Wilson v. Proprietors of Central Bridge and Others

Bkayton, C. J. The motion made by the defendants is to * dissolve the injunction heretofore dereed by this court enjoining them, and each of them, from demolishing the Central Bridge, and from otherwise interfering and taking possession of the same, or the other estates or property of the bridge corporation, for the purpose of locating upon or using for any other bridge the site of said Central Bridge, until further order. The motion is made in pursuance of the leave given at the time this injunction was ordered, to move its dissolution whenever the defendant corporation should have had a legal meeting. That meeting has now been held, and the corporation has now voted to surrender its franchise to the state, and has executed, on its part, such surrender, and has voted to sell and convey to the city of Providence all their property, being the lands upon which the Central Bridge is built and abutted, and the lands used therewith, with the bridge and the materials of the • same remaining. And they now move the dissolution of the injunction against them, in order that the commissioners, appointed by the Greneral Assembly for that purpose, may locat¿ a free bridge, to be built by the city of Providence and the town of East Providence, and that the city and town may proceed to build, under *596 the authority given them, a free bridge across the Seekonk river. This committee were authorized to locate such free bridge, and the city and town to construct it, only in the contingency that the franchise of this bridge company should be by them surrendered, with all their right to build and maintain the Central Bridge. There is no objection now made,' as heretofore has been, that the meeting was not properly held, upon sufficient notice, and properly organized. It was their annual meeting appointed by the charter. But it is objected that the acts of the company, in disposing of their property and in surrendering the franchise and all right to maintain a bridge over Seekonk river, are nevertheless inoperative and void for various reasons. 1. That a majority of the stock was not properly represented. There were certain shares of stock in this company, thirty-three in number, which had been in his lifetime held by one Samuel B. Tobcy, and which on his death, passed to his executors. These shares were sold at private sale by the executors to Charles EL Parkhurst, and the purchase money paid by the city of Providence. This sale, it is objected, is void, because the executors were not directed by the court of probate to sell, and that without it the executors had no power thus to sell. * This objection is based upon the provision of the statute, that unless an executor or administrator sell at public auction, he shall account for the property sold at double its value as appraised in the inventory, unless he shall be directed to sell at private sale by the court of probate. This provision seems to relate to the mode of accounting only. It does not prohibit such sale, nor declare it void, neither expressly, nor does that effect seem to have been intended. The provision for the mode of accounting assumes the sale to be valid. 9 he purchaser is not affected. The effect is upon the executor or administrator only. The validity of the *597 sale is not affected by the fact that it is still undetermined in the court of probate if the executor shall be directed so to sell. The lis pendens is not the question of the validity of the sale, but of the mode of accounting. 2. It is objected that the stock was held in trust for the city of Providence, the legal title being in the stockholders voting, and the legal holders could not rightfully vote upon the shares by them held in trust. To this point the objectors have referred us to Angelí & Ames on Corporations, § 131, which does not seem to support the position. That section refers to Ex parte Holmes, 5 Cow. 426, in which the court say that the real owner of the stock should vote, especially when his name is truly expressed on the books; though it might be otherwise, they say if he chose to have the entry simply in the name of another, without expressing any trusty But that was stock held in trust for the corporation itself, and the court said that could not be voted upon at all, and could only be voted upon by the other stockholders in proportion to their interest in the corporation. In the case of State v. Hunter, 28 Vt. 594, the stock proposed to be voted upon was bank stock held in trust for a person not a citizen of the state, and who was for that reason prohibited by statute from holding stock in a bank in Yermont, and the court held that the statute could not be evaded by putting the stock in the name of another, who might be an inhabitant. Even where the trust appears on the books, it is said the trustee cannot vote, except at the direction of the real owner. At his direction he may; the implication is that he may. It is not even suggested here that the votes given were not in accordance with the wishes and desire of the real owners, or that they were not content that the stock should stand in the names of the persons who did vote without disclosing any trust. The inference, from all the evidence in the case is, that they were satisfied in both respects. 3. It is again objected, that whatever validity the sale of the property may have, the surrender of the charter of the corporation was void, the vote therefor not having been unanimous; and the objectors say that a surrender cannot legally be made by *598 any majority, however large, or against the dissent of any one member. The text books state no such rule. So far from it, Angelí & Ames, the book referred to, state no such rule and cite no case to any such point. The only case cited touching the question is the case of Smith v. Smith, 3 Dess. 557, which holds that it would require the assent of the great body of the society, and that the directors could not of themselves surrender and dissolve the corporation without the action of the body. Many cases have been cited to the proposition announcing a rule that the business and objects of the incorporation cannot be perverted by a majority. They cannot apply its capital to purposes foreign to those for which the company was incorporated. The nature of the corporation cannot be changed. Such is the case of Ward v. Society of Attorneys, 1 Coll. 370, strongly urged upon our consideration, where the majority,of the stockholders were enjoined from applying to parliament to surrender their charter, in order to be incorporated with their capital for another and different purpose. They were enjoined from proceeding, because it was one to change the nature of the company, to pervert its purpose. So it has been held that an amendment of a charter of incorporation, substantially changing the nature of the corporate body, cannot be accepted by a majority. But it has been held that an amendment to a railroad charter, creating preferred stock entitled to dividends to the exclusion of the original shares, may be accepted by a majority, and