American Railway-Frog Co. v. Haven

Ames, J. This petition raises three questions: 1st. Were Otto Cuntz and the five others, whose names are joined with his, duly elected at the annual meeting of the company to the offices which are claimed for them respectively? 2d. If they — 402 — were so elected, will mandamus lie for the purpose of compelling these respondents, who claim the same offices, to give up the books and papers of the company in their possession? 3d. If mandamus will lie, are the circumstances of the case of such a character that the court, in the exercise of a sound judicial discretion, ought to direct the issue of that writ. The case finds that the capital stock was divided into two thousand shares, all of which were properly issued to the original stockholders; and that sometime afterwards four hundred of these shares were transferred by some of the stockholders to Aaron N. Clark “ to hold for the benefit of the corporation.” If these transfers had been made directly to the corporation, without the intervention of a trustee, it would hardly be contended that it would thereby become entitled to vote at a meeting of stockholders. A corporation cannot literally be one of its own stockholders in the full sense of that term. Such a transfer might not operate as a mere surrender or cancellation of stock, unless so intended. It would not diminish the amount of the capital, nor necessarily reduce the number of shares. The corporation might perhaps receive such a transfer, and hold the stock so conveyed to it, for the purpose of reissue to new subscribers or purchasers. By the terms of the transfer, Clark holds “ for the benefit of the corporation,” and of course subject to its order. This is the extent of his trust. Nothing in the nature of it makes it necessary that he should vote, as the holder of those shares. There is no apparent reason why he, not being beneficially or practically the owner of them, should be endowed with the privilege of controlling four hundred votes according to his own judgment or pleasure, especially when it is taken into consideration that the corporation for which he holds them has no right of voting in any event. It is easy to see that any such privilege would not only be unreasonable and unfair, but might lead to great abuses. The position of these shares, in our judgment, is the same, to all intents and purposes, so far as the right of voting upon them is concerned, as if they were held directly by the corporation itself; and, until they are sold and transferred by its authority, the right of voting upon them is suspended. — 403 — Ex parte Holmes, 5 Cowen, 426. Ex parte Willcocks, 7 Cowen, 402. It follows then, that, at the annual meeting in question, the votes on these four hundred shares ought not to have been received or counted; that the whole number of competent and legal votes was fifteen hundred and thirty-three, and no more; that Cuntz and his five associates received a clear majority of these votes; and that they were duly elected to the offices claimed for them respectively in the petition. We then come to the second question, namely, Whether this is one of the cases in which the court has the power to issue the writ of peremptory mandamus. We must consider this petition as the petition of the corporation. The respondents are not its officers, but are mere intruders and wrongdoers, their term of office having expired. In the case of a public office or corporation, it is not denied that this writ might issue if the petitioner’s title were first made out. It is well settled that it can be granted, for instance, to compel a town clerk, or a clerk of a public corporation, whose office has expired, tó deliver over to his successor the common seal, books, papers and records of the corporation, which had belonged to his custody. Some of the cases go so far as to say, that “ indeed it lies to any person who happens to have the books of a corporation in his possession and refuses to deliver them up. In fact it is the peculiar and appropriate remedy in such a case.” Rex v. Wildman, 2 Stra. 879. 2 Kyd on Corporations, 301. Angell & Ames on Corporations, (6th ed.) § 707 and cases cited. St. Luke’s Church v. Slack, 7 Cush. 226. It is described by Lord Mansfield as a very beneficial writ, which may be issued by the court where there is no other specific remedy. The King v. Commissioners of Land Tax, 1 T. R. 148. It will not be granted where the applicant has another adequate, specific, legal remedy. Rex v. Barker, 3 Burr. 1267. The King v. Bishop of Chester, 1 T. R. 404. 2 Kyd on Corporations, 297. In re White River Bank, 23 Verm. 478. But the remedy, in order to be a bar to the issuing of the writ, must not only be adequate but also specific; and damages recoverable for the violation of the right are not such specific remedy. In the case at bar, it is difficult to see in what way the petitioners — 404 — can obtain such adequate and specific relief, if their petition should be refused. The same four hundred illegal votes that have created the difficulty may perhaps be employed to render it permanent. The respondents insist, however, that, inasmuch as they are actually in possession of the offices in question, under a claim of right, and exercising the functions annexed to them, the only mode of controverting their title is by a writ of quo warranta. The fact that the offices are de