Mack v. DeBardeleben Coal & Iron Co.

90 Ala. 396
CourtSupreme Court of Alabama
DecidedNovember 15, 1890
StatusPublished
Cited by19 cases

This text of 90 Ala. 396 (Mack v. DeBardeleben Coal & Iron Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mack v. DeBardeleben Coal & Iron Co., 90 Ala. 396 (Ala. 1890).

Opinion

STONE, C. J.

The Eureka Company is a mining and manufacturing corporation, having its situs and business residence at Oxmoor in Jefferson county. Its history may be briefly stated as follows: There was first an association and incorporation under the general statutory provisions, but it had a different name. By special enactment, approved November 5, 1862 — Sess. Acts, 118 — it was incorporated as the “Red Mountain Iron and Coal Company.” Its declared purposes were, “mining for coal and iron, and the mailing and general manufacture of iron on their lands in Shelby and Jefferson counties.” This act of incorporation was somewhat amended by [399]*399act approved March 3, 1871. — Sess. Acts, 257. By statute, its name was changed to the “Eureka Mining Company of Alabama.” — Sess. Acts 1866-6, 558. By act approved December 6, 1873 — Sess. Acts, 139 — some additional provisions were enacted in reference to said corporation.

What Ave have stated above we haA^e gleaned from private enactments, Avliich, with the exception of a clause in the act of 1873, to be considered further on, are not before us in such form as that AAre can consider them. They are introductory to the opinion Avliich follows, and will make it more easily understood. This is the sole purpose of their insertion here. No ruling Avill be based on their provisions, save the one clause in the act of 1873.

The DeBardeleben Goal and Iron Company is another corporation in Jefferson county, engaged in substantially the same lines of business and trade, and lias its business sihis nine miles from that of the Eureka Company. In the further progress of this opinion we will characterize them as the Eureka Company and the DeBardeleben Company.

The present bill was filed by Mack, a stockholder and director of the Eureka Company. It sets forth that the stock of the Eureka Company consists of 8,308 shares, of AAdiich complainant,Mack, owns 3,185 shares; that in October, 1889, the DeBardeleben Company purchased and became the OAvner of 4,673 shares of the Eureka Company’s stock, being a majority of the A\rliole number of shares; that-soon thereafter a meeting of the Eureka Company was held in Cincinnati, Ohio, at which three of its directors,-including its president, resigned, and H. F. DeBardeleben, D. Boberts and A. T. Smythe were elected in their stead, DeBardeleben being made president, and Boberts secretary. DeBardeleben was president of the De-Bardeleben Company, and Boberts and Smythe were directors in that corporation.

A clause in the bill contains, we suppose, a clerical error, which renders it difficult to be understood. It should probably be read as follows,: “That they [the controlling board of the DeBardeleben Company] in this Avay had a sufficient number of themselves to assume the office of directors of said Eureka Company to make a majority of the board, and in this way unlawfully and illegally assumed to act as directors, and at once took absolute charge and control of all the property of- the Eureka Company.” The import of this averment is, that in the election at Cincinnati, the DeBardeleben Company, through its majority voting power, acquired a majority of the governing body, by electing, through its majority of the stock in the Eureka Company, three of its oavu board, DeBardele[400]*400ben, Roberts and Smythe, and that these three constituted a majority of the board of- directors of the Eureka Company. Based, as we suppose, on the assumed-truth of this averment, the present bill was filed, and seeks to enjoin the DeBardeleben Company, an alleged rival corporation, from voting its majority stock in an election of directors for the Eureka Company, soon to come off.

The bill makes no averment that complainant, before instituting his suit, made any attempt, or preferred any request,, to have the wrongs he complains of redressed by a suit instituted by and in the name of the corporation, and it is not pretended he made such request. If it were true that DeBardeleben, Roberts and Smythe, president and directors of the DeBardeleben Company, constituted a majority of the directors of the Eureka Company, this would excuse Mack for not requesting proceedings for redress through the corporate authorities of the latter corporation. Elected as they were by the DeBardeleben Company, holding the majority of the stock as it did, the presumption that a request of suit would be denied is so strong as to relieve Mack of the necessity of making it. The law never requires a vain ceremony.—Tuskaloosa Man. Co. v. Cox, 68 Ala. 71; Mer. & Plan. Line v. Wagner, 71 Ala. 581; Nathan v. Tompkins, 82 Ala. 437; Rothwell v. Robinson, 21 Amer. & Eng. Corp. Gas. 408; M. & C. R. R. Co. v. Woods, 88 Ala. 647; Hawes v. Oakland, 104 U. S. 450.

In consequence of certain details contained in the answers, it became necessary to file an amended bill, which was done February 3, 1890. By that amendment it is shown that the board of directors of the Eureka Conrpany consists of seven members, only three of whom, DeBardeleben, Roberts and Smythe, were elected after the DeBardeleben Company became the owner of a majority of the Eureka’s stock. Four of the directors, Mack, M. H. Smith, L. E. Miller and J. W. Means, were directors in the Eureka Company before and at the time of the purchase, and are still directors. It is not charged that either of these four is a stockholder or director in the DeBardeleben Company. The charge in reference to M. H. Smith is as follows: “That the said 4,683 shares of stock now standing upon the books of the Eureka Company to M. H. Smith, who is one of the directors of the said Eureka Company, but who has no interest in said company or its stock, but who holds the same in the interest of said DeBardeleben Coal and Iron Company, and who acts in all matters connected with. said Eureka Company, in the interest of, and as requested by - the defendant, H. F. DeBardeleben.”

If said M. H. Smith had not been a director before the De-[401]*401Bardeleben Company’s purchase of the stock in the Eureka Company, but, like DeBardeleben, Roberts and Smythe, had been elected after the purchase, possibly the presumption would be, that he would exercise his power in the interest of the company to which he owed his election; and, possibly, in such case, no request for suit by the corporation would he necessary as a pre-requisite to a suit by a stockholder. We need not decide these questions, as this case does not raise them. According to the averments of the bill, Smith had no interest in either corporation, and he was not indebted to the DeBardeleben Company for his election. We can not presume that he will contribute to, or sanction, bad faith in the government of the corporation. It is only when interest antagonizes duty that eqiiity will stretch forth its restraining hand.—M. & C. R. R. Co. v. Woods, 88 Ala. 630; Cook on Stock & Stockholders, § 618; Moses v. Scott, 84 Ala. 608. We think the bill, as amended, is fatally defective, in not averring.a previous request or appeal to the majority of the directors to institute proceedings in the name of the corporation, to restrain the apprehended abuse of poAver by the De-Bardeleben Company, through its oAAmership of a majority of the stock of the Eureka Company. We announce this principle as the logical result of our ruling in the case of M. & C. R. Co. v. Woods, not because of alleged wrongs perpetrated.

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90 Ala. 396, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mack-v-debardeleben-coal-iron-co-ala-1890.