Statement of case.

groceries and East Indian and South American products; to protect such trade from unjust and unlawful exactions; to reform abuses in such trade and diffuse accurate and reliable information among its members; to produce uniformity and certainty in the customs and usages of the trade in said merchandise; to settle differences between the members of said corporation arising out of the trade in said merchandise, and to promote a more enlarged and friendly intercourse between merchants engaged in said trade and generally to increase the facilities for conducting the trade in groceries and East Indian and South American products." The amount of the capital stock was $3,750, divided into fifteen shares of $250 each, one share being held, er officio, by each of the fifteen trustees, and upon the expiration of his term of office, passing under the by-laws to his successor. The members were elected by the trustees and each one was required to pay an initiation fee of $250, until the number equaled one hundred, after that $500, until there were two hundred, and after that $1,000. The certificates of membership are transferable, provided the transferee is approved by the committee on membership and the governing committee. There are now 220 certificates outstanding, held by 216 members. The Exchange began work in November, 1883, occupying commodious rooms, furnished with black-boards, call stands and all the usual appliances for the convenient transaction of the business of an exchange. The annual rental was $7,000 and the salary roll nearly as much more. The attendance at first was large and much business was done, chiefly in teas and sugars for future delivery. Speculation in tea was so active that prices gradually rose from nineteen to thirty-four cents a pound, but the market became demoralized in consequence, failures resulted, business ran down, the attendance fell away and all efforts at resuscitation were in vain. From November, 1883, to December, 1884, inclusive, the transactions in tea amounted to more than forty-five million pounds; in sugar to nearly sixty thousand tons, besides about forty thousand barrels, and in hemp, to nine hundred bales. The decline

Statement of case.

began with the collapse caused by speculation in March, 1884, and gradually continued until May 1, 1885, and since then there have been no transactions on the Exchange. In May, 1884, steps were taken to reduce expenses, and in March, 1885, cheaper, though large and convenient, rooms were occupied. In April, 1886, the Exchange removed to small and inconvenient rooms that rented for $450 a year, and in February, 1887, a part of these was surrendered, and since then the rent has been $300 per annum, and the salary roll $15 per week. As early as June, 1885, a move was made to wind up its affairs. its affairs. At the annual election in 1885 one hundred and eighteen votes were cast, and in 1886 only thirty-four. In April, 1887, the governing committee, composed of the officers and trustees, unanimously resolved to take the necessary legal steps for a dissolution, and appointed a committee for that purpose. Nine out of the fifteen trustees verified the petition by which this proceeding was commenced, and three trustees served an answer. Thirteen members of the present governing committee and 131 holders of certificates of membership either petitioned for a dissolution or testified on the trial that in their opinion it was for the best interest of the members to wind up the Exchange. The opposition is headed by two members and one ex-member of the governing committee, and consists entirely of those interested in the tea trade, but does not include all who are thus engaged. Ten members testified that they were opposed to dissolution, because it furnished the following benefits to the tea merchants: Combined action in state and legislative matters; reliable standards of values; uniform telegraphic and other trade information ; accurate monthly statements of teas received and delivered, showing the consumptive demand; machinery to settle disputes as to packing, cooperage and the condition of teas; the establishment of regular warehouse charges, and "the ability to issue certificates of tea upon which money could be borrowed, as collateral." The referee found that such benefits accrued to the tea people from the organization of the Exchange, but that none of those benefits now exist, except

Statement of case.

the collection and publication of statistics of the amount of tea received and in warehouses. He also found that the Exchange has outlived its usefulness; that no business has been done there for a long time past, and that business cannot be successfully conducted there; that the great majority of all the members desire its dissolution, and that a trust fund, accumulated from the sale of certificates of membership, and amounting to $69,648.68, is lying idle, and the members desire to receive their respective shares thereof. There are no debts against the corporation, except a small amount for current expenses. The governing committee is elected by the members of the Exchange, and as a large majority desire a dissolution they elect a committee in favor of that course. In the spring of 1886 the trustees prohibited calls of merchandise and refused to furnish standards of tea unless they were paid for by sub, scription, although without them business in tea cannot be successfully done upon the Exchange. The main reason why sugar was not dealt in is because the sugar business was largely in the hands of the sugar refiners, who refuse to deal on the Exchange or to purchase sugar bought or sold there. The referee found expressly that it was for the interest of the objecting members, or of those engaged in the tea trade, that the corporation should not be dissolved, and by implication that it was for the interest of all the others, many more than half, that it should be dissolved.

