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In my opinion, under the case here presented, the objection that remedy by injunction cannot be afforded at the instance of the injured party should not be sustained.
3. It is contended that under the case made by the bill the grievance complained of is that of the Osceola Company, and that complainant, as a stockholder in that company, has not complied with general equity rule No. 94, adopted to prevent a collusive conferring of jurisdiction. The authorities agree that, where the relief is sought for the benefit of the corporation, the complaining stockholder must show that he has exhausted all means within his reach to induce the corporation to take action, to the extent of formally making demand for action upon the board of directors (and, as held in some cases, even upon the stockholders), unless it appears that such demand would be an idle ceremony.
It is clear that such demand upon the stockholders would have been, in this case, an idle ceremony, as a majority of the stock is apparently controlled by the Calumet & Hecla Company. Moreover, but 22 days intervened between February 20th and March 14th, and the mining law required four weeks' publication of notice for special stockholders' meeting. 2 Comp. Laws Mich. 1897, § 6999. The bill alleges that the suit is not collusive; that complainant had consulted with a majority of the directors, all of whom expressed their opinion that the corporation should not bring the suit, in view of the antagonism thereto on the part of the majority of the stockholders, and in view of the near expiration of their terms as directors. Assuming that the relief asked for belongs to the corporation, the question is : Does the bill show that demand upon the directors to bring the suit would be an idle ceremony?
y? This hearing is not upon demurrer to the bill, but upon answer and affidavits. There is force in the suggestion that the directors might properly be adverse to taking corporate action under the circumstances stated, and that under the allegations referred to there is as much ground for an inference that the board, if formally called together, would have declined to take corporate action, as in a case where individual directors are known to favor the situation complained of. The allegations prima facie negative collusion. If upon final hearing the jurisdiction of this court should be found to rest upon collusion, the bill would be then dismissed. The fact that the original bill did not allege compliance with rule 94 is not material. The amended bill was filed as a matter of right. On this hearing relief can be given on the amended bill with the same effect as if it were an original bill.
It is not clear, however, that the grievance complained of belongs solely to the corporation. An action at law for the recovery of damages on account of the acts sought to be enjoined would accrue to individual stockholders, under section 7 of the federal act and the eleventh section of the Michigan statute. Metcalf v. American School Furn. Co. (C. C.) 108 Fed. 909, 912; s. C. (C. C.) 122 Fed. 115, 116. The right of the complainant to maintain the bill for his personal interest is recognized by respectable authorities. High on Injunctions (4th Ed.) § 1227, and cases cited; Dunbar v. American Tel. & Tel. Co., 79 N. E. 423, 224 Ill. 9. If the Osceola Company was not a necessary party, and the bill is maintainable upon general equity principles, this court would have jurisdiction through diversity of citizenship, and thus the case would not be within the mischief aimed at by the rule in question.
4. It is contended that the bill does not allege a threatened, direct injury to complainant from the proposed monopoly charged, beyond such injury as would be suffered by the general public, and that irreparable injury is not sufficiently alleged to justify injunction. The seventeenth paragraph of the bill alleges that if the Calumet & Hecla Company shall secure the intended control of the Osceola Company it will be able to, and will, control the Osceola Company in its own interests, and not in the interests of complainant and other stockholders similarly situated; that the officers of the Osceola Company will have no independence of action in the management of that company's affairs; and that thereby complainant and other stockholders will suffer great loss and damage. As before said, this hearing is not on demurrer to the bill. The paragraph in question must be construed in connection with the other paragraphs of the bill and the case presented upon this application. The bill alleges that the complainant is director and officer of the Osceola Company, and defendant's affidavits allege that he receives a substantial salary. It is alleged that the Calumet & Hecla Company proposes to oust the present directors, including the complainant, as a director and officer. Complainant's affidavits tend to show that the Calumet & Hecla Company proposes to revolutionize the method of operation of the Osceola mine, both in mining, manufacturing, and selling, and in the interuse of shafts, drifts, and openings, and that the proposed methods, if applied, will injure the value of complainant's stock. Surely injuries such as these are distinct from such as would be suffered by the general public through the creation of a monopoly, and are injurious not only to the corporation as an entity, but to the individual stockholders. Moreover, under the anti-trust laws, if an unlawful monopoly is created, the Osceola Company would be subject not only to fine, but to forfeiture of franchises, notwithstanding the monopoly is created by action of the stockholders rather than by corporate action. Clark & Marshall on Private Corporations, § 314 (R). These injuries likewise are distinct from those suffered by the general public. If the injuries referred to shall be suffered by complainant, they are properly termed irreparable. High on Injunctions (4th Ed.) § 1227, and cases cited.
