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allegations of misappropriation or diversion company, it has been successful and profitare denied in the answer, which sets out able; the Kentucky Company selling to the at length the particulars of the transaction, Y Company its whiskies at a profit, and in which are, in my judgment, sustained by turn making a reasonable profit upon the the proofs. The payments which are com capital of the Y Company. With the 2 Complained of ($400,000 in cash and $700,000 in pany, capitalized at $900,000, business of the stock of the Kentucky Company), which same character is transacted, but on a larger were paid for two of the distilling properties scale, and at present it supplies the largest which the Kentucky Company was formed outlet for the product of the Kentucky Comto purchase, were portions of the entire pay. pany; distributing about 50,000 barrels a ment agreed to be made by the Kentucky year, upon which both the manufacturers' Company (about $29,000,000 in stock or cash) and retailers' profits are made. The Kento one Stoll, who had options or controlled tucky Company is also the owner of another the properties (over 50 in number) as the distributing company, which was previously vendor for the entire properties, to be con organized, called the “W Company,” the veyed according to the prospectus and under stock of which it purchased and controlled. writing agreement to which complainants The W Company distributes for the Kentucky were parties. As against the purchaser (the Company annually between 20,000 and 30,Kentucky Company), Stoll, as the vendor, 000 barrels-about one-seventh of its entire retained under the arrangement the right to product--and is doing now a business of apportion or divide the consideration among about $100,000 monthly. The business and the different grantors; and it was under property of the W Company, including its good this reservation to Stoll, the vendor, that the will, was purchased for about $150,000. As Spirits Manufacturing Company, the owner appears by its certificate of incorporation, the of two of the fifty or more properties con Kentucky Company was formed for the veyed, received the payments now question manufacture, sale, and dealing in whiskies, ed, on making the conveyance to the Ken and also for the purpose of carrying on any tucky Company. To require now the Spirits part of its business, and to invest in all kinds Manufacturing Company or its directors to of property, real or personal, within or withaccount for or repay this portion of the en out the state of New Jersey, including the tire consideration to the Kentucky Company, shares of stock of other corporations. The which has received the properties and re right of the Kentucky Company, under the tains them, would be, in effect, to make a charter and under the laws of the state, to new bargain for the purchase, and in the purchase the stock of the pre-existing comabsence of Stoll. This suit is not appropri pany—the W Company-for the purpose of ate for the trial of a question of this charac its business was not contested at the hearing. ter, and the charge that the alleged diver It cannot be questioned, I think, that the sion was the result of any fraud or breach method of distribution of its products by the of trust on the part of the directors of the machinery of subsidiary companies, considKentucky Company for the benefit of the ered merely as a matter of business manageDistilling Company or its directors is not ment, is one with which this court will not sustained by the proofs.