facto filled and occupied by rival claimants is by no means decisive, and perhaps not very material, upon this point. Borough of Bossiny, 2 Stra. 1003. Borough of Aberystwith, Ib. 1157. Corporation of Scarborough, Ib. 1180. The King v. Bedford Level Co. 6 East, 356. It has been so decided in the case of conflicting claims to the office of county commissioner. Strong, petitioner, 20 Pick. 484. Also in the case of members of a school committee. Conlin v. Aldrich, 98 Mass. 557. It may be, that, if a petition for mandamus were literally in the name and for the benefit of a claimant of an office against an actual incumbent, the parties would be left to a quo warranta; but however that may be, the case of St. Luke’s Church v. Slack, 7 Cush. 226, seems decisive upon the point that, in the case of a public corporation, a mandamus may issue on its petition against persons claiming to hold its offices. Upon the third of the questions raised by the case at bar, it is claimed that, as the writ of mandamus is not a writ of right, out is only to be granted at the discretion of the court, in view of all the circumstances, the present is not a proper case for the exercise of that discretion. The respondents insist that, even npon the assumption that the object of the petition is to compel them to do what they are bound in duty to do, and what the petitioners have a clear and manifest right to have done, and upon the assumption also that the petitioners have no adequate specific remedy except what the writ would give them, yet the writ is only to be issued for public purposes, and to compel the performance of public duties, and for that reason ought not to be granted on the present occasion. This objection is the only — 405 — one that has given us any considerable embarrassment. It is insisted that this company, although called a corporation, differs very little from a mere copartnership; that it is in fact a mere association for trading purposes; that it is not concerned with any public charity or trust or institution, or any public interest of any kind, and that its affairs are not matters of public concern in such a sense as to justify the exercise by the court of any extraordinary power. The writ is defined, by the earlier writers, as a high prerogative writ, flowing from the king himself sitting in the court of king’s bench, superintending the police and preserving the peace of the country; and it is also called one of the flowers of that court — a definition which throws very little light upon the question as to the occasions that will require or justify its issue. The old rule undoubtedly was, that it was only to be issued in cases of public interest or having some relation to public offices or rights; but in the time of Lord Mansfield a more liberal doctrine was established, and the writ was used more freely. On a review of the authorities, it seems substantially certain that it is by no means confined to cases of a public nature, or to public corporations. It has often been issued in cases where the corporation partook very slightly, if at all, of a public character, and where the question in controversy was rather upon some matter of private right. Schriven’s case, 2 Stra. 832. Rex v. Wildman, Ib. 879. Thus, to compel the swearing in of a director in the Amicable Assurance Company, a company charr tered by the crown ; Anon. 2 Stra. 696; to compel a trading company to admit a member; Dacosta v. Russia Co. 2 Stra. 783; to compel a company to admit a Quaker on bis affirmation, he refusing to be sworn; Rex v. Turkey Co. 2 Burr. 999. See also White’s case, 2 Ld. Raym. 1004; 2 Kyd on Corporations, 299. The more recent English cases on the subject are of the same general tendency, and some of them perhaps depart lather more widely from the ancient rule than any of the decisions of the American courts. For instance, it has been granted to compel the master of a corporation to affix the seal to an instrument legally executed by the majority ; The Queen v. Ken — 406 — dall, 1 Q. B. 366; to compel a company to enter upon its ' oaks the probate and will of a shareholder; The King v. Worcester & Birmingham Canal Co. 1 Man. & Ryl. 529; to compel a joint stock company to pay the amount of an award against them; The King v. St. Katharine Dock Co. 4 B. & Ad. 360; to compel one manager of a charity to deliver to another one key of a coffer, where each is authorized to have one (and it was held to be no objection to the rule, that it was a private charity); The Queen v. Abrahams, 4 Q. B. 157. In our own country the writ has been issued in the case of corporations and claims, some of which, at least, might more properly be called private than public, namely, to restore bank directors who had been refused the exercise of their rights as directors by a majority of the board ; Prieur v. Commercial Bank, 7 Louisiana, 509; to restore a member of a navigation company who had been improperly disfranchised; Delacy v. Neuse River Navigation Co. 1 Hawks, 274 ; to maintain the right of a bank director to see the discount book, although his associates, from a belief that he was unfriendly to the interests of the corporation, had by a resolution directed the cashier to refuse to show it to him; People v. Throop, 12 Wend. 183; to restore a trustee of a private academic corporation, though no emoluments were attached to the office; Fuller v. Plainfield Academic