Perdicaris v. Charleston Gaslight Co.

19 F. Cas. 217, 10 Int. Rev. Rec. 110

• Court: U.S. Circuit Court for the District of South Carolina
• Decided: June 15, 1869
• Status: Published

Opinion

CHASE, Circuit .Tustice.

The bill in this case was filed by the plaintiff in his own behalf and in behalf of any others who might come in and contribute to the expenses of the suit. It is stated that the shares in the Charleston Gaslight Company’s stock, belonging to the plaintiff and others, were sequestrated under an act of the Confederate government and sold during the Civil War. It is also stated that in lieu of those shares other shares of a corresponding amount were delivered to the purchasers, and the prayer of the bill is that the certificates thus issued may be declared to be invalid; that they may be ordered to be delivered up to be cancelled; that the defendants may be restrained from bringing suit for their transfer, and that the company may be restrained from allowing such transfer and from the payment of dividends. To this bill, there is a general demurrer filed by part of the defendants, and a motion to dissolve the injunction already granted. The only question in the case is, whether the parties are entitled to any relief in this court upon the ease made by the bill. This question is twofold: first, whether the plaintiffs have a case of equity; second, whether this court has jurisdiction of the controversy between the plaintiff and defendants. It is not claimed that the transfer of shares sequestered and sold under the authority of the Confederate government conveyed exclusive title to the defendants. It has been repeatedly decided, both by the circuit courts and by the supreme court of the United States, that all acts of the Confederate government, or the government of a state hostile to the United Stares and prejudicial to the rights of citizens of states adhering to the Union, are void and convey no title.

Perdicaris is a citizen of an adjoining state. It is proper to add that the Gaslight Company has acted upon the principle just stated. It is true that it erased from the books the names of the original stockholders, whose stock was sold under the sequestration act and issued new certificates to the purchasers, But this was during the war. Since the war ended it has reinstated the names of the original stockholders, and recognized fully their right to dividends. The certificates issued to the purchasers from the Confederate receiver are, however, still outstanding. Perdicaris, as owner of original stock, claims the interposition of the court against the defendants, who in virtue of their purchases from the re-ceivoi’, assert a claim to be recognized as stockholder’s upon an equality with himself. It is very clear that Mr. Perdicaris has a good case in equity. If the whole stock had belonged to stockholders residing in other states and had been sold under the sequestration act. and it- can be maintained, after the war, that the purchasers are entitled to recognition equally with the original stockholders, it is very clear the value of the stock to the latter would be reduced just one-half. This shows very clearly, the equity of Mr. Perdicaris. There is no way by which he can be relieved except by a court of equity. But it is insisted that the company itself should bring suit, and that Perdicaris, being only a stockholder, can not be heard in this court. We do not agree to this view. It is not denied that if the company had refused to institute proceedings, the stockholders might do so. There is no principle of equity administration which denies to a stockholder protection in a court of equity. It is true that the corporation represents the corporate interests, and in this case it would, perhaps, be most appropriate that the corporation should bring a suit, for its own protection and for the protection of the rights of the original stockholders, but it has at least neglected and omitted to do so. Under such circumstances any stockholder may proceed. IVc think the bill filed in this case by the plaintiff for Ms own benefit and for the benefit of his co-stockholders is properly conceived, and that upon the case made by it the plaintiff is entitled to the relief asked. The demurrer must be overruled, and the motion to dissolve the .injunction must be denied.

[Subsequently a final decree was entered in favor of the complainant. Case No. 10,073.]