interfere; nor will it attempt to control the The remaining question, as to diversion of business judgment of the directors, which assets of the Kentucky Company charged by appears to have been honestly exercised. the amended bill, arises out of the following The only question is that of power of the facts appearing by the answer and proofs: | Kentucky Company to invest its capital and The Kentucky Company has organized un organize such companies for this purpose. der the laws of West Virginia two subsidiary The doctrine of ultra vires, where it con. companies for the purpose of selling and dis cerns purely a matter of business managetributing some of the whiskies which it ment of the corporate property by the directmanufactures to retailers. It conveyed to ors or by the company, and where the power each of these companies a portion of its is called in question by a stockholder, must stock of whisky-to one company, whisky be applied reasonably, and not unreasonably. valued at $75,000, and to the other an amount The rule applied in these cases is the one anvalued at $900,000—for which it has received nounced by Lord Selbourne, in the House of full-paid capital stock of the respective com Lords, in Atty. Gen. V. Directors, etc., of panies to these amounts. These sums are Great Eastern Railway Co., 5 App. Cas. 473, the entire capital stock of the companies, and 49 L. J. Ch. (N. S.) 545, 547 (1880), and apthis stock in both companies is owned by the prored by Vice Chancellor Green in EllerKentucky Company, and is controlled by it man v. Chicago Junc. R. Co., 49 N. J. Eq. through its nominees, who are employés, sub 242, 23 Atl. 287. This rule is that whatever ject to removal. The company with the cap may be fairly and reasonably regarded as inital of $75,000, called the "Y Company" in cidental to or consequential upon those the proofs, was formed for the purpose of things which the Legislature has authorized selling to the retail trade, direct, a particular ought not (unless expressly prohibited) to be brand of whisky manufactured by the Ken held by Judicial construction to be ultra vires. tucky Company, and, according to the evi The Legislature has here expressly authordence of Mr. Bradley, the president of the ized the manufacture and sale of a product,
and this sale may undoubtedly be either at the public policy of Washington, and, this wholesale or retail. It has also, by the cer holding and control being thus against the tificate, authorized the purchase of stocks of public policy of the state of Washington, it other corporations for the purpose of this should be enjoined in New Jersey. In the business of selling, and by the express pro present case there is no proof as to the stat. visions of the corporation act (section 51) has utes or decisions of the state of West Viralso authorized the purchase of the stock of ginia upon the question of the right of a corporations of other states. Considering West Virginia corporation or of a foreign this fifty-first section of the statute to be corporation to hold stock in a West Virginia subject to the implied limitation that the corporation; and it must, in the absence of purchase and ownership must be for the such proof, be assumed, under the laws of purposes of the business, this condition is evidence, as well as of comity, that the laws complied with in the present instance, for of West Virginia are similar to our own the purchase and ownership is exclusively laws, and authorize the Kentucky Company, for the promotion of the business of the sale formed under our laws, to exercise within or distribution of the product manufactured the limits of West Virginia the powers conby the company. The ownership of stock of ferred upon it under our statutes and its other corporations for the purpose of the cor charter. The law of comity, settled in Amerporate business is the substantial thing au ican jurisprudence by the decisions to wbich thorized in these provisions, and in the case I referred at some length in my opinion of a private business corporation, exercising in Coler v. Tacoma Ry. Co., 53 Atl. 680, no public franchise of any kind, the method is that a corporation of one state of the of acquiring such ownership of stock is in Union may exercise within another state all cidental only. The second section of the cor the powers of its charter, to the extent that poration act of 1896 expressly authorizes cor its exercise thereof has not been prohibited porations to exercise all the powers contained in such other state, or affirmatively declared in the act, so far as the same are necessary by the Constitution, statutes, or decisions of or convenient to the attainment of the ob such other state to violate its own public jects set forth in the charter or certificate. policy. Such violation of the declared public Under this provision, no question is or can policy of a foreign state must be proved, and be raised as to the power of purchasing cannot be assumed. stocks of existing companies for the purpose The questions above considered are all of of accomplishing the distribution of the pro the claims for relief raised by the bill or duct; and, in my judgment, the organiza amended bill which were relied on at the ar. tion of subsidiary companies for the same gument, or briefs on final hearing, and the purpose and with the same object may be only remaining question is the application of fairly and reasonably regarded as incidental complainants to amend the bill. This applito or consequential upon the business which cation, which was made after the closing of is expressly authorized, and convenient for the proofs and at the time fixed for argument the attainment of its objects, and should not of the cause, is resisted. No application is by a judicial construction