as well to inquire here, before proceeding to the principal question in the cause, whether or not the corporation, at the time of the filing of this bill, was in existence.
The commissioners are appointed in the first place by the charter itself as mere ministerial officers, acting as the agents of the state in receiving subscriptions to the capital stock of a corporation created by the state, under the provisions and restrictions of the charter. The corporation, it is trae, was not created eo instanti, but its existence and right to the franchises conferred depended upon the contingency of a specified amount of stock being subscribed, and a specified amount of money paid thereon.
*349The commissioners were, in the first place, to open books of subscription, in which all persons might subscribe, and become stockholders upon the payment of one dollar on each share. This requirement of payment, was absolute and necessary to all the subscriptions made while the commissioners were acting in their ministerial character. They had no power to receive subscriptions without the payment, and they had no power to change, in the least, the requirements of the charter as to the time when or the amount which should be paid.
But, upon the fact being ascertained that one thousand shares were subscribed, and one dollar on each share actually paid in, the subscribers of such stock, and other persons who should associate with them, were, by the act, declared and created a body corporate and politic, by the name and style of the Milwaukee and Janesville Plank Road Company. I do not suppose it was the intention of the legislature to limit the amount to be received by the commissioners to one thousand shares. The books were opened at different and distinct points; and it would have been the right of any one person to make a bona fide subscription of any number of shares— say two thousand — immediately upon their being opened. There might have been one thousand shares subscribed by five hundred other persons ; and most, if not all, on the first day. This is not an improbable supposition, for frequently the whole capital stock of similar corporations has been taken in one day. In such case, could the commissioners have refused to issue certificates to each subscriber? Could they have refused to call a meeting of the subscribers, or could they at such meeting have discriminated or selected which holders of one thousand shares should vote and which should not ? No. Up to the time they ascertained that, at least one thousand shares — not exactly one thousand shares— •were subscribed, their powers were merely ministerial — having, in fact, no discretion or power beyond the plain, written *350requirements of tie charter under -which they were acting. But when it was ascertained that the requirement of the charter had been met — that one thousand shares had been subscribed — and one dollar on each share actually paid in, then, by the express words of the charter, they were clothed with all the powers of directors. The corporation was then in esse —the legislature saw fit to fully complete its organization, by providing officers for it — and hence, by the charter itself, appointed the commissioners as directors, until the company should elect their successors. It might have been better, it is true, that some more solemn act should have ushered this corporation into existence — that the commissioners should have certified to the governor of the state, and he, under the great seal, have declared the corporation in esse. But, as it is, the words of the charter are positive and clear that, as soon as one thousand shares are subscribed, then the subscribers are created a body corporate.
It was further contended, in argument, that the charter required only the subscriber’s to the first one thousand shares to pay one dollar on each share, and that after that amount was subscribed, the requirement was no longer in force. But this construction cannot be sustained. The legislature certainly did not intend making so marked a discrimination against the first subscribers. The object in requiring money to be paid, was plainly to prevent large subscriptions being made for the purpose of controlling the location of the road and the management of the affairs of the company. The charter is granted, not for the exclusive benefit of the stockholders, but for the benefit of the whole state. The road is to be located, not with referencé to the private interests of individuals, but with regard to the good of the whole community. There is often an issue between the interests of the public and those of individuals. Property is to be enhanced in value by the location of the termini; and this would, no doubt, be a sufficient inducement to large subscriptions, made for this mere purpose. *351Then, too, important rights are Tested by this charter — the right of taking private property — claimed to be justified, I suppose, in this charter of a territorial legislature, under the provision in our state constitution allowing private property to be taken for the public use — for the use of the state, or its public political agents. Much stress was laid, in argument, upon the sentence, “with such other pei-sons as shall associate with them (the subscribers of the one thousand shares) for that purpose,” as carrying the idea that others were joined with them, and were excluded from the restriction of payment. But I think the argument gains nothing from tins phrase. The subscribers of the one thousand shares, together with all persons who should subscribe with them, their successors and assigns, “for that purpose” — for i/ze purpose of enjoying the franchises of the corporation — were created a body corporate and politic. In other words, the act did not merely incorporate the subscribers to the one thousand shares, but they and all others who should associate with them for the purposes intended by the charter — for the construction of the road.
The bill is framed upon the theory that no corporation is as yet in esse (with a clause, however, in. the alternative), charging that its organization by the election of directors, in the proper manner and by the persons having the legal right under the charter to vote, has been prevented by the fraudulent acts of the defendants. But it follows, from the view just presented, that the corporation, being in esse, should have been made a party to the bill. Robinson v. Smith, 3 Paige, 222; Verplanck v. M. Ins. Co., 2 Paige, 438, and cases there cited.
