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Ramsey agt. the Erie Railway Co.
legally payable by said company," and that he is the owner of several fifth mortgage bonds of the company-also the owner of several sterling bonds of the company-also the owner of several other $1000 bonds of the company_also the owner of several shares of the preferred and several shares of the common capital stock of the company, “entitled to be standing in his name on the books of said company, and of the right to receive dividends thereon.” It is futher alleged that “there are numerous other floating creditors of said company.” And the plaintiff avers that he brings the action " on his own behalf and on behalt of all others of the said stockholders and bondholders (so far as said stockholders are entitled to be heard herein), and on behalf of all creditors of said company who shall join in and become parties to this action, and contribute to the expense thereof." But I am not informed that any other creditor or bondholder or stockholder has manifested any disposition to coine into the case on the part of the plaintiffs.
The complaint does not show when the plaintiff became the owner of his claim for money against the company or its amount, or its character, or how it accrued. Nor does it state when he became the owner of any bond of the company, or when or for what the same was issued, or when the same becomes due; or whether anything is due on any bond he has, or the amount of his bonds. It fails to allege that the plaintiff has any scrip or certificate for stock of the company by assignment or otherwise; and it does not state facts, from which any legal inference can be drawn that he is “entitled” to have any stock stand in his name on the books of the company, or which show a right in him to receive dividends on such stock. He has contented himself with stating conclusions of law respecting his title to his alleged claim and bonds and stock of the company.
Common sense, as well as law, would indicate that the plaintiff should have stated in his complaint the nature and amount of any claim past due which he has against the
Ramsey agt. the Erie Railway Co.
company, by note, bill, account or bond, or on coupons, so that the directors could pay the same and relieve themselves from suspension, or at least so that the directors who are not suspended or enjoined could pay it.
And I take it to be clear that such facts should have been averred in the complaint as would show the plaintiff's title to the claim, bonds and stock mentioned in it, which he says he owns. In respect to the stock, none is shown to be standing in his name on the books of the company. The court of appeals decided in the City of Buffalo agt. Halloway, (3 Selden, 493), that a statement in a complaint, " that by means of a contract” (which was set forth), “it became the duty of the defendant to perform certain acts, is not sufficient, unless the facts necessary to show the duty are stated.” Judge SELDEN said, in McKyring agt. Bull, (16 N. Y. R., 303), when speaking of the Code ; “It was evidently designed to require of parties, in all cases, a plain and distinct statement of the facts which they intend to
For aught the complaint shows, the plaintiff is a mere volunteer in bringing the action, and purchased his alleged claim and bonds and stock, or pretended right to the same, immediately before commencing it. And he has not alleged that he has demanded payment of any “past due” claim that he has against the Erie Railway Company, or that payment thereof has been refused.
No authority has been cited to establish that a complaint like this gives the plaintiff such a standing in court as entitles him to such an ex parte injunction or such ex parte orders as he has obtained.
It was held in Galway agt. The United States Steam Sugar Refining Co., (36 Barb., 257,) " that the Statutes provide for but three cases in which a receiver of the property of corporations (other than moneyed corporations) can be appointed: 1. Upon the application of a creditor by judge ment or decree, on the return of an execution unsatisfied. Ramsey agt. the Erie Railway Co.
2. When the corporation has been insolvent for a year, or has neglected or refused, for a year, the payment of its debts, or has suspended its business for a year. 3. Upon the application of the directors or trustees, when in their judgment the condition of the corporation makes a voluntary dissolution desirable.” In this case there are nine directors in office, who are not suspended, and are capable of acting, and were they simply trustees, the rule would partly apply, that “where there are two or more trustees, the court will not appoint a receiver upon the death, absence, disclaimer or misconduct, &c., of some or one of them, nor as long as there remains any trustee to act in the trust.” (Hill on Trustees, 3d Am. Ed. with notes, p. 318.)
