Smith v. Franklin Park Land & Improvement Co.

Morton, J. Assuming that the receipts were given on behalf of the corporation, and that the money was received by Merrill for it, we come to the question whether the corporation had power to authorize the president to sell and issue shares in such manner as he saw fit, and whether private sales by him, which the sales in this case were, were valid sales, and such as this court will enforce. It is to be observed that it is nowhere alleged in the bill that the capital stock was increased by the stockholders. From the vote of the directors, it would appear as though- they increased it pursuant to authority purporting to [349] be given them by the stockholders, which manifestly could not be done. It seems to have been assumed on both sides, however, that the increase was the result of proper action on the part of the stockholders, and we proceed on that assumption. The bill does not allege how or when the defendant company became a corporation, or for what purpose it was organized. It is recited in St. 1889, c. 102, § 1, that it was organized under the general laws of this Commonwealth, and from that act and St. 1887, c. 168, and from its name, we infer that its business is that of buying and selling real estate. If so, Pub. Sts. c. 106, § 37, would seem inapplicable, because the defendant corporation could not organize under that chapter (see § 14), and, so far as appears, does not come within the enumeration of those described in § 3 as governed by its provisions. But even if c. 106, § 37, does apply, the plain implication of that section is that the stockholders must direct by vote the manner of sale, and cannot delegate their power. See Mason v. Davol Mills, 132 Mass. 76; Crosby v. Dracut, 109 Mass. 206; Harris v. Marblehead, 10 Gray, 40; In re Leeds Banking Co. L. R. 1 Ch. 561; Monmouth Ins. Co. v. Lowell, 59 Maine, 504; Silver Hook Road v. Greene, 12 R. I. 164; Farmers’ Ins. Co. v. Chase, 56 N. H. 341; Rutland & Burlington Railroad v. Thrall, 35 Vt. 536. The plaintiff relies on Pub. Sts. c. 105, § 20. That section requires the untaken shares to be sold by the directors at public auction. The stock which is the subject of the present suit was not only not sold at public auction, but was, sold in a manner which was the opposite of that contemplated by the statute. We do not see how the plaintiff can maintain a bill to compel the issue of certificates representing stock thus sold. Very likely, as the plaintiff argues, if the certificates had been issued and_ delivered, .the corporation could not maintain a bill for their cancellation and return. But that is very different from saying that the corporation can be compelled to issue certificates for stock which it has sold, if not in violation of law, at least in a manner in which it had no authority to sell it. Whether the plaintiff has any other remedy it is not necessary for us to consider. For the reasons given, we think that the present bill cannot be maintained. We have not found it necessary to consider the question of laches. Decree affirmed.