Maynard v. Green

30 F. 643, 1887 U.S. App. LEXIS 2502
CourtU.S. Circuit Court for the District of Southern New York
DecidedApril 13, 1887
StatusPublished
Cited by2 cases

This text of 30 F. 643 (Maynard v. Green) is published on Counsel Stack Legal Research, covering U.S. Circuit Court for the District of Southern New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Maynard v. Green, 30 F. 643, 1887 U.S. App. LEXIS 2502 (circtsdny 1887).

Opinion

Shipman, J.

This is a motion to amend the bill, and to file a supplemental bill. The facts in the ease aro stated in the opinion of the court in Maynard v. Tilden, 28 Fed. Rep. 688.. The original bill was based upon the theory that the relations between Mr. Wetmore and Mr. Tilden were those of partners, but that, for the purpose of distributing evidence of the ownership of the property among the parties interested therein, certificates of stock were issued; that the loans and advances of Mr. Tilden were advances made on account of Mr. Wetmore’s share in the undistributed profits of the business; and that the pledges were void. The bill prayed that the pledges should be declared void, that the defendant should account in regard to the copartnership dealings, and should pay the plaintiff whatever might be found due upon a settlement of the account. The court found that the relations between Messrs. Wet-more and Tilden were those of the only actual stockholders of record in a corporation, and that valid and unredeemed pledges of its stock had been made by Mr. Wetmore to Mr. Tilden individually, and as trustee for the corporation.

The plaintiff contended that if the iron mine was a corporation, yet that its funds could be divided in this suit between the plaintiff and Mr. Tilden, inasmuch as the latter had reduced nearly all the assets of the corporation into money; held the money in his own name; the two were the only stockholders of record; there was merely a nominal board of directors; the corporation had ceased to do business, and had a bare legal existence. The plaintiff was, permitted to amend his hill so as to ask that in the event that the court should find that the corporation was [644]*644duly organized, that the property was transferred to it, and that the pledges, or. any of-them, were .valid, there should be'an ascertainment of the amount due upon them, and a decree for the redemption of the pledged stock; but it was said that it wasmot possible, under the'bill, to direct the division of the money of the corporation in the possession of Mr. Tilden, on the .ground that he and the plaintiff were the only stockholders, and that the directors had only a nominal existence.

If a corporation has parted with all its property, and has been determined to be extinct, and there are funds belonging to the stockholders in the hands of the defendant', as- was the case in Cramer v. Bird, L. R. 6 Eq. 143, a stockholder can bring his suit against the defendant for relief, without asking the corporation to act; but when the corporation is an existing one, having property in its. own name, and is capable of suing, the plaintiff cannot sue a co-stockholder individually, for the portion of the funds of the corporation in his hands which would belong to the plaintiff upon a division of the moneys of the corporation among the stockholders, it being a right of action existing ’in the corporation itself, unless the bill avers a state of facts which prevents the corporation itself from commencing the suit, and which compels the plaintiff to take the initiative such as are specified or referred to in Hawes v. Oakland, 104 U. S. 450.

While the plaintiff claims that the facts in this case, which, are stated in the former opinion, fully show that the corporation is, through its inertness ? oppressively managing the funds in such a way as to violate the rights of the plaintiff; yet, if the appropriate allegations should be introduced by way of amendment, the theory of the original bill would be destroyed, and a new bill, upon a state of facts entirely at variance with those in the original bill, would be substituted, — a course which, under the form of an amendment, would make a new and different case, in violation of the principles announced in Shields v. Barrow, 17 How. 130; Hardin v. Boyd, 113 U. S. 756, 5 Sup. Ct. Rep. 771; and Richmond v. Irons, 7 Sup. Ct. Rep. 788.

In allowing the amendments which were suggested in the former opinion, the court went as far as it could go to save the bill, and to prevent the expensive litigation from being entirely fruitless. It was thought that the Iron -Mine, a Michigan corporation, created under the authority of the state of which the plaintiff is a citizen, could be considered, under'the peculiar circumstances of the case, (the real controversy being between the two stockholders, and the corporation being a mere shell, but whqse presence in the case was useful for ministerial purposes,) while a necessary — a formal — party in the amended bill to ascertain the amount due upon the pledges to Mr. Tilden individually and as trustee. Walden v. Skinner, 101 U. S. 589. Whether service can now be made upon the corporation, under the recent statute of March 3, 1887,1 do not decide.

■ The plaintiff now asks leave to file a supplemental bill, and set up the facts which took place after March 4, 1881, the date of the filing of the original bill. These facts are the mere nominal position of the directors towards the corporation, their neglect of their duties, their collu[645]*645sion with Mr. Tilden in his injurious acts, the cessation of the business of the corporation, the conversion of its property into .money, and its incapacity to resume business. The prayers are that the executors of Mr. Tilden account as trustees for all moneys of the Iron Mine for which he was chargeable at the time of his death, that the said moneys may be divided between the plaintiff and the said executors as stockholders, and that, out of the plaintiff’s share thereof, the indebtedness for which said 5,888 shares are held may be paid, and the balance remaining may be paid over to him.

The ground upon which this application is made is that the facts which pointedly show the complete control which Mr. Tilden took of the business and property of the New York Mine, and his improper conduct towards the corporation and his co-stockholder, and the negligent and destructive manner in which the directors permitted him to manage the property, occurred alter May, 1888, and that facts which took place after the suit was brought cannot bo inserted in the bill by amendment, but must be made the subject of a supplemental bill. Premising that the prayer'of the bill could not be granted to its full extent, because the plaintiff and Mr. Tilden’s executors are not the only parties in interest, for Peter White has a first lien upon 1,000 shares of stock, the certificates of which ho holds, the question is whether a supplemental hill will lie in favor of the plaintiff, against the executors of Mr. Tilden, to recover from them the moneys of the corporation, for which he was chargeable; the bill making proper averments of the fraudulent and negligent acts of the directors, and their neglect and refusal to do anything in behalf of the corporation.

A supplemental bill is generally filed to slate facts which occurred after the suit was brought, and which compel an alteration or a modification of the relief which -was originally sought. It may also be filed to supply a defect in the original bill, which was not discovered in time for amendment. To a certain extent, relief of a different kind or on a different principle from that which was sought in the original bill may be sought iu a supplemental bill, and a new and different case may be introduced. Story, Eq. PI. §§ 338, 851&.

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Bluebook (online)
30 F. 643, 1887 U.S. App. LEXIS 2502, Counsel Stack Legal Research, https://law.counselstack.com/opinion/maynard-v-green-circtsdny-1887.