Langer v. Fargo Mercantile Co.

174 N.W. 90, 43 N.D. 237, 1919 N.D. LEXIS 19

• Court: North Dakota Supreme Court
• Decided: July 16, 1919
• Status: Published

Opinions

Robinson, J.

In this case there is no question concerning either the facts or the law. It is an appeal from an order of the district court denying a motion to remove the defendants as trustees of the Fargo Mercantile Company and to appoint a receiver for the company. Its corporate stock was 2,500 shares or $250,000. F. J. Langer owns 25 shares; William Langer, 100 shares. The affairs of the company had been so well managed for many years that its stock paid a dividend of 25 per cent. Its life term of twenty years expired on April 1, 1915,, and without noticing the lapse of time the company continued and did business as a de facto corporation until August 13, 1918. Then all the stockholders, excepting the Langers, formed a new corporation by the-name of “Fargo Mercantile Co.” The business of the company was a valuable asset, and the new company took over and conducted the same as the heir or legal successor of the old company. In the reorganization the new company left out the plaintiffs and tendered them only the par value of their stock in the old company, though it was apparently worth much more than its par value. Then the trustees proceeded to sell to the new corporation of which they were officers all the property of the old corporation, and to conduct the business in just the same manner as if the new corporation were the legal successor of the old corporation. Now, of course, it goes without saying that the new corporation cannot in that way freeze out the Langers. They are entitled to receive either the full value of their stock or to share in the new corporation according to their stock the same as all the other members. The old corporation has always been perfectly solvent, and it has paid large dividends, commonly 25 per cent a year, and in truth the new corporation is merely the old corporation under the same name only that the letters “Co.” are used for company. However, as the new company is perfectly solvent and as it has given a good bond in the sum of $35,000 to pay any judgment that the plaintiff may recover, there is no reason for appointing a receiver. Such an appointment would have done the plaintiffs no good and it would have done the new company a great and manifest wrong. Hence the court denied the motion, and of course that was perfectly right, and of course there was not the least reason or excuse for this appeal, nor was there any reason for counsel referring to the trustees and managers of the old corporation as crooks, thieves, and pirates. Crooks do not commonly manage a corporation so as to make its stock pay 25 per cent dividend.

Order affirmed and case remanded forthwith.