Marston v. Durgin

54 N.H. 347

• Court: Supreme Court of New Hampshire
• Decided: June 15, 1874
• Status: Published

Opinion

Sargent, C. J.

It appears that in 1850 the plaintiffs and divers other persons, residing in or near the village of East Andover, formed themselves into a voluntary association by the name of the “ East Andover High School Association;” that they adopted a constitution and by-laws, and gave due notice of the formation and purpose of the association ; that the sum of five hundred dollars was subscribed, and that one hundred shares of stock, of the par value of five dollars each, were voted and created by the association, and taken by the members thereof.

That May 20,1850, one Joseph Osgood conveyed by warrantee deed to said association a tract of land “ for an academy building location, and to be held by them for that or any other purpose, except a private dwelling-house ;” that in the year aforesaid the said association erected upon said lot a building, to be used as a school-house and hall for the general accommodation of the village of East Andover; that, from the time of its erection down to the latter part of the year 1867, the said building was used for the purposes intended by the association ; that in that year the defendant, having obtained a quitclaim deed of the association land from the original grantor, Osgood, and having become the owner, of the larger part of the stock, took possession of said building, and has since retained the possession, and that the defendant also obtained, and has since retained and still holds, the records of the association ; that after 1852 but little use of the building had been made up to 1867, and that no legal meetings of said association have been held, nor any officers chosen, since 1856.

That after the defendant had the possession of the house he made repairs thereon, as he alleges in his answer, but that he never consulted the other members of the corporation concerning them, and never invited such members, or any of them, to assist him in making them, and that these repairs were of such a character as would be beneficial to all the members of the association as such; and also, that the defendant took his deed with full knowledge of ihe existence and terms of the deed to the association, and neither Osgood nor the defendant understood that anything passed by said deed, except the right of reversion in the land subject to the title conveyed to said association.

That the plaintiffs were original members of said association, and own a certain number of shares therein, the only question being as to how many shares they own.

That, at the time of the service of the injunction upon the defendant, he was intending to remove the building of the association upon his own land and convert the same into a dwelling-house, claiming that he had the legal right so to do, but which claim we do not find to be well founded.

The charge that he refused all access to the book of records in his possession, though supported to a certain extent by the evidence, yet we think was excusable under the circumstances; and, as he has since given every proper means of access to said records, we think the objects of the bill have been fully answered in that particular, and that the information sought has been furnished. There is no evidence before us that anybody, except these plaintiffs and this defendant, owns any of said original stock in said association, or claims any of the same.

In this case, upon these facts, it seems to be clearly a case of injustice to these plaintiffs, of pressing necessity, of imminent danger, and of great and irreparable damage, and not of that nature for which an action at law would furnish any adequate remedy. The defendant was intending to remove this building and convert it into a dwelling-house. This would be unjust to the plaintiffs if they have rights therein, and wish to have the building remain for the purposes for which it was originally designed. So far as appears, they had no way to prevent its removal but by obtaining the injunction, and the loss to them would be of that character which may properly be termed irreparable, and it is difficult to see how any action at law would furnish them any adequate remedy.

Tiie defendant, having obtained the reversionary right in the land, has a direct interest, personally, in conflict with his interests as a member of the association, and in conflict with the interests of these plaintiffs as members of the same association. He, also, having purchased in a large majority of all the shares of stock, might easily control the association; but he should not be allowed, either as an individual outside, or as a member of the association having a controlling interest, to deprive the other members of the same association of their rights of property, or the privileges secured to them as such members by the deed which conveyed the land for the location of the building of said association.

This is not a case of a doubtful or uncertain right. Here the plaintiffs’ rights are not only asserted, but proved beyond question. The fact that there may be some dispute as to the number of shares owned by the plaintiffs is not material. If their right to fourteen shares is established, as it is in this case, then they are entitled to have those rights protected just as much as though they owned twenty-nine shares. The right to certain shares being established, establishes the plaintiffs’ right and title ; the only question is, to how much ? The question is not one of right, but as to the extent or quantity of the interest.

And in such cases it can make no difference who is in possession of the premises for the time being. It is only where the right is in question, that possession gives any advantage to the person enjoying it. There is no need of a suit at law, unless there is a right or title in dispute. Here the right is established, and although the plaintiffs have not been damaged because the building has not been removed, yet that is the very injury which the plaintiffs seek to prevent by this injunction. The defendant being in fact the corporation, or owning a great majority of its stock, as lie claims and as the evidence tends to show, should at least have observed the forms of law, and procured a vote of the association before he attempted to destroy its property; for a removal of this building and the conversion of it into a dwelling-house would amount to a destruction of it, to all intents and purposes, so far as the association, or so far as the rights of these plaintiffs, are concerned. Whether, if he had caused a meeting of the association to be held, and procured a vote to authorize him to do just what he was intending to do in this case, it would then have been legal and proper to have done so, is a question which does not arise here.

