Court Opinion

ID: 6668670
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:07:54.920457+00
Date Added: 2024-06-11T16:00:25.570335
License: Public Domain

Beatty, J.,
dissenting:
I dissent upon tbe ground that tbe complaint does not make a ca'se for tbe extraordinary relief sought. Tbe means resorted to by plaintiff for tbe purpose of quieting its title deserve anything but favor in a o( urt of equity. There are certain classes of transactions wbicb, because they are *354universally attended, by opportunities and temptations to commit a fraud, are presumed, from motives- of public utility, to be always fraudulent. It appears to me tbat tbe complaint discloses a transaction of that kind. A corporation finds that another corporation is asserting a claim to a portion of the mining ground owned and possessed by it, and is so “greatly annoyed” thereby that it determines to buy its peace. Instead of pursuing the plain, simple, direct, honest and effective method of accomplishing that object by purchasing its adversary’s quitclaim, it goes to work to secure the control of the antagonist corporation by buying up its stock. The modus operandi is a familiar spectacle. By means of its agents it first gets control of a majority of the stock, and next proceeds to “freeze out” the minority stockholders, which, as they are practically remediless, is an easy operation. It is just possible that a transaction of this kind might be consummated without defrauding the minority; and so is it possible that one who purchases from himself as the agent of the vendor may pay a due regard to the interests of his principal, or a ward make a voluntary donation to his guardian, without being unduly influenced. But such instances are so extremely rare, and so little to be expected, that every presumption is against their bona jfides. The same presumption of fraucl, I think, should attach to the operation attempted by the plaintiff here, and to the consummation of which he invokes the aid of the extraordinary powers of a court of equity. The case made by the complaint is simply this: If the court does not decree the return of the stock of the Allen Company in controversy, the plaintiff will lose the control of the Allen Company, which may then assert its claim to plaintiff’s ground and cloud its title. In view of the extremely liberal remedy afforded by our statute for wrongs of this nature, such a result would not appear to involve irreparable damage to the plaintiff. A recovery of the value of the stock it claims to have lost would restore it to its original position, and it might then proceed by regular and legitimate means to quiet its title or buy its peace. But aside from these considerations, the *355reason, which is conclusive to my mind for denying the injunction and all the equitable relief prayed for is, that the courts, so far from going out of their usual cohrse to aid a transaction of this hind, should sternly discountenance a proceeding which always and inevitably involves temptations and opportunities of fraud, and should therefore be presumed to have been resorted to for fraudulent purposes, especially when there were more direct, legitimate and effective means of honestly accomplishing the avowed object.