페이지 이미지
PDF
ePub

was the construction of a pipe line from Coraopolis to Titusville; and the capital of the company was practically all invested in that construction. The articles of assoThe articles of association of the company contemplated buying and selling, as well as the transportation, of oil; but the evidence makes it apparent that the buying and selling of oil was rather incidental to the transportation of oil, the condition of the oil trade being such that the buying of oil by the pipe-line company was necessary to the successful prosecution of the business of transportation of oil through the lines. Nothing disclosed by the evidence indicates that it was in contemplation by any of the promoters of the company to enter into the business of speculating in oil by purchase and sale. However comprehensive the language of the articles of association may be with reference to the power of the company to deal in oil, the investment of its capital in the pipe line and its equipment clearly indicates the intention of the members of the company with reference to the principal object to be accomplished. Of the Producers' and Refiners' Oil Company, Limited, the Producers' Oil Company, Limited, has control by reason of the ownership of seventeen twenty-fifths of its capital stock. The Producers' & Refiners' Oil Company, Limited, was organized to promote and facilitate the business of the Producers' Oil Company, Limited, and the importance and essential character of the property of the Producers' & Refiners' Oil Company, Limited, covered by the resolution of January 27, 1894, is clearly shown by the evidence. It is true that the company is owner of about 100,000 barrels of crude petroleum, against which there is an indebtedness, the exact amount of which was not shown; but at the present prices of oil, the difference between the value of this oil and the amount against which it is pledged would be, according to the testimony, perhaps from $30,000 to $50,000. The effect of the proposed sale would be to divest the Producers' & Refiners' Oil Company, Limited, of all of its property useful or essential in transporting oil, and all of that necessary in the business of buying oil, except that amount which would remain after the payment of the indebtedness due on the crude oil now on hand. This amount is, of course, subject to the fluctuation of the crude oil market. In exchange for the property so proposed to be sold, the company would become the owners of $250,000 of the capital stock of the United States Pipe-Line Company. We are not informed what the powers of this corporation are, but, assuming that they are indicated by the title of the company, the Producers' & Refiners' Oil Company, Limited, would be transformed from a buyer and seller and transporter of oil under its own management simply to a shareholder in a corporation whose capital is shown to have been increased to $2,000,000. That such a radical change in the condition of the

property of the company and the scope of its operations cannot be lawfully effected by the managers of the company is shown by the authorities cited, to which many others might be added, the latest of which is that of the learned president of the court of common pleas of Allegheny county in the case of Carter v. The Producers' Oil Company, Limited. The authorities relied upon by the defense on this branch of the case relate to the conduct of the partnership business within the true scope thereof; or, as was said in Sloan v. Moore, supra, 'in the orderly and ordinary course of the business.' They do not relate to the power of the managers to dispose of property useful and necessary for the prosecution of its business. It is true, as a general proposition, that the right of alienation is incident to ownership. Where, however, individuals unite in a corporation or partnership to engage in a particular business for a definite period, and such corporation or partnership acquires property essential to the conduct of such business, the right of alienation is restricted, where shareholders object. The case of Peacock v. Cummings, 46 Pa. St. 434, relates to the power of the majority of partners to employ an agent to assist in the prosecution of the business for a term of years, a subject of internal administration, having no bearing upon the right to dispose of the entire property of the firm or of the essential parts thereof. The decision in Layng v. Spring Co., 149 ra. St. 308, 24 Atl. 215, is based upon the facts (1) that the investment was made from the surplus of the company; (2) that the investment was auxiliary to the principal business of the investing company. Justice Sterrett, in delivering the opinion of the court, said: 'It thus appears that the investment complained of did not in any manner impair the fixed capital of the defendant company. The purchase of the 501 shares in question required only a portion of its then surplus profits.' It is further shown in the opinion of the court that it was perfectly legitimate to adopt this mode of securing a supply of steel for the business in which the investing company was engaged. The same line of argument was adopted in the case of Patterson v. Pipe Co. (Com. Pl. Crawford Co.) 12 Wkly. Notes Cas. 452. The investment proposed by the managers of the Producers' & Refiners' Oil Company, Limited, is of a very different character. It contemplates the investment of practically all of the capital of the company in a corporation over which it can have no legal control.