5. It is urged that the case made by complainant's bill and affidavits is fully met by defendant's answer and affidavits; that it is clearly shown that no combination in restraint of trade is actually threatened, or is possible; that this suit is a mere attempt on the part of minority stockholders to maintain themselves in power; that complainant and his associates are shown to have abused their trusts; that the proposed action sought to be restrained is in the best interest of the Osceola Company and its stockholders; that the injunction should be denied for these reasons, and for the further reason that it would violate the fundamental rule which forbids the disturbing, by injunction, of vested rights and existing status. In this connection, the apparent fact that the Calumet & Hecla Company bought its Osceola stock not merely for investment, but for the purpose of intervening in the management of the affairs of a competing company, is worthy of consideration. The fact that the answer completely denies the equity of the bill does not require a refusal of the injunction, nor should the court upon this hearing, and from affidavits, determine litigated questions of fact. It may be that upon the final hearing it must be held that complainant's case is completely overthrown. It is apparent, however, that if complainant shall sustain, on final hearing, the case presented by his bill, he is entitled to relief, unless it shall be found that the right belongs to some one other than complainant. The court is not to be understood as expressing an opinion upon the merits. It is sufficient for the purposes of this hearing that the court be convinced that upon the pleadings and upon the evidence a case is presented which makes the transaction a proper subject of investigation in a court of equity; or, otherwise stated, that complainant has a fair question to raise as to the existence of such right. It is in this view that the testimony favorable to complainant's case has been so fully set out. The court cannot say upon this application that complainant may not prevail upon final hearing, but is convinced that a fair question is raised as to the existence of the right asserted, and that opportunity should be given for a final decision upon the difficult questions of law and fact involved. Such being the case, the injunction should not be refused unless upon the balancing of convenience and inconvenience, to the one party or the other, an injunction appears inexpedient.
Upon such balancing, the considerations in favor of the injunction preponderate. If the injunction is not issued, the office of this suit is practically ended. On the other hand, if the injunction issues, the worst that can happen to the Calumet & Hecla Company is a continuance, until final hearing, of the present management, which, although unsatisfactory to the majority of the stockholders (including the Calumet & Hecla Company) is not shown to seriously jeopardize the interests of the Osceola Company and its stockholders. The rules and considerations applicable to conditions such as here presented are so fully stated in the recent case of Pere Marquette Ry. Co. v. Bradford (C. C.) 149 Fed. 492, as to make unnecessary further citation of authorities thereon.
The consideration that complainant would have no right to appeal from an order refusing an injunction is properly entitled to weight. Harriman v. Northern Securities Co. (C. Č.) 132 Fed. 464. Such injunction will not disturb the existing status, which is not, properly speaking, the abstract right of majority stock control, but rather the concrete fact of the present management of the Osceola Company as distinguished from a management by the Calumet & Hecla Company. The Osceola stockholders who have given their proxies to the Calumet & Hecla Company are not punished by the issuing of the contemplated injunction. No reason is suggested why their proxies given that company may not be revoked.
Upon these considerations, the issuing of temporary injunction in substantially the terms of the existing restraining order, which would operate to protect all interests concerned, seems both proper and expedient. Temporary injunction will issue accordingly.
WHITAKER & RAY CO. V. ROBERTS, County Superintendent of Schools,
(Circuit Court, D. Nevada. July 8, 1907.)
1. SCHOOLS AND SCHOOL DISTRICTS-CLAIMS FOR SUPPLIES-ACTION-PARTIES.
Where, in a suit against a county school superintendent a board of citizens and taxpayers, and a board of county commissioners, to compel payment for certain school desks purchased by a board of school trustees, as authorized by Comp. Laws Nev. 88 1294, 1298, it appeared that the trustees executed the contract, received the desks, and allowed complainant's claim, which was thereafter disallowed by defendants, a bill, not joining the school trustees representing the school district, from whose funds any judgment would have to be paid, nor praying any relief against them.
was demurrable. 2. SAME-DISALLOWANCE OF CLAIMS.