be held to be ultra made to open the proofs, and the general rule vires. As to companies in which New Jersey applicable to amendments applied for under Companies may hold stock, and the states in such circumstances is that amendments may which subsidiary companies may be organ then be made, if necessary and proper, in orized, it may be that the late decision of the der that issues which have been in fact tried Court of Errors and Appeals in Coler v. by the parties, and upon which both parties Tacoma Railway Co. (March, 1903), 54 Atl. have been practically and fully heard, may 413, limits the power of New Jersey com be formally set out in the pleadings, so that panies to hold stock of corporations of other the pleadings may conform to the proofs. states to the holdings of stock in companies Story, Pl. § 905, and cases cited in Ogden v. organized in states whose laws authorize their Thornton, 30 N. J. Eq. 569, 573. But comown domestic corporations to hold stock in plainant cannot amend at the hearing in orand control their own domestic companies. der to present a new or inconsistent case. In the Coler Case the Court of Errors and Ap Pasman v. Montague, 30 N. J. Eq. 385, 393, peals, on the application of the stockholder (Runyon, Ch., 1879); 1 Dan. Ch. Prac. (6th of a New Jersey Company which owned a Am. Ed.) 418, note “a." The amendment railroad in the state of Washington, enjoined sought is to add a claim that complainants, the sale of the railroad to a Washington as the preferred stockholders of the Ken. Company in consideration of stock of the tucky Company, under the certificate of inWashington Company; one ground being corporation, are entitled to receive a stated that, under the statutes of Washington and dividend, payable quarterly, from the net the decisions of the Washington courts, a profits arising from the business of the comWashington corporation had no power to pur pany; that net profits applicable to such chase or hold the stock of a Washington dividends have been accumulated, but have Company, and that it must therefore be con not been paid. A prayer is added that such cluded by the courts of this state that the dividends may be directed to be declared and ownership of the stock of a Washington cor paid by the Kentucky Company to the comporation by a foreign corporation was against plainants. It is manifest that this cause of
action concerns the Kentucky Company and to transact business, and did not apprehend the its directors alone, and that the parties to nature of his act. Peld, that a decree compel. this suit, other than the Kentucky Company
ling the repayment of the money was justified.
2. Where the repayment of money given by a and its directors, have no interest in this father to his son is compelled because of the litigation. This amendment would make the mental incapacity of the father at the time of bill multifarious. This claim, also, is for the
making the transfer, it is proper to order that
the money should be paid to the guardian of specific performance of the contract to pay
the father, who was appointed after the suit for dividends, based on the valid, continuous ex. reconveyance was begun. istence and management of the Kentucky
Appeal from Court of Common Pleas, Company as a going corporation. It is there
Wayne County; Purdy, Judge. fore inconsistent with the case and claim for
Bill by John Polt against Joseph Polt. relief set up in the bill, which are based up
Decree for plaintiff, and defendant appeals. on the supposed illegality of the management
Affirmed. of the company, and pray for its dissolution and winding up by this court, and for the re
The court below found the following facts payment to complainants of the amounts
and conclusions of law: paid for their stock. It is also a claim as to “Findings of facts: On September 4, 1900, which no notice was given in the issues
the defendant obtained from the plaintiff a made up on the pleadings, and to which no transfer of $1,635 from the plaintiff's account evidence has been specially directed, and in the Wayne County Savings Bank to that upon which the Kentucky Company and its
of his own, by means of a check given by directors have not been heard.
the plaintiff for this amount without considThe application to amend is denied, and
eration. At the time of this transfer the the bills must be dismissed.
plaintiff, then eighty years of age, was having trouble with his family, was in great
mental distress, and was largely under the (69 N. J. L. 238)
influence and control of his son, the defendLEONARD V. HOBOKEN PRINTING &
ant. In giving the check to the defendant, PUBLISHING CO.
the design of the plaintiff was to put the (Supreme Court of New Jersey. Feb. 25,
money beyond the reach of his wife and
other members of his family; and, while he 1903.)
was not a lunatic, his mental condition was PUNITIVE DAMAGES-REVIEW.
such that he did not understand the legal 1. Punitive damages being allowable, the Su
effect of the transaction, or that he was putpreme Court cannot say that they are excessive.
ting the money beyond his control, but supAction by Clement De R. Leonard against posed it was to be for his use as before. the Hoboken Printing & Publishing Com
This money so transferred was substantially pany. Heard on rule to show cause. Rule
all of the property the plaintiff owned, exdischarged.
cept a lot of land which was fully covered Argued November term, 1902, before GUM. by a judgment for $1,500 which he had conMERE, C. J., and VAN SYCKEL, FORT, | fessed to the defendant but a short time beand PITNEY, JJ.
fore. The money still remains to the credit William H. Speer, for plaintiff. James
of the defendant in the Wayne County SavB. Vredenburgh and William S. Stuhr, for ings Bank, no other rights having intervened. defendant.