"It is contended, however, that by-law No. 2 of the Producers' & Refiners' Oil Company, Limited, empowered the managers to enter into the contract in question. Attributing to this by-law the broad meaning given to it by the defendants, I do not find any evidence showing that it ever was adopted by the shareholders, or that the Producers' Oil Company, Limited, which owned a majority of

the capital of the Producers' & Refiners' Oil Company, Limited, ever assented to, or had notice of it. We are not shown by whom it was adopted. If adopted by the managers, it could give them no greater authority in the premises than they had without it. If adopted by the shareholders, it could only have validity as a by-law when adopted by a majority of the shareholders. Nor has it greater efficacy as a contract. While it might not have the force of a by-law, it might be binding upon all those who are parties thereto; but it has not been shown that the Producers' Company ever gave assent to it. It is alleged by the defendants, however, that the shareholders of the Producers' & Refiners' Oil Company, Limited, gave unanimous consent to the sale of the property. It appears from the evidence that a meeting of the shareholders was held on the 10th of March, 1894, at which two of the managers of the Producers' Company were present. At this meeting a resolution was adopted authorizing the sale of the property to the United States Pipe-Line Company substantially in accordance with the resolution of January 27, 1894. Two of the managers of the Producers' Company undertook to give the assent of that company to the sale of the property of the Producers' & Refiners' Oil Company, Limited. The same reasoning which applies to the sale of the property of the Producers' & Refiners' Oil Company, Limited, applies to the action of the managers in granting the consent of the Producers' Company to such sale. As has been seen, the plant of the Producers' & Refiners' Oil Company, Limited, was not only essential to the business of that company, but was specifically useful and important to the Producers' Company in furnishing increased facilities for the transaction of business by the latter company. The pipe lines of the two companies were operated together as one system, under the control of the shareholders of the Producers' Company, and the continued ownership and use of the property of the Producers' & Refiners' Oil Company, Limited, was essential to the successful operation of the Producers' Company. The managers referred to had not authority, therefore, to commit the Producers' Oil Company to the proposed sale without the consent of that company.

"Conceding, however, that the majority of the shareholders have given their assent to the sale, is the complainant concluded by that action? It is a rule governing partnerships that a majority cannot enlarge or vary a business importantly, or enter upon new business, without the consent of all the partners. T. Pars. Partn. c. 7, §§ 5, 7. In Hoole v. Railway Co., 3 Ch. App. 262, Lord Cairns, in delivering the opinion of the court, held that the corporation might dissent from it, and had the right to appeal to a court of equity to be protected against its effects. In Dodge v. Woolsey, 18 How. 341, the court said: 'It is now

no longer doubted, either in England or the United States, that courts of equity in both have jurisdiction over corporations, at the instance of one or more of their members, to apply preventive remedies of injunction to restrain those who administer them from acts which would amount to a violation of the charters, or to prevent any misapplication of their capital or profits which might result in lessening the dividends of shareholders or the value of their shares.'. In Peabody v. Flint, 6 Allen, 52, the court held a minority of shareholders might maintain a bill in behalf of themselves and other standing in the same relation to restrain illegal acts. In Gray v. Lewis, L. R. 8 Eq. 526, it was decided that a shareholder may maintain an action in his own behalf and that of all other shareholders who may become parties, where the ground of complaint is that the corporation has exceeded its powers. 'An act beyond the corporate powers cannot validly be done by a body corporate acting as such, through the vote of the majority in a duly-assembled meeting, nor can it be thus ratified, for the majority have no authority by such act or ratification to bind absent or dissentient shareholders.' Tayl. Priv. Corp. § 288; 1 Mor. Priv. Corp. §§ 249, 256; Green's Brice, Ultra Vires, 647; March v. Railway Co., 40 N. H. 548; Spel. Extr. Relief, §§ 590, 760. The same doctrine is held in Balliet v. Brown, supra, and numerous other authorities. It follows, therefore, that even with the consent of a majority of the shareholders the plan proposed could not be carried out against the protest of dissenting shareholders if it involved a material change or enlargement of the business of the company, or involves the sale of the property necessary to the prosecution of its business.

"Objection is made to the plaintiff's rights to the relief sought for the reason that he is not a shareholder in the Producers' & Refiners' Oil Company, Limited. That he has an interest in that company cannot be doubted. The division of the capital of the Producers' Oil Company, Limited, into shares is not provided for in the articles of association. The property of the plaintiff is in the capital of the company, and not in the shares which represent it. He owns a part of the property of the Producers' & Refiners' Oil Company, Limited, or is a cestui que trust with reference thereto by reason of the ownership of a part of the property of the Producers' & Refiners' Oil Company, Limited, by the Producers' Company. In either case, he has an interest in the property and management of the Producers' & Refiners' Oil Company, Limited. In Peabody v. Flint, supra, it was held that, if there is an equitable interest, there must result from it equitable relations and equitable rights, and these rights may be enforced by equitable remedies.' In Railway Co. v. Rushout, 10 Eng. Law & Eq. 72, the court sustained a bill where the plaintiff was an equitable shareholder, holding