We think, therefore, that the first two reasons given by the defendant’s counsel why an injunction should not be granted, do not apply; and the third, that the plaintiffs have been guilty of laches or bad faith, does not seem to be well founded. The plaintiffs were not bound to object to any repairs being made upon the company building, by any member of the association who chose to make them, so long as such repairs were proper and necessary for the use of the building, in the manner in which the association had used it and might properly use it; but as soon as it was ascertained that anything was contemplated which was adverse or hostile to the interests of the association or its members, then was the time for objection to be made, — and in this case it was made promptly. As soon as it was learned that the defendant intended to remove the building and convert it into a dwelling-house, this proceeding was at once commenced and a temporary injunction at once obtained. That seemed to be a case requiring immediate action; and it would probably have been equally useless and fatal to tlie plaintiffs’ rights to have delayed or waited to call a meeting of the association, for before that could have been done, the removal would have been made, and the whole thing done and accomplished.

The necessities of the case were such as to preclude the possibility of the plaintiffs having called a meeting and procured a vote of the association before acting; and then, the other facts in the case, which are now disclosed, that if such meeting had been called it could have been controlled by this defendant, he being the owner of a majority of all the shares in the association, would have rendered such meeting useless: but the first of these reasons seems amply sufficient to justify the plaintiffs in their action. The plaintiffs have slept upon no rights that seemed to be invaded or threatened. They were not called upon, as we have seen, to object to repairs being made on the building, which were not inconsistent with its use by the association; but as soon as danger was discovered, it seemed to be so imminent that the plaintiffs could do nothing more nor less than they did do in season to avert it. We think the evidence shows that any effort or attempt to procure any action of the association, as such, after the intention to remove the building was discovered, and before obtaining the injunction, would have been entirely useless.

But it is urged that this bill cannot be maintained, because the plaintiffs have not brought their bill, not only upon their own account but in behalf of others who might desire to come in and become parties. But, in the first place, it does not appear affirmatively that there are any other parties interested in this association except the parties to this bill, and, from the whole case, we infer that there are no shares of stock outstanding to which these parties have not either the legal or the equitable title.

But it is further urged that the bill cannot be maintained, because the plaintiffs have not made the corporation or the association a party defendant in this proceeding. There is no question about the ordinary rule in such cases, that the association or the corporation should be made a party. This defect, if it was one, was apparent upon the face of the bill, and perhaps upon demurrer,* there being nothing else shown, the bill might have been held insufficient; but the answer is full and responsive to the bill, discloses the information sought without objection to the form of the bill or for any want of parties, and the evidence and answer disclose the facts as we have before seen, that, under the circumstances of this case, nothing would have been gained by that course ; and, further, our statute authorizes the granting of “ writs of injunction whenever the same is necessary to prevent fraud or injustice.” . Gen. Stats., ch. 190, sec. 1.

It is difficult to see why this is not just the case where injustice to the rights of these plaintiffs, as members of this association, is threatened, and should be prevented; where the delay that would be necessary to obtain any vote of the society, situated as this is shown to be, would be fatal to the plaintiffs’ case, and, also, that to have made the association a party defendant would have been entirely useless. The plaintiffs had sufficient interest in the subject-matter to justify them, in commencing this proceeding, to find out the facts in the case in regard to the defendant’s ownership and claims in this property of the association, and sufficient interest to authorize them to ask to have the property in which they were thus interested protected from destruction or removal.

And this defendant certainly is in no condition to complain that other parties are not added to or contained in the bill, when he is assuming to act as the whole association, or as though there were no association, and takes entire control of this property, and uses it, or is about to use it, as his own, in such a way as to prejudice the rights of these plaintiffs as members of such association. They certainly ought to have the right to protest, and to prevent such use of the company property and such sacrifice of their rights, at least until the association can be legally organized by the election of proper officers, and its powers and wishes properly ascertained; and then, if either party, the present plaintiffs or the defendant, shall conclude to institute other or further proceedings to assert their rights, they can proceed in such a way, and make such persons and associations parties to their proceedings as are necessary. But so far as this bill is concerned the defendant has answered it fully, without objection, and given the desired information, and the plaintiffs have shown such a case as, under the provisions of our statute, entitles them, we think, to the injunction prayed for, or, rather, to an injunction such as we propose to grant.

The jurisdiction of equity, “ at the instance of a shareholder, is, to apply preventive remedies, by injunction, to restrain those who administer the affairs of a corporation from doing acts which amount to a violation of the charter, &c. It also extends to inquiring, concerning, and enjoining, as the case may require, individuals, in whatever character they may assume to act, from prosecuting any course of conduct which is in violation of a corporate franchise, or in denial of a right growing out of it, when for the injury which will result there is no adequate remedy at law. * * If a stockholder is aggrieved by the refusal of the board of directors to accept his views, his remedy is, to unite with other stockholders and change those directors. But if irreparable mischief to his interests may ensue in the meantime, equity will administer preventive justice until such time as the will of the body of the stockholders can be ascertained.” Samuel v. Holladay, 1 Wool. C. C. 400, 420.

The defendant is enjoined and commanded not to remove said academy building, nor to convert the same into a dwelling-house, without the consent, in writing, of all these plaintiffs, or until this court shall order or permit the same to be done in some proceeding to which the said association shall be made a party.

Injunction granted.