The transfer was not the intelligent and de
liberate act of John Polt, the plaintiff, but PER CURIAM. The court properly re
was made under mental stress, without a
clear understanding of its legal effect, and fused to nonsuit the plaintiff or to direct a
was an improvident disposition of his propverdict for the defendant. There was no
erty. charge to the jury. The case was one in
be declared a trustee of the said money for which the jury were justified in awarding
the benefit of the plaintiff; the same to be punitive damages. That they did so is evi
paid to the plaintiff, or to such person as dent from the amount of the verdict. The
may be legally authorized to receive it for damages being punitive, this court cannot say
him. that they are excessive.
“Decree: This cause came on to be heard The rule to show cause will be discharged.
at an adjourned court held January 14, 1902, and was duly argued by counsel, and deter
mined by the court that the said plaintiff (205 Pa. 139)
was entitled to the relief asked for in his POLT v. POLT.
bill, but that the said plaintiff was not of (Supreme Court of Pennsylvania. March 9, sufficient ability to properly care for the 1903.)
money due him; and the exceptions of the CONVEYANCE OF PROPERTY-REVOCATION defendant to the decision of court having
MENTAL INCAPACITY. 1. The evidence showed that, at the time a
been considered and dismissed, and the or. father 80 years old transferred all his property
phans' court of said county, upon petition by check to his son, he lacked mental capacity for said purpose, having appointed C. C.
Jadwin guardian of said plaintiff, and upon was a stockholder had been deprived of profits due consideration thereof, it is now, July
for the benefit of the other company, and that 14, 1902, ordered, adjudged, and decreed that
it was proposed to transfer the business of her
company to the second company. The court apthe said Joseph Polt, defendant, be, and pointed a receiver, and enjoined the officers hereby is, declared a trustee of $1,635, de from removing the machinery of plaintiff's posited in the Wayne County Savings Bank
company, or changing its mode of operation,
until final hearing of the bill. Held, that the on September 4, 1900, to the credit of Joseph
appointment of the receiver should be reversed, Polt, together with the accrued interest there but the decree affirmed in other respects, but on, for the benefit of said John Polt, and the so as not to prevent the officers of plaintiff's said Wayne County Savings Bank is hereby
company from operating it, or removing such
employés thereof as they deemed fit. ordered and directed to pay the said sum of $1,635, with the accrued interest thereon,
Appeal from Court of Common Pleas, Lawto C. C. Jadwin, guardian of said John Polt,
rence County; Wallace, Judge. and that the costs of this proceeding, with
Bill by Annie M. Devine against the Frankreasonable counsel fees for plaintiff, be paid
ford Steel & Forging Company and others. by said guardian from the said fund so to Decree for plaintiff, and defendants appeal. be received by him as aforesaid."
Modified. Argued before DEAN, FELL, BROWN, The bill averred in substance that plaintiff MESTREZAT, and POTTER, JJ.
was the owner of 205 shares of stock of the H. Wilson and P. H. Hoff, for appellant.