that they have, therefore, an interest in what is sought by this bill, to protect the property and concerns of this company.' This subject was fully considered in Ryan v. Railway Co., 21 Kan. 365. In that case, the stockholders of a railroad company filed a complaint against the directors of the second company, who were also directors of the stockholding company, and the court held that the complainants had such an equity as gave them standing to enforce their claim., A shareholder is entitled to relief in a court of equity for any infringement of his equitable rights. 1 Mor. Priv. Corp. §§ 278, 271. The doctrine was declared in Dodge v. Woolsey, supra, that 'the jurisdiction [over corporations] extends to inquire into and enjoin, as the case may require that to be done, any proceedings by individuals, in whatever character they may profess to act, if the subject of complaint is an implied violation of the corporate franchise, or the denial of the right growing out of it, for which there is not an adequate remedy at law.' If the proposed sale is in violation of the rights of the plaintiff, he has no other relief than that now sought, and is therefore entitled to the use of the remedy now invoked.

"Three of the managers of the Producers' & Refiners' Oil Co., Limited, are also managers of the Producers' Company, Limited, and have joined in the proposed plan of consolidation. The complainant, after calling upon the manager of the Producers' Company, Limited, to take proper steps to prevent the sale, now seeks to enforce his rights as an individual shareholder. The property of the company of which he became a shareholder is, by virtue of a lease, in possession and control of the Producers' & Refiners' Oil Company, Limited. About one-third of the capital of the Producers' Company, Limited, is invested in the capital of the Producers' & Refiners' Company, Limited. The plan contemplated would convert substantially all of the property of the Producers' & Refiners' Company, Limited, into stock of the United States Pipe-Line Company, and the function of the Producers' & Refiners' Company, Limited would be that of a holder of this stock for the benefit of its shareholders. The complainant, standing upon his legal rights, objects to the consummation of this plan, and this, I think, he has a right to do. No majority have the implied authority to constitute any dissenting shareholder a member of another corporation. 1 Mor. Priv. Corp. § 415. If his rights are infringed or threatened, his motives are unimportant. 1 Mor. Priv. Corp.

259. Nor is it material that the other parties in interest consider the proposed plan advantageous to the defendant company. In the case of Hoole v. Railway Co., supra, the court, believing the act committed to be most advantageous to the corporation, and to every person concerned, and regretting that the arrangement did not meet with the unanimous assent of the shareholders, declared

that if the issue of the shares was ultra vires, any member of the corporation might dissent from it. And in the same case, Lord Justice Rolt, in his opinion, said that it was possible, and very probable, that the arrangement proposed by the issuing of the shares was very beneficial, but that, if the scheme proposed was altogether beyond their power, the court had nothing to do with the merits. It will be observed that the pending proceeding is not directed against the defendant companies in the prosecution of the business in which they are engaged. It is not within the power of the complainant to disturb them with reference thereto. They may operate their lines and conduct their business in conjunction with the United States Pipe-Line Company, as may be to their interest and advantage. It is a matter for regret that the parties in interest are unable to harmonize their views in regard to the management of the affairs of the company, but we have no authority to produce such a result. The injunction is continued in accordance with the conclusions herein reached."

J. W. Lee, Clarence Walker, and Roger Sherman, for appellants. P. Church, Samuel Grumbine, Geo. F. Davenport, Knox & Reed, and A. Leo. Weil, for appellee.

PER CURIAM. The only subjects of complaint in this case are granting the preliminary injunction, and afterwards continuing the same "until further order of court." The very able and ingenious arguments of the learned counsel for appellants on the questions presented by the record, followed by a careful consideration of those questions, have failed to convince us that there has been, thus far, any error that calls for our intervention. In the class of cases to which this belongs we purposely abstain from any extended comment on the merits of the case, for the reason that in its subsequent development as it progresses to final decree in the court below some of the questions that may now appear to have an important bearing on the final result may be eliminated, and others may arise. The decree continuing the preliminary injunction is affirmed, and the appeal dismissed, with costs to be paid by appellants.

COMMONWEALTH ex rel. HENSEL, Attor

ney General, v. SEVERN. (Supreme Court of Pennsylvania. Oct. 22, 1894.)

CONSTITUTIONAL LAW-ACT CREATING OFFICE OF COUNTY COMPTROLLER-Title.

