Duquesne Gold Mining Co. v. Glaser

Mr. Justice Campbell delivered the opinion of the court: The defendant corporation was organized under the laws of this state to carry on mining in Gilpin county. Its officers, or some of them, when last known, resided in Pittsburg, Pennsylvania. John A. Snee of that city obtained a judgment against defendant, apparently in some court in the City and County of Denver, and caused an execution to be issued and levied upon its property in Gilpin county and had the property sold thereunder. The time for redemption from the sale by the judgment debtor expired June 15, 1905. In December, 1904, a number of defendant’s stockholders, residing at Pitts-burg, learned of the sale and proceeded at once to call a meeting of as many shareholders as could be reached to devise means to lift the debt. Some progress was made thereat, and a committee appointed to see Snee. He said to this committee, when interviewed, that he would hold the title, if he secured it, for the benefit of contributing shareholders. A second meeting of the stockholders was held, at which plaintiff, one of them, was authorized to represent the stockholders generally, and, if necessary, to redeem defendant’s property from the judgment sale in their behalf. Plaintiff again saw [188] Snee and Jeremiah Miller, who had acquired a half interest in the judgment. Both of them were stockholders of'defendant, and Miller was its vice-president (the president theretofore having died), though Miller’s official position was not then known to plaintiff and the stockholders he represented. He was unable to obtain from the judgment creditor the agreement or declaration which theretofore the latter said he would sign. This was about the 7th of June, 1905, only eight days before defendant’s right of redemption expired. The plaintiff and his fellow stockholders had made diligent effort to ascertain who were the officers of the company, so as to get them to act. in behalf of defendant, but they could not obtain any information on the subject. Miller — who, it was afterwards learned, was vice-president — did not, upon due inquiry by them, make known that fact. Prompt action was necessary, and plaintiff, in order to protect the interests of the company and its members, ■ through attorneys in Colorado, paid to the sheriff the amount necessary to redeem, and obtained the sheriff’s certificate of redemption Certain taxes were due by ’ defendant upon its property, one-half of which were delinquent and the other half due, and the total amount of this tax was paid by the plaintiff for and in behalf of defendant. Plaintiff thereafter brought this action against defendant company to recover for these advances, alleging he had made them at its request. The defendant filed its answer denying that plaintiff made these payments for its use or at its request, and alleged that he did so, if at all, merely as a volunteer. In his replication, plaintiff set forth the ultimate facts hereinbefore recited, proof of which was made by the evidence submitted. Prom the judgment in favor of plaintiff, the defendant has appealed. [189] The only point argned by appellant is that plaintiff made these payments purely as a volunteer, and not at defendant’s request, and therefore cannot recover. Defendant’s counsel in his brief cites many authorities which it is not necessary to reproduce, because the doctrine is so familiar that a stockholder, as such, is not the representative of a corporation, that the latter can act only through its board of directors or its duly appointed agents; that a stockholder cannot sue or defend in its' behalf, or voluntarily, and without its request, make himself its creditor. Such, however, are not the questions in this case. When directors and officers of a corporation violate their duty to its stockholders and attempt to wreck its property, or wrongfully secure it for their personal profit, or if they neglect their duty, permit its property to be taken away without any effort to save it, or fraudulently refuse to protect its interests, the stockholders, as such, are not remediless. They may protect the interests of the corporation and incidentally their own, provided they first make due efforts to have the corporation, through its governing officers, take the necessary action. And if it appears that the officers refuse to act, or if the 'facts and circumstances are such that it is clear that it would be useless to ask them to do so, the stockholders themselves may, in their own name, protect the corporate interests. They may, in their own name, sue or defend in such behalf. Defendant’s counsel concedes, for the purposes of this case, that plaintiff might maintain a suit in equity in his own name to redeem from the judgment sale in behalf of himself and other stockholders similarly situated, but says plaintiff cannot take the short cut without suit by paying to the sheriff the amount necessary to redeem and recover the same in an action against the corporation. We can [190] not see any valid distinction in principle between the supposed case and the case at bar. If plaintiff may, by suit, save the property for the corporation, why may he not do so without suit, -by payment to the judgment creditor, or sheriff? The judgment creditor, a stockholder co-operating with the vice-president, in the month of December, had manifested a willingness to permit the property to be redeemed, or the judgment debt paid, by plaintiff and all other stockholders, and led plaintiff to believe that he, as judgment creditor or grantee under a sheriff’s deed, would execute the necessary papers for their protection. They, living in Pennsylvania, being thus misled until a short time before the time for redemption expired, and the judgment creditor, whose proceedings were in a Colorado' court, then refusing to carry out his agreement, prompt action was necessary. Plaintiff might advance the money necessary to redeem and make the same, in equity, a charge against defendant. His interests as a stockholder gave him this right. He was not a mere volunteer. In such case the law will, if necessary, imply a promise upon the part of the corporation to repay the advances made. Particularly is this a case where, the defendant should be held, since, through its officers, it knew, and received the benefit, of plaintiff’s payments in its behalf.—10 Cyc. 1078. By plaintiff’s act, the property has been saved to the corporation, and it should refund to him the amount of his expenditure. It would be a reproach to the law if, in a case like this, the stockholders of a corporation might not thus protect their interests. There may not be many precedents for this ruling, doubtless because very few cases have arisen where the . officers of a corporation have acted in such a negligent and fraudulent manner and afterwards had the temerity to repudiate acts so manifestly in [191] the corporate interests. Plaintiff and Ms fellow stockholders have exercised the utmost good faith and made the redemption and paid the taxes for themselves and all other stockholders who are willing to contribute their share. A case exactly in point is Wright v. Oroville Mining Co., 40 Cal. 20. The defendant admits that this case is in plaintiff’s favor, but says that it is contrary to the great weight of authority, and should not be followed. On the contrary, we think it establishes a wholesome doctrine. It is approved in the later case of Ashton v. Dashaway Association, 84 Cal. 61. Baldwin v. Canfield, 26 Minn. 43, and Morrill v. Little Falls Mfg. Co., 46 Minn 260, are also in point in plaintiff’s favor. See 6 Thompson on Corporations, sec. 7868; 4 Thompson on Corporations, sec. 4479 et seg.; 2 Clark & Marshall Private Corporations, sec. 546; Bronson v. La Crosse R. Co., 2 Wall. 283. The judgment is affirmed. Affirmed. Chief Justice Steele and Mr. Justice Mussee concur.