Frankford Steel & Forging Company, and F. P. Kimble and E. C. Mumford, for ap
that the defendants were the owners of a pellee.
majority in interest of the capital stock of
the Frankford Steel & Forging Company and PER CURIAM. The plaintiff is an old
the Tindel-Morris Company; that Tindel and man, of 80 years. He had on deposit in the Morris, through their control of the two corWayne County Savings Bank $1,635. On porations, fraudulently conspired to bring September 4, 1900, he transferred to his | about an agreement between the two comson, Joseph Polt, this defendant, the full
panies, by which the Tindel-Morris Company amount of this deposit. It constituted his
was to take over the business of the Frankentire estate. He had not a dollar left. Be- ford Steel & Forging Company in considerasides the son, he had a wife and daughter.
tion of the guaranty by the Tindel-Morris The court below found, on ample evidence,
Company of a dividend of 10 per cent. per that the old man at the date of the transfer
annum upon the capital stock of the Franklacked mental capacity to transact business,
ford Steel & Forging Company; that plainand did not comprehend the nature and con
tiff was induced to vote in favor of this agreesequences of his act. Besides the evidence
ment at a stockholders' meeting by reason of witnesses, the learned judge saw the fa
of misrepresentations made to her by Tindel ther in court, and observed his appearance
and Morris. The complaint charged that: and conduct. In the interval between hear
"(7) Your oratrix is informed and believes, ing and final decree, in proper proceedings,
and so charges, that the consideration for a guardian was appointed for the father, to
said transfer by the Frankford Steel & take charge of his estate, and then the money
Forging Company of its business to the Tinwas ordered paid to this guardian. It is
del-Morris Company was appropriated by said probable that the orderly procedure would
Tindel and Morris; that said transfer was have been to have had the guardian appoint
made illegally, without proper warrant or ed first, and then have instituted this pro
authority, upon terms and conditions that ceeding in equity, but that is now unimpor
were unfair, inequitable, and unjust to the tant.
Frankford Steel & Forging Company and its The decree is affirmed on the findings of
stockholders, and that said arrangement, confact by the court below.
tract, or agreement, in whatever form made, would never have been made except for the
fact of the conspiracy, confederacy, and (205 Pa. 114)
fraudulent intent of said Tindel and MorDEVINE V. FRANKFORD STEEL &
ris as aforesaid, and could never have been FORGING CO. et al.
effected except through the control of both
of said companies by said Tindel and said (Supreme Court of Pennsylvania. Feb. 11,
Morris, who by specious promises lulled the 1903.)
suspicions of your oratrix, and induced her CORPORATIONS--ACTION BY MINORITY STOCK.
by protestations of friendship and interest HOLDER-SETTING ASIDE CONTRACT-RECEIVER.
in her and her children to consent to such 1. A minority stockholder sued to set aside transfer, she at the time having no sufficient an alleged fraudulent contract between the cor
knowledge or information in the premises poration and another corporation, the majority stockholders in both companies being the same,
to enable her to form any intelligent opinion and making parties defendant the two corpora upon the subject." The defendants, in their tions and the majority stockholders. The bill affidavits, denied that there had been any stated that, because of certain representations misrepresentation. The court granted a premade to the complainant, she was induced at a stockholders' meeting to vote in favor of the liminary injunction enjoining the defendants contract, and that the company in which she Adam Tindel, L. I. Morris, and the Tindel
Morris Company from in any manner inter
Additional Opinion, fering with the present operation of the
(Feb. 20, 1903.) Frankford Steel & Forging Company, and the said Tindel and Morris and other officers
It appearing that question has arisen as to of the Frankford Steel & Forging Company
the extent of the decree of February 11, 1903, from in any manner interfering with the
it is now further adjudged and decreed that present management and operation of said the officers of the Frankford Steel & ForgFrankford Steel & Forging Company, and
ing Company are not enjoined from discharfrom dismissing, discharging, or removing
ging or removing the superintendent and such any of the managers, employés, or opera