Comp. Laws Nev. $ 1287, provides that no public money can be paid out except on warrants of the county auditor issued on orders of the county superintendent of public schools, and section 1338 makes it the duty of the county superintendent of public schools to draw his order on the county auditor in favor of the trustees of any school district in his county for any bill signed by the trustees and authorized by the act, except that, if in the opinion of the superintendent the bill contains an exorbitant or unwarranted charge, he may refuse to draw his order until ordered to do so by the board of county commissioners, who are required to act as auditors on any bill rejected by the county superintendent. Act Feb. 13, 1905, p. 23, § 9, authorizes the trustees of the district in question to purchase new school furniture, and provides that no purchase shall be valid until it has received the approval of a majority of a board of taxpayers and citizens created by such act. Held that where, after the allowance of a bill for school desks by school trustees, it was allowed only for a portion of the amount by the county superintendent, whose ruling was confirmed by the board of citizens and taxpayers and the board of county commissioners, the allowance of the bill by the trustees was insufficient to establish the claim as a valid claim for the full amount
against the district. 3. SAME-PAYMENT-ENFORCEMENT.
Prior to the allowance of claims against a school district by the officers selected therefor by law or the establishement of such claim by a judgment against the district, proceedings will not lie to compel payment
of the claims by the officers of the county. 4. MANDAMUS-SCOPE OF WRIT-SCHOOL DISTRICTS—CLAIMS–PAYMENT.
After a claim against a school district has been duly established and liquidated, mandamus is the proper remedy to compel payment thereof.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 33, Mandamus, $ 226.] B. EQUITY-GROUNDS OF JURISDICTION-MULTIPLICITY OF SUITS.
Where complainant's claim against a school district for school desks was partly disallowed, all the desks having been purchased under a single contract, complainant was not entitled to sue in equity to compel payment of the full amount claimed in order to prevent a multiplicity of suits.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 19, Equity, $$ 167, 169.]
FARRINGTON, District Judge (orally). December 4, 1905, the board of trustees of Carson school district, Ormsby county, Nev., entered into a written contract with the complainant for the purchase of 410 school desks. The desks having been delivered, the board of trustees allowed the complainant's bill, amounting to $2,385.10. Subsequently, the claim was presented for approval to the board of three citizens and taxpayers of the school district, appointed under the provisions of the statute of Nevada of February 13, 1905, p. 23, § 9. This board refused to allow the claim in full, and approved it for but $2,065.30. The claim was next presented to the defendant E. E. Roberts, county superintendent of public schools for Ormsby county, who declined to approve it for any amount in excess of $2,065.30, on the ground that the claim was exorbitant. July 18, 1906, the complainant presented the claim to the board of county commissioners of Ormsby county, with the request that the board compel the county superintendent to allow and approve it for the full amount claimed. This the board refused to do, but approved the claim to the amount of $2,065.30, and no more.
September 14, 1906, the complainant filed its bill in equity in this court. In this bill the county superintendent of schools, the board of three citizens and taxpayers, and the board of county commissioners are defendants.
The complainant asks: First, that the board of three citizens and taxpayers and the board of county commissioners of Ormsby county be compelled to allow and approve complainant's bill in full, and to indorse their approval thereon; second, that E. E. Roberts, county superintendent of public schools, be compelled to allow and approve complainant's bill in full, and indorse his approval thereon, and to draw his warrant on the county auditor in favor of the complainant for the sum of $2,385.10, the total amount of complainant's bill, with interest thereon at y per cent. per annum, and also for $300 additional as attorney's fees; third, that it be decreed that complainant is justly entitled to the sum of $2,385.10, and interest thereon from June 15, 1906, to the date of judgment herein, at 7 per cent. per annum, also to the sum of $300 additional for attorney's fees, and also to its costs and other appropriate relief.
The board of school trustees is a body corporate. Comp. Laws Nev. § 1294. It had the power, and it was its duty, to supply schoolhouses within its district with necessary furniture, and to pay for the same out of the county school moneys belonging to the district. Comp. Laws Nev. $$ 1294, 1298.
The board of school trustees executed the contract attached to complainant's bill, and received the desks contracted for, but the price has never been paid. The relief prayed for does not include a demand for a judgment against the board of school trutees; neither is the school district, nor its board of trustees, in any manner made a party to this proceeding. Furthermore, it does not appear that the demand of the complainant has ever been reduced to a judgment. This court is asked to decree that the complainant is justly entitled to the full amount of its claim, with interest, costs, and attorney's fees, and also