Act June 8, 1893 (P. L. 393), entitled "An act creating the office of county comptroller in counties in this commonwealth containing 150,000 inhabitants and over, prescribing his duties," in effect abolishes the office of county auditor, and is unconstitutional, because such purpose is not expressed in its title.

Appeal from court of common pleas, Schuylkill county; Cyrus L. Pershing, Judge.

Petition by the commonwealth of Pennsylvania, on the relation of W. U. Hensel, attorney general, for a writ of quo warranto directed to B. R. Severn, requiring him to show by what authority he claimed to exercise the office of county comptroller of Schuylkill county, Pa. There was a judgment ousting respondent from office, from which he appeals. Affirmed.

W. D. Seltzer and W. J. Whitehouse, for appellant. W. U. Hensel, Atty. Gen., for appellee.

PER CURIAM. This case is ruled against the defendant by Com. v. Samuels (Pa. Sup.) 29 Atl. 909, in which an opinion by our Brother Mitchell was filed on July 11, last, holding that by reason of its defective title the act of June 8, 1893 (P. L. 393), under which defendant in this case claims title, was unconstitutional. While the defendant, by taking this appeal, has availed himself of a reargument of the constitutional question disposed of in the case above cited, we are very far from seeing our way clear to do anything else than adhere to the principle announced in that case. It therefore follows that there is no error in the judgment of the court below. Judgment affirmed.

[blocks in formation]

INJUNCTION REMOVING RAILROAD TRACKS-JURISDICTION-AUTHORITY OF CITY AND COUNTY.

1. Whether a court of D. county, in which a suit is brought to enjoin the city of P., its director of public works, and a person whom he has ordered to tear up railroad tracks on a bridge in D. county, has jurisdiction to proceed against the city, it being outside the county of D., is immaterial, it having jurisdiction to enjoin the individual defendants.

2. An alleged error in refusing to hear oral testimony cannot be considered, the record not showing such refusal, and no exception thereto having been taken.

3. On a preliminary injunction against the tearing up by the city of P. of railroad tracks on that part of a bridge which lies within the county of D., the city of P. being outside of it, it will not be held that, because the bridge was paid for equally by the city and county, the county could not, without the consent of the city, confer lawful authority for laying the tracks on that part of the bridge within the county.

Appeal from court of common pleas, Delaware county.

Suit by the Delaware County & Philadelphia Electric Railway Company against the city of Philadelphia and others for injunction. From an order continuing a preliminary injunction, defendants appeal. Affirmed.

James Alcorn, Asst. City Sol., and Charles F. Warwick, City Sol., for appellants. J. B. Hannum, for appellee.

GREEN, J.

This is an appeal from an order of the court below continuing until further notice a preliminary injunction previously granted to restrain the defendants from tearing up and removing the ties, rails, and wires of the plaintiff's electric railway track laid upon so much of the bridge over Cobb's creek as was within the county of Delaware. The allegation of the bill is that the railway track was laid by permission of the supervisors of Upper Darby township, from the middle of Cobb's creek, over roads in that township, to the western line of the township, and also that the permission of the commissioners of Delaware county had been obtained to lay its rails, ties, and wires over so much of the bridge as lies within the county of Delaware. The injunction was asked for because Mr. Windrim, director of the department of public works in the city of Philadel phia, had given notice in writing to Mr. John B. Reilly, the contractor who built the bridge, to remove the tracks from the bridge, and Mr. Reilly had shown this notice to the plaintiff, and had informed the plaintiff that he would be obliged to remove the tracks from the bridge. In the paper book of the appellant a question is raised as to the jurisdiction of the court of Delaware county to proceed against the city of Philadelphia in that county, on the ground that the city could only be sued in the courts of Philadelphia county. The question. is of no consequence, because both Mr. Windrim, who gave the order, and Mr. Reilly, who was to execute it, are defendants, and individual persons only, and are, of course, subject to the jurisdiction of the courts of Delaware county to prevent the commission within that county of any acts of trespass.

are

The third assignment of error alleges that the court below refused at the hearing on April 16, 1894, to hear oral evidence offered by the defendants. We are unable to find anything in the record to support this assignment, and no exception was taken to such refusal.