of the managers, employés, and operatives tives of said Frankford Steel & Forging
of the said company, including Robert F. Company, except by and with the consent of
Devine, as they may deem expedient, and its present superintendent and manager, Rob
the said officers shall have full authority and ert F. Devine; and that the said Tindel and
control over all matters concerning the conMorris and the officers of said Frankford duct of the works pursuant to the method of Steel & Forging Company be further inhibited
operation which was in existence at the time and enjoined from discharging, dismissing, or
the special injunction issued. removing until the further order of court said Robert F. Devine, as manager and su
(205 Pa. 119) perintendent of said Frankford Steel & Forging Company; and the said Frankford Steel
In re LESIEUR'S ESTATE, & Forging Company and its officers and man
Appeal of JOLY. agers are inhibited and enjoined from in any
(Supreme Court of Pennsylvania. Feb. 23, manner dismantling the plant, removing its
1903.) machinery, transferring the same, or other
WILL-CONSTRUCTION="LEGAL REPRESENwise changing its present method of opera
TATIVES." tion. Subsequently the court continued the 1. Testator devised certain real estate in trust injunction, and appointed receivers to take
for his niece during life, with power of ap
pointment by will of the principal, “or, in decharge of the property, estate, and effects of
fault of a will, to her legal representatives.” the Frankford Steel & Forging Company, The niece died, leaving a husband and two and to manage the same, make all contracts
children surviving. Held, that he could not necessary to keep it in operation, conduct and
take a share of the estate as a legal representa
tive of his wife, manage its business, employ the necessary clerks, assistants, laborers, and workmen to
Appeal from Orphans' Court, Philadelphia carry on and conduct the business as here
County; Ashman, Judge. tofore conducted, etc., and to demand of
In the matter of the estate of Louis LeAdam Tindel, L. I. Morris, and Tindel-Mor
sieur, deceased. From a decree dismissing ris Company that they turn over to the said
exceptions to the adjudication, Charles Joly receivers all the orders received by them for
appeals. Affirmed. the manufacture of products by the Frank An attachment sur judgment was presentford Steel & Forging Company, and all other ed as a claim against a debt alleged to be orders for the manufacture of products here due by testator to the executor, John C. after coming into their possession for the Springman, the accountant. The court found use, benefit, and advantage of the said the as follows: “Mr. Brightly offered in eviFrankford Steel & Forging Company. dence a copy of an attachment sur judgment
Argued before MITCHELL, DEAN, wherein Charles Joly is plaintiff, John C. BROWN, MESTREZAT, and POTTER, JJ. Springman defendant, and John C. SpringJohn G. Johnson and E. Hunn Hanson, for
man, executor, is garnishee, issued March 15,
1899, from court of common pleas No. 3, to appellants. A. Leo Weil, Winternitz & McConaghy, and Charles M. Thorp, for appellee.
December term, 1894, No. 620; real debt, $2,770.87. Interest from March 1, 1899, and
costs, which was duly served upon said dePER CURIAM. And now, to wit, Febru- fendant, and as garnishee. By said writ, it ary 11, 1903, this case having been argued appears, were attached, inter alia, 'debts due and considered, it is adjudged and decreed to John C. Springman, which came into the that so much of the injunction as prohibits hands of Louis Lesieur, executor of the last and enjoins the Tindel-Morris Company and will and testament of Alfred Nicholas Verthe Frankford Steel & Forging Company and rier, deceased, and which became due the the officers thereof from in any manner dis said John C. Springman by the said Louis mantling the plant, removing its machinery, | Lesieur, executor as aforesaid, in his lifeor otherwise materially changing its present time, and which has since come into the method of operation until final hearing is af hands of the said John C. Springman as firmed. The rest of the injunction is reversed executor of the said Louis Lesieur, deceased, and dissolved, the appointment of receivers or which became due and owing the said is revoked, and they are ordered forthwith to John C. Springman by the said Louis Lesieur turn over the property to the officers of in his lifetime.' Mr. Brightly also offered in Frankford Steel & Forging Company, and evidence a copy of a will executed by A. N. file an account of their transactions.
Verrier on June 14, 1866, by which, inter