The Special Term denied the application and dismissed the proceeding upon the ground that the Code does not require a dissolution when it would be beneficial to a majority of the stockholders, but injurious to a minority. (2 N. Y. Supp. 257.) Upon appeal to the General Term this order was reversed, the report of the referee confirmed and a decree made, which after reciting that "it appearing to the court for the reasons stated in the said report of the referee, that it will be beneficial to the interests of the stockholders and members and not injurious to the public interests, if a dissolution is ordered," dissolved the corporation, appointed a receiver of all its property and directed a distribution of the net proceeds among

Statement of case.

the members in proportion to the amounts paid by them respectively for their certificates of membership. (8 N. Y.Supp. 319.)

Frank E. Blackwell for appellants. This exchange is not a corporation contemplated by the Code of Civil Procedure, that is, it clearly was not in the minds of the law makers when the provisions in regard to dissolution were enacted. (Code Civ. Pro. § 2429.) Had the Code intended to provide that the interest of a majority of the stockholders should control, it would have said so, but it clearly contemplated a case where it was for the interest of all the stockholders that the corporation should be wound up. (In re E. M. B. S. & F. Co., 34 Hun, 371; In re P. M. Co., 29 id. 430; Code Civ. Pro. $2429.) The right of a majority of the stockholders or members to surrender the charter of a corporation, or even to do an act having the effect of a surrender, has always been denied in this state. (Denike v. N. Y. & R. L. Co., 80 N. Y. 606; In re S. Assn., 15 Civ. Pro. Rep. 215; Abbott v. A. H. R. Co., 11 Abb. Pr. 204; 33 Barb. 578; Ward v. Soc. of Attys., 1 Colly. 370; In re N. Ins. Co., 1 Paige, 258; Kean v. Johnston, 9 N. J. Eq. 401; Curren v. Santini, 16 La. Ann. 27; P. S. Lodge v. Suntini, Id. 53; M. & O. R. R. Co. v. State, 29 Ala. 586, 587; N. O., J. & G. N. R. R. Co. v. Harris, 27 Miss. 540; In re P. M. Co., 29 Hun, 430.) By the terms of the articles of incorporation it was provided that "the term of existence of said corporation is to be fifty years." To alter the period of fifty years would be to impair the obligations of this contract. (Black v. D. C. Co., 22 N. J. Eq. 403, 404, 405, 415, 416; Livingston v. Lynch, 4 Johns. Ch. 573.)

James Proctor Clarke for respondents. This corporation comes within the provisions of title 11, chapter 17, voluntary dissolution, of the Code. (Code Civ. Pro. $$ 2419, 2431; In re A. D. F. Assn., 22 Abb. [N. C.] 234.) The mere fact that there is a minority opposed to dissolution is not a bar to the proceeding. (Code Civ. Pro. § 2419, 2420, 2429.) The fact that fifty years is stated in the certificate of incorporation as

Opinion of the Court, per VANN, J.

the life of the corporation is of no effect. (Morawetz on Corp. S418; 2 Pars. on Cont. § 569; 3 id. 532; People v. G. M. L. Ins. Co., 91 N. Y. 174; People v. O'Brien, 111 id. 1; Code Civ. Pro. §§ 2419, 2429.)

VANN, J. The question presented by this appeal is whether the court has power to dissolve a corporation organized as an exchange, when it is solvent but doing no business, owing to the diverse interests of its members, upon the petition and consent of a large majority of its trustees and members, in opposition to the wishes of a small minority of both? Whether courts of equity have inherent power to dissolve corporations, as has been held in some jurisdictions but denied in others, it is unnecessary for us to consider, as the method of effecting corporate dissolution, when prescribed by statute as in this state, is exclusive, and must be substantially followed. (Verplanck v. Mercantile Ins. Co., 1 Edw. Ch. 84; Kohl v. Lilienthal, 81 Cal. 378; Spelling on Private Corporations, $ 1008.)

The earliest legislation upon the subject, to which our attention has been called, is an act passed in 1817, which authorized the dissolution of incorporated insurance companies, provided the directors, or a majority thereof, presented a petition stating, among other things, that they deemed it necessary or beneficial to the interests of the stockholders; and provided also, that no sufficient cause against dissolution should be shown to the chancellor, "he having due regard to the interests of the stockholders and all persons interested." (L. 1817, ch. 146, § 1 to 4.)

The Revised Statutes authorized the Court of Chancery to dissolve any corporation, with certain exceptions not now material, upon the petition of the directors, trustees or other officers having the management of its concerns, or a majority of them, provided it was either insolvent, or if for any reason a dissolution thereof would be beneficial to the stockholders and not injurious to the public interest. (3 R. S. [6th ed.] p. 752, $$ 73-80.)