School, 6 Conn. 532; to restore members of private corporations for charitable purposes, illegally expelled. Commonwealth v. German Society, 15 Penn. State, 251. In the case of Barrows v. Massachusetts Medical Society, 12 Cush. 402, this court refused to grant the writ to compel the restoration of a member who had been expelled, on the ground that it did not appear that he had been wrongfully expelled. In a matter depending upon a sound judicial discretion, it is difficult and perhaps impossible, from the nature of the case, to lay down in advance a precise and inflexible rule to govern the exercise of that discretion. Some of the text books go so tar as to say that the writ is never issued except in the case of public persons or officers, or to compel the performance of public duties, Tapping on Mandamus, 12. They all, however, agree in adopt — 407 — ing Lord Mansfield’s rule, that the value of the matter and the degree of its public importance are not to be too nicely and scrupulously weighed. There are two English cases that must not be overlooked. One of them, The King v. Bank of England, 2 B. & Ald. 620 was upon an application by a stockholder of that bank for a mmdamns to compel the governor and company of the bank to produce their accounts and make a dividend of the profits. The court refused to grant the writ, Abbott, C. J., saying: “ This is an application for a mandamus to a trading corporation, at the instance of an individual member, to compel his copartners to produce their accounts of profit and loss, and to divide their profits, if any there be. The examination of the accounts of a trading company may be effectually entered into in the court of chancery, but this court is a very unfit tribunal for such a subject. A mere trading corporation differs materially from those which are intrusted with the government of cities and towns, and therefore have important public duties to perform. No instance has been cited in which the court has granted a mandamus to a corporation like the present, and I think we ought not now to establish the precedent.” Best, J., said:11 If we were to grant this rule, we should make ourselves auditors to all the trading corporations in England.” The other case, The King v. London Assurance Co. 5 B. & Ald. 899, was a petition for a mandamus to compel a transfer of shares standing in the name of a bankrupt stockholder to his assignees. The court say: “ We are not aware of any instance of a mmdamus like the present having ever been granted, and if we were to grant this, we should be called upon to interfere in all cases of dispute between the members of private corporations. This company, although carried on under a royal charter, is a mere private partnership. But the writ of mandamus is a high prerogative writ, and is confined to cases of a public nature. Rule refused.” Both of the above were cases against a corporation, in that respect differing from the case at bar. It is very manifest that neither of them would have justified the issue of the writ. But it is equally manifest that the impropriety of issuing the writ in — 408 — those cases had very little to do with the question whether the corporate n was of a public or a private character. The real difficulty was in the nature of the applicant’s interest, and the character of the investigation proposed. The court might well refuse to be the auditor of accounts for a trading company. It is not claimed that the process of mandamus against a corporation is suitable or proper for the investigation of the details of commercial business, or for the adjustment of matters in the nature of partnership accounts. The case at bar is not a process of a private stockholder against a corporation, but a petition by the corporation to protect itself in the enjoyment of its chartered rights, and to secure to itself the benefit of a due and legal organization. “ There has been a good deal of refinement and subtlety in the distinctions which have been applied to the decision of questions of this kind, so that it is not very easy to say when a mandamus ought to be granted, or not.” Grant on Corporations, 272. It is very clear that it ought not to be granted where the court can see that the question arises merely from an indisposition of the minority to be controlled by the majority; or where it is sought merely for the auditing of accounts, or settling disputes, such as arise among copartners, or going into the details of commercial affairs. The refusal of the writ in such cases does not appear to stand upon the ground that the court will not so interfere with private corporations; “because it often has so interfered.” Grant on Corporations, 272. But we think that a writ of mandamus might very properly issue on the application of a manufacturing corporation, where it is essential to justice, in the way of securing the benefits of its charter, or the due and proper observance of the laws in relation to its organization. The case at bar presents an instance in which a minority of the stockholders, by the use of illegal votes, have usurped powers that do not belong to them, and have deprived the majority of its power to govern. We do not think that, under such circumstances, and in the exercise of our discretion, the mandamus should be refused for the sole reason that the party seeking redress is a manufacturing corporation. Peremptory mandamus to issue.