The remaining assignments raise only the question of the right of the plaintiff to lay its rails, ties, and wires on the bridge, and assert that the city never had granted permission to that effect. To this the plaintiff replies that they did not lay any part of their structure east of the county line on the bridge, but only up to the county line, which, the plaintiff says, runs through the middle of Cobb's creek, and therefore across the middle of the bridge. As the bill does not ask for an injunction except as to that part of the bridge which lies within Delaware county, no question can arise as to the part lying within the city limits. Some contention is made that the bridge is a joint structure, because the cost of its erection was defrayed equally by the city and the county, and therefore the city had a concurrent jurisdiction over the whole of the bridge, and hence its consent must be obtained. Whatever may be the merits of

such a contention, it cannot affect the physical fact that one-half of the bridge is located within the territorial limits of Delaware county, and is therefore subject to the jurisdiction of the courts of that county. The tearing up and removing the ties and rails of a railway track without authority of law is an act of violence and force, which we have refused to sanction in other cases, and cannot permit in this. Easton, S. E. & W. E. P. Ry. Co. v. City of Easton, 133 Pa. St. 505, 19 Atl. 486. We see no reason for interfering with the injunction already issued, and decline to do so. We are not prepared to hold that the consent of the supervisors of Darby township and of the commissioners of Delaware county could not confer a lawful authority upon the plaintiff to lay its tracks on so much of the highway as to include that part of this bridge which lies in Delaware county. We will certainly not decide so now. The decree of the court below is affirmed, and appeal dismissed, at the cost of the appellants.

[blocks in formation]

CONTRIBUTORY NEGLIGENCE-QUESTION FOR JURY. The question of the negligence of defendant and the contributory negligence of plaintiff, where the evidence is conflicting, is for the jury. Appeal from court of common pleas, Washington county; J. A. Mcllvaine, Judge.

Action by Lemuel Gray, by George Gray, his next friend, against Henry Floersheim and others, formerly partners doing business as the Germania Gas-Coal Company, for personal injuries caused by defendants' negligence. From a judgment for plaintiff, defendants appeal. Affirmed.

The assignments of error are as follows: "First. The court erred in its answer to the first point of the defendants, which point and the answer thereto were as follows: (1) Under all the evidence the verdict must be for the defendants. Answer. We refuse to give you binding instructions, and leave the case to you under the evidence, and the instructions we have given you as to the law.' Second. The court erred in its answer to the third point of the defendants, which point and the answer thereto were as follows: '(3) It appearing by the admission of Lemuel Gray, made upon the witness stand, and being undisputed, that he, with knowledge of the fact that a mule drawing empty cars was about to proceed up the main entry, stepped upon that track, and started to walk along it, with his back towards the mule, and without looking backward to see whether said mule was approaching, and it being undisputed that if he had so looked he could have seen the danger in which he was from the proximity of the mule, before stepping upon the track, and could have escaped injury by standing in the mouth of entry No. 3,

he was guilty of contributory negligence, and the verdict must be for the defendants. Answer. Refused. We leave it for the jury to say whether the plaintiff was guilty of contributory negligence under the law and the evidence as they have been given to you.' Third. The court erred in submitting to the jury, in the answer to the defendants' fourth point, the question whether any of the defendants were personally guilty of negli gence, the said point and the answer thereto, being as follows: (4) It being undisputed, upon the testimony, that the defendants had placed the entire control and management of the inside operation of their mine into the hands of a mine boss having a certificate of competency, as provided by the mining law of 1885, whose competency is not questioned in this case, they had performed the duty which they owed to the plaintiff, Lemuel Gray, as their employé, and they are not responsible for any negligence in such operation in which they did not personally participate. Answer. Affirmed. But we leave it to the jury to determine whether any of the defendants were personally guilty of negligence.'"

James I. Brownson, Jr., and Charles G. McIlvaine, for appellants. James R. Burnside and Alex. M. Templeton, for appellee.

PER CURIAM. An examination of the record shows that this case involved the questions of defendants' negligence and the alleged contributory negligence of the plaintiff. The testimony bearing on each of these questions was such as to necessarily carry the case to the jury. It was fairly submitted to them in a clear and impartial charge, which appears to be free from any error of which defendants have any just reason to complain. It would have been plain error to have given binding instructions to find for defendants, as requested in their point recited in the first specification. There was no error in the learned judge's answer to defendants' point recited in the second specification, nor has the able and ingenious argument of the learned counsel for the defendants convinced us that the court erred in affirming their point quoted in the third specification, but at the same time leaving "it to the jury to determine whether any of the defendants were personally guilty of negligence." In the last clause of the point the court was requested to say that the defendants "are not responsible for any negli gence in such operation [meaning inside operation of their mine] in which they did not personally participate." In view of the testimony, there was no error in submitting to the jury for their determination the question whether defendants did personally participate in any negligence in the inside operation of their mines. We find no error in the record that would justify us in reversing the judgment. Judgment affirmed.

« 이전계속 »