Upon these questions I concur with the majority of my brethren. The want of the company as a necessary party could have been easily remedied by amendment, and the cause proceeded; but the bill was dismissed, in the court below, upon the ground of jurisdiction. This is the most interesting question presented by the cause, involving not only the construe*352tion of a somewhat loose and indefinite statute of our own state, but the examination of the broad ground of equity jurisdiction.
Proceeding upon the ground that the corporation is in esse, and that the defendants have fraudulently usurped its franchises, there is no doubt but at law the only remedy would be by quo wairanto. Courts of equity have, through a long train of decisions, estabiishéd their jurisdiction over corporations charged with a misapplication of funds — regarding them as trusts, also treating them as partnerships, and in very many cases upon the ground of fraud — commencing with the celebrated declaration of Lord Hardwicee, in The Charitable Corporation v. Sutton, 2 Atk. 400-406, and running through all the decisions down to our own day. Had a bill been filed against the commissioners, charging them with an abuse of their trust, there would have been no difficulty in the case ; but here we have a much more intricate bill, bringing before the court many parties having distinct interests, though growing out of the same subject-matter, and all interested in the point at issue in the cause. The bill, if amended by making the corporation a party, then seeks in effect to oust certain persons who are publicly acting as directors.
The statute of 1841, p. 36, is in the following words :
“.Sec. 1. That courts of equity shall have power to declare the charter of any corporation to be forfeited for any just cause, and shall possess and are hereby vested with the same power upon the subject of corporations that is possessed by courts of common-law jurisdiction.”
This statute gives distinctly to courts of equity the same power to declare the charter of a corporation forfeited, for any cause that would work a forfeiture if proceeded against at law. If the act had stopped here, there would be no difficulty in its construction; for the bill would have to be exhibited by the attorney-general. This construction is aided by the act of 1846, p. 85, giving the attorney-general the right to exhibit *353a bill against any corporation, and tbe court power to restrain it by injunction from assuming or exercising any franchise, liberty or privilege not allowed by the charter ; or to declare the charter forfeited for insolvency, misuser or non-user. So also in case of the usurpation of a franchise; a court of equity would,, have power to oust the usurpers upon a similar proceeding. But the act proceeds in the same connection to vest counts of equity “ with the same power upon the subject of corporations that is possessed by courts of common-law jurisdiction.” Now, at law, in the absence of a statute giving the power to a court of equity, in the case of the usurpation of an office or franchise, the only remedy would be by information by the attorney-general on behalf of the state.
The bill shows that certain of the defendants have assumed to act as directors of the corporation, that Ohandler is acting as secretary, and that they have fraudulently usurped its name and franchises. Here, then, are persons acting publicly as officers of a corporation, and they must be presumed to be rightfully in office. The bill is exhibited by individuals, seeking to oust them and substitute others in their stead. They claim an invasion of a mere private right, and do not call in the aid of the state to vindicate her own honor or to redress their grievance. Will the latter clause of the act of 1841 authorize this proceeding ? I think not. In the absence of a statute expressly giving the power, I see no distinction in the books between the remedy in the case of the usurpation of a franchise and the other cases, which demand the interference of the government or its law officer.
In the common case of a corporation usurping powers not granted, the remedy is always by information. Is there any distinction between the usurpation, by the corporation itself, of some franchise not granted, and the entire usurpation of the name and franchises of a corporation by unauthorized individuals ? Is the breach of the law and public policy any greater in one case than in the other ? Is not the fraud as *354flagrant in one as in the other ? I can see no distinction. In either, the injury to the private right is merged in the insult and injury to the state.
In the absence of the acts of 1841-6, in either case, the only TP.Tnedy would be by information by the law officer of the government; and with those acts I see only a right giyen to him to come into a court of equity, where the remedy can be more simple and speedy than at law. .
It is upon this ground that I thought the bill should be dismissed ; not that there was no equity in it, for if the allegations are true, there cannot be a cause more clearly requiring the salutary powers of a court of equity. It being admitted that the corporation is in esse, that certain persons are publicly exercising its offices, and using its corporate name, I think: the grave question is fairly presented of the right of private persons to proceed in a court of equity to oust the acting officers of a corporation. But the majority of the court have seen proper to waive all consideration of this question, and express no opinion upon it, sustaining the bill entirely upon the ground that the court acquired jurisdiction in this particular cause, because of the fraudulent use of its powers in a different cause by the defendant Blossom. That that suit ought to have been retained by the court for the purpose of vindicating its own integrity, and, if possible, righting the wrongs of these complainants, I have no doubt. But because of the fraud of Blossom in suing out his injunction, the court thereby became possessed of the power to entertain a distinct bill, filed by individuals, to oust those publicly acting as officers of a corporation, I do not believe. Perhaps I might have believed it, had there been any authority produced to sustain the position, or any argument had, either in the court below or in this court.