I am constrained by authority to hold that the plaintiff has not shown by his complaint that he has any standing in court as a creditor or bondholder or stockholder of the Erie Railway Company, so that he could have a receiver or referee appointed ex parte in the action. (See Howe. agt. Deuel, 43 Barb. 504; Belmont agt. Erie Railway Co., 52 Id., 637; Mss. opinion of Judge NELSON: People agt. Erie Railway Co., 36 How. Pr. Reps., 129.) I appointed a referee in the last mentioned case, but it was after hearing both parties and with their consent. If they had not consented to the appointment of a referee therein, I should not have appointed one, for it would have been unprecedented and unauthorized. Since the decision of Belmont agt. The Erie Railway Co., (supra) the order in The
People agt. The Same has been modified, upon a stipulation, nunc pro tunc, so that it conforms, respecting the right of the company to convert bonds into stock, to the opinion in Belmont's case, and the opinion of Justice INGRAHAM therein cited.
Two questions were pretty well settled about a year ago by this court, when an effort was made by some stockholders of the Erie Railway Company to have ex-Judge Davies made receiver of the company : i. That a receiver
.Ramsey agt. the Erie Railway Co.
of the company could not be properly appointed in an action brought by a stockholder or a creditor who had no judgment (52 Barb. 637; 36 How. Pr. Reps., 129.) 2. That the directors of the company, acting in good faith, have power to issue convertible bonds in the name of the corporation for the amounts they may borrow to complete and finish, or to operate the road, with the right to authorize their conversion into stock, although it increases the amount of capital stock beyond that fixed by the charter. And that being so, the right of the directors to issue stock in conversion of such bonds, is clear, (Belmont agt. Erie Railway Co., supra.)
Chancellor WALWORTH held in The People agt. Norton (1 Paige's Reps., 17,) that “as a general rule, a receiver should not be appointed without notice to the parties interested.” He also held in Devoe agt. The Ithaca & Owego Railroad Co., (5 Paige, 521,) that a receiver ought not to be appointed ex parte, and without giving the corporation an opportunity to be heard. And the same rule is laid down in several other well considered cases (See Gibson agt. Martin, 8 Paige, 481.)
In regard to the plaintiff's claim that he is entitled" to have some stock of the company stand on its books in his name, I will say that if he had certificates for the same duly transferred to him, (which is not alleged,) he could have surrendered such certificates to the transfer agent of the company and requested that the stock be transferred to him on the books of the company, and upon a refusal of the agent to do it and issue certificates to him for such stock, he could have maintained an action against the company to recover damages for such refusal. (See Commercial Bank agt. Kortright, 22 Wend. 348.) But he could not compel such transfer of the stock by mandamus. This was held by Judge Bronson in ex parte The Fireman's Insurance Company. (6 Hill. 243.)
It seems to me that it would have been wise at least for
Ramsey agt. the Erie Railway Co..
the plaintiff to have seen that he was a stock holder on the books of the Erie Railway Company before bringing this action.
The defendants' counsel have argued that the ex parte order, suspending eight directors of the company, was entirely void ; and that the court has no authority to suspend them from the exercise of their offices, except by judgment after a default, or after a regular trial of the action upon the merits. One of the grounds for this position is that suspension of directors is not a provisional remedy authorized by the Code. It is not expressly authorized therein, and if the court has such power it exists by implication, or must be found in the revised statutes, or be based upon some principle outside of any statute of the state. By the revised statutes the court has power to suspend any director or officer of a corporation from exercising his office, whenever it shall appear that he has abused his trust; and to remove him from office, upon proof or conviction of gross misconduct. But it is further provided that this "jurisdiction shall be exercised as in ordinary cases, on bill or petition, as the case may require or the supreme court may direct, at the instance of the attorney general prosecuting in behalf of the people of this state, or at the instance of any creditor of such corporation, or at the instance of any director, trustee or other officer of such corporation having a general superintendence of its concerns." (3 R. S., 5th Ed., 762 and 763, $ 40, § 43 ; 2 Id., 1st Ed., 462 and 463, · $ 33, § 36.)
No authority is conferred by these statutes upon a stockholder of a corporation to maintain an action for the removal or suspension of a director. If the plaintiff can sustain such an action, his right must rest upon the alleged fact that he is a creditor of the Erie Railway Company. I am not aware of any decision as to whether a creditor at large, without a judgment, can maintain such an action under the above statutes. (Sce remarks of Nelson, Ch. J.,