Leigh v. National Hollow Brake Beam Co.

Mr. Presiding Justice Ball delivered the opinion of the court. Counsel for appellants having in oral argument waived the want of notice of the application for a receiver and for the injunction, that question need not be here considered. We do not find that the affidavit attached to the bill is insufficient. The cases cited by appellants thereon are not in point. We must take the allegations of the bill as true. The bill alleges facts and circumstances showing that the members of one board of directors were regularly elected, that they duly organized as the lawful board of directors of appellee, and lawfully elected certain named persons as its officers; and that the other and pretended board of directors is composed in large part of men who have not the slightest claim to be directors of appellee. And, further, that such pretended board is hostile to appellee, and has knowingly acted against the interests of appellee in favor of its lessee and rival, the Equipment Company; and that such pretended board has'caused minutes and transactions to be entered in the books and records of appellee which tend to impoverish appellee and to enrich its rival. And, further, that this pretended board has some indicia of right to act for appellee, and therefore may bind appellee to third parties who deál with that board as the representative of appellee in ignorance of its want of power to act. The acts set up in the bill as being done by this pretended board of directors are so destructive to the well-being of appellee that the court was justified in appointing a receiver to hold the property of appellee subject to the further order of the court. This it did upon the application of the owner of such property. In this way the confusion that would otherwise inevitably ensue in the affairs of appellee from a continuance of the wrongful acts set out in the bill, is prevented; and the property is protected and preserved pending the application for relief. It is conceded by appellee “ that a court of equity has no jurisdiction to try the title to the office of director of a corporation as a primary question; that it has no power to enter a decree which will act upon the office in rem, or have the effect of ousting one claimant and installing another.” But if the question as to which person is entitled to the office of director is, or becomes, an incidental question in the case, and there are other questions involved of which equity has jurisdiction, the court, in order to ascertain what, if any, relief should be granted, will decide all the issues presented, including that of who is the lawful director. Nathan v. Tompkins, 82 Ala. 437; Ciancimino v. Man, 20 N. Y. Sup. 702. What are the real facts in this case, we do not know. As before stated, we are limited to the bill. We must accept its allegations as true. It therein appears that appellants are endeavoring to wreck appellee for the benefit of the Equipment Company; that by reason of their wrongful and fraudulent acts an irreparable injury will be inflicted upon appellee. In such a case an injunction is the only remedy that will preserve matters in statuquo until the learned chancellor has had an opportunity to sift the cause, and thus to ascertain where the truth lies. Unless a court of equity has jurisdiction to order a provisional injunction in such a case, the rightful party may be ruined before a court of law could determine who are the legal directors. Johnston v. Jones, 23 N. J. Eq. 216; Kerr v. Trego, 47 Pa. St. 292, 295. The decree of the Circuit Court is affirmed.