Watson v. LeGrand Roller Skating Rink Co.

Mr. Justice Wilkin delivered the opinion of the court: It is urged on behalf of appellant, first, that the decree entered August 12, 1892, dissolving the corporation and appointing a receiver, was final, and that the court had no power to vacate it on August 16, 1898; and second, that the pleas filed by the corporation and stockholders July 24, 1896, present no defense to the merits of the bill. The first contention is not well supported. While, in form, the decree of August 12, 1892, may have been final, the filing by the defendant of its petition for a rehearing at the same term at which the decree was rendered, and the cause being continued to a subsequent term upon that petition, had the effect of suspending the operation of the decree and of retaining jurisdiction over the subject matter at the subsequent term, and the court had the power, at the later term, to amend, alter, modify or vacate the decree. Hibbard v. Mueller, 86 Ill. 256; Hearson v. Graudine, 87 id. 115; People v. Springer, 106 id. 542. The second and chief question for our decision is presented by the pleas filed by the corporation and stockholders on July 24,1896, setting up a champertous agreement between the complainant herein and Charles T. Yerkes, giving the latter authority to prosecute this proceeding, and thereby enable him to defeat a claim of the LeGrand Roller Skating Rink Company against the street railroad corporations of which he is president. Appellant does not attempt to deny the champertous nature of the agreement entered into, but contends that champerty is no defense except in a suit upon the champertous agreement by one of the parties thereto against the other, and that third parties cannot take advantage thereof, and numerous authorities are cited in support of this position. A careful examination of the record in this case forces the conviction upon us that the agreement referred to is more than a mere champertous one,—■ that it is, in fact, a collusion between the parties thereto to enable Yerkes, as president of the street railroad corporations mentioned, to accomplish a purpose indirectly which he could not accomplish directly,—i. e., to wreck the LeGrand company, and thus relieve his corporations from liability to it,—in other words, that the real purpose was not to preserve the assets of the LeGrand company, but to destroy them. p?he rule is well settled that courts of equity will not lend their aid to the dissolution of a corporation, or to enjoin or bring" to an accounting the corporate directors, where the suit is instituted, not to protect, benefit and preserve the interests of the stockholders in the corporation, but to benefit some other corporation. The difficulty usually is to prove that the suit is instituted on behalf of some other person or corporation, but in this case we have the champertous agreement averred in the defendants’ plea, and the uncontra dieted affidavits of Sidney C. Eastman, one of the solicitors for the LeGrand company, that this suit was instituted and has been prosecuted by Yerkes, and that complainant, Watson, had stated to him that the suit was being conducted under contract with Y erkes. To determine whether a proceeding" is properly invoked, a court of equity may go behind the parties on the face of the record to see who are the real parties to the proceeding", and if it be discovered that the prosecution is carried on for the exclusive benefit of an individual or corporation the court will dismiss the bill,—and this, not upon the ground that the proceeding .may have "been instituted in pursuance to a champertous agreement between the ostensible complainant and some third party, but because of the fraud that is attempted to be perpetrated upon the court. Cook on Stockholders, (3d ed.) sec. 736; Thompson on Corporations, secs. 4567, 4568; Morawetz on Private Corp. sec. 260; People v. General Electric Railway Co. 172 Ill. 129. Counsel for appellant, in their reply brief, insist that upon the hearing certain affidavits were improperly admitted in evidence and considered by the court, these affidavits containing facts material to the finding of the court upon the merits. It is stated by counsel for appellees that the affidavits were introduced by agreement, and that formal pleadings were waived in the cause. The record discloses no objection made at the time to the introduction of the affidavits in evidence, nor does the assignment of error filed here raise the question. This question not having been raised upon the hearing nor assigned as error here will not be considered by this court. Upon a careful consideration of the entire record and the questions raised therein we are satisfied there was no error committed in dismissing the bill. Judgment affirmed.