that, because, under the circumstances, although it places burdens upon the original shareholder not then contemplated, it was nevertheless the only way to accomplish the original design of the incorporation, namely, to construct and equip the road, and so it was to the interest of the company to accept the terms and the burdens. It was a kind of necessity. No case has been cited, and, in view of the diligence of counsel in this case, we may say there is no case which holds, that where the pui’pose of the incorporation could not be accomplished, the business contemplated could not be carried on ; where the capital had been exhausted in endeavors to go on, leaving no means to go further ; a company thus laboring under burdens which they could no longer *599 bear, could not release themselves by a surrender of their franchise to the state which granted and which was willing to receive it, and that by a majority. This is not only for their benefit, but it is a necessity, and it would be hard indeed if one stockholder could by his dissent prevent such relief against the prayer of all other members of the company. It requires some case to hold that one member has this power. That case has not been found. So we think there is no such rule, and are of opinion that the franchise of this company has been on their part lawfully surrendered. 4. It is objected that the surrender has not been accepted by the state, and, until so accepted, is not valid. Undoubtedly the settled rule is that a corporation cannot, even by a unanimous vote, effect its own dissolution without the assent of the legislature of the state creating it, by surrender or otherwise. But the act authorizing the building of a free bridge, and a location of it by the commissioners, upon the surrender by the bridge corporation, did not contemplate any further action of the General Assembly as necessary to the action of the commissioners, or of the city of Providence, or of the town of East Providence. They were to act whenever the company should, on their part, make the surrender, not when it should be formally and thereafter accepted. It was expected that that would be made in the recess of the legislature, as would also be the location, and, it might be, the construction also. The assent of the General Assembly was given in advance. There is nothing to prevent the commissioners from proceeding to locate, or the city from proceeding to build, on the site selected by the commissioners. The corporation, by the surrender of its franchise, has, for the purpose of maintaining a bridge across this river, ceased to exist, and its further existence is only continued by the statute to enable it to dispose of its property, pay its debts, and wind up its affairs. It is now merely the owner of certain real estate upon which its bridge abutted, and some other' estate purchased for the convenience of the bridge, and of certain materials that remain of the bridge now gone to decay. We can no longer enjoin the commissioners from proceeding to act, for the contin *600 gency has happened upon which they were authorized by the General Assembly to proceed and fix the site of a free bridge. The site being thus fixed by them, we can no longer enjoin the city of Providence, nor the town of East Providence, from proceeding to act under the license granted them by the legislature, if they desire so to do, and to take the necessary steps towards the construction of such bridge. They may purchase the land necessary for the abutments of the bridge proposed, of those owning the banks at the place where the commissioners may have made the location, whether the land of this corporation or of individuals, if they can agree with such owner, or they may purchase the easement over it. Failing in the purchase of the soil, or of the right of way, they may move the exercise of the power, as well of the board of aldermen of the city as of the town council of the town of East Providence, to lay out highways on either side of the river down to the river bank and to tide-water, upon which to place their abutments, and to have the lands necessary for the purpose condemned for the public use, under the power to lay out highways, the damage to be assessed and paid by the city and town respectively. 5. There is another objection made, which alone can prevent the entire dissolution of the injunction heretofore ordered against every of the parties defendant and for every purpose. The objection is, that the city of Providence is proceeding to enter upon the estate of this corporation, under the deed executed to it in pursuance of the vote of the corporation passed at the meeting at which the vote of surrender was passed, which vote and the deed thereupon executed, the plaintiff objects, is void as to him. 'At that meeting a majority of the votes given were given upon stock held by stockholders holding in trust for the city of Providence, to which the conveyance was made. The consideration for the purchase was the payment of the debts of the corporation, the amount not exceeding $1,000. At the meeting, at which this vote was passed, the company were offered for the property the sum of $5,000, which they then refused and made the conveyance to the city. The control of this corporation in the disposition of this prop *601 erty, it is quite clear, was in the city, and it is quite as clear that the votes were given in accordance with its wishes and desire. Having this control, and exercising it, they stood in the place of the corporation, acting in the disposition of this property as trustees for sale; for upon the surrender of its franchise, the property was necessarily to be disposed of for the benefit of all the stockholders. Now, the equitable rule certainly is, that a trustee cannot purchase for himself, even for the best price offered, much less can he buy at a less price than may be had of other persons, and in preference. Eor this general rule we need not refer to cases, but see Abbott v. American Hard Rubber Company, 33 Barb. 678. The deed, then, to the city of Providence, can hardly be held valid against the objection of those interested in.the trust property. They have a right in such case to a resale, in order that the best price may be obtained. We can continue the injunction against the parties only so far as to restrain them from entering upon and taking possession of the property of this corporation under that deed. In doing this, we cannot enjoin the company from proceeding to sell and dispose of its estate and property at a public sale, if they will, with liberty to the city, as to any other stockholders in the corporation, to bid at such sale. Injunction continued, (modified as above.) Footnotes [*] It was maintained by S. B. Tobey’s executors, and contended by the respondents in their argument, that the leave of the court of probate.had been duly obtained before the sale, but the court, as will be perceived, did not find it necessary to pass upon this question, it being, in their view of the law, immaterial to the complainant’s case, whether leave had been obtained or not.