Sprigg v. Western Telegraph Co.

Robinson, J., delivered the opinion of the Court. This is an application by the appellant, a stockholder of the Western Telegraph Company, for an injunction to restrain the appellees and other stockholders, from organizing under the Act of 1868, ch. 471, known as the General Corporation Law of this State. It can hardly be necessary to repeat what we have so often said, that in all ex parte applications of this kind, where the Court is asked to interfere by a process so summary in its character, and so liable therefore to be abused, it is the duty of the complainant to make a full and candid disclosure of all the facts within his knowledge, touching the subject-matter in regard to which relief is prayed. There must be no misrepresentation, or concealment, or keeping in the back-ground, important facts, of which the Court ought to be advised, otherwise this strong arm of the law, which is interposed only to prevent positive and substantial injury, may become the instrument of wrong and oppression. Keighler vs. Savage Manuf’g Co., 12 Md., 383; Shoemaker vs. Nat. Mech. Bank, 31 Md., — 75 — 491; Canton Company vs. Northern Central R. R. Co., 21 Md., 398; Kerr on Injunctions, 608, and cases cited; 2 Joyce on Injunctions, 1034. In Dalglish vs. Jarvis, 2 Mac. & G., 242, the law on this subject is thus strongly stated hy Baron Rolee : “ The application for a special injunction, is very much governed hy the same principles which govern insurance matters, which are said to require the utmost degree of good faith, uberrima jides. In cases of insurance, a party is required to state not only all matters within his knowledge, which he believes to he material to the question of insurance, hut all which in point of fact are so. So, if a party applying for a special injunction, abstains from stating facts which the Court thinks are material to enable it to form its judgment, he disentitles himself to that relief which he asks the Court to grant.”' How, it is obvious, the complainant has not, in this case, stated fully and fairly all the facts within his knowledge, in regard to the objects and purposes of the appellees in organizing a new company under the Act of 1868. He alleges in the hill, that he is the owner of two shares of stock of the Western Telegraph Company, of the par value of one hundred dollars each, upon which he has for many years received semi-annual dividends, and that the appellees and other stockholders are about to create a new corporation under the Act of 1868, and to transfer to the company thus formed, all the rights and property of the Western Telegraph Company, and thus compel the complainant to become a member of the new company. That the formation of the company as proposed, would subject him, against his consent, to obligations different from those assumed hy him as a corporator in the old company, and to risks which he never contemplated. But he does not state that the old company was chartered in 1846, for a term of thirty years, and that the period .thus fixed was about to expire, and that the Legislature — 76 — had expressly reserved the right to alter or amend its charter at pleasure. Nor does he state the important fact, that in the contract made between the company and the Baltimore and Ohio Railroad Company, and under which it acquired the license to construct, maintain, and operate a line of magnetic telegraph, upon and within the limits of said railroad, it was stipulated among other things, that in the event of a dissolution of the telegraph company, or a suspension of operations, either voluntary or in consequence of legal process, the railroad company was authorized to take charge of the telegraph line until the company should resume active operatious. He also omits to state, that in 1859, the Telegraph Company leased all its lines to the American Telegraph Company for a period of thirty years, at a rental of ten thousand, five hundred and seventy-six dollars per year, free from all deductions for expenses, wear and assessments, and that this rental constituted the sole income from which the complainant and other stockholders derived the semiannual dividends on their stock. These material facts, it is hut fair to presume, were known to the complainant, or if he had not actual knowledge, he was put upon the inquiry and had the means of ascertaining, and ought to have ascertained them before instituting a proceeding of this kind. And he not only fails to state these facts, but leaves the Court to infer, that if no steps were taken by the appellees and other stockholders to organize under the Act of 1868, the old company would still retain and exercise the rights and franchises granted by its charter, and would still remain in possession of its property, and that he and other stockholders would continue to receive the semi-annual dividends on their stock, or in the event of a dissolution, the property would he distributed among the stockholders. The failure on the part of the complainant to state these facts, so important and material to enable the Court to act — 77 — with due regard to the rights aud interests of all pa-rties, is in itself a sufficient ground to disentitle him to this summary process of the Court. Reddall vs. Bryan, et al., 14 Md., 476. . But in addition to this, when the hill is read in connection with the answer and exhibits, it is difficult to imagine on what principles of equity the complainant can ask the interference of the Court, because the organization under the Act of 1868, was absolutely necessary to prevent the property of the company from passing into the possession and under the control of the railroad company, and also necessary to enable the telegraph company to perform its covenants under the lease from which its entire income was derived. Independent of these objections, we deem it proper to add, that we find nothing in the Act of 1846, incorporating the Magnetic Telegraph Company to prevent the appellees, and others constituting a majority of the stockholders from organizing under the Act of 1868. In conferring corporate powers upon the company, the Legislature expressly reserved the right to alter or amend its charter at pleasure. This reservation became part of the contract between the State and the corporators, and the exercise of it in no manner impairs the obligation of a contract, within the meaning of the Constitution of the United States. State vs. Northern Central R. R. Co., 44 Md., 165; Miller vs. State, 15 Wallace, 497; Tomlinson vs. Jessup, 15 Wallace, 457. And it is equally clear, we think, that this amended or substituted charter may be conferred by a special Act, or by a general law authorizing the corporation to organize under such general laws ; and if such amended or substituted charter is accepted by a majority of the'stockholders it is clear upon principle and upon authority, that such an acceptance is binding upon all the members of the corporation, unless the original purpose of the corporation be — 78 — changed by such charter. Korn & Wisemuller vs Mutual Ins. Co., 6 Crunch, 192; Central R. R. Co. vs. Georgia, 2 Otto, 671; White vs. Syracuse & Utica R. R., 14 Barb., N. Y., 559; Joslyn vs. Pacific Mail S. S. Co., 12 Abbott Pr. Rep., N. S., 838; 4 Kernan, 349 ; Bishop vs. Brainerd, 28 Conn., 289. If then the Legislature has the power to alter or annul the charter of the Telegraph Company, because the corporation has agreed it may exercise this power, it may assuredly make the alteration as lawfully by the substitution of a new charter as hy the amendment of the old charter, provided such substituted charter he germane, and necessary.to the objects and purposes for which the company was organized. .- The inquiry then is, whether the proposed organization under the Act of 1868, is a radical and fundamental.change in the objects and purposes for which the original company was chartered. We have examined the provisions of the Act of 1868, in connection with Act of 1846, incorporating the Telegraph Company, and are of opinion that the proposed organization is not liable to this objection. On the contrary, the number of shares of the capital stock, the property, business, objects and purposes of the company remain the same, and under the new charter each stockholder of the old company will he entitled to an equal number of shares in the new, and of the same par value. It is true, additional powers are conferred upon the company hy the Act of 1868, the power for instance to consolidate with and lease other lines, hut whatever conflict there may he in the decided cases as to what constitutes a fundamental change in the charter, they all agree that the mere grant of additional powers auxiliary to the original design, is not liable to that objection. Clearwater vs. Meredith, 1 Wallace, 25; Green’s Brice’s Ultra Vires, 80, 84, and cases cited. Without reviewing the several cases relied on hy the appellant, it is sufficient to say, that upon an — 79 — examination of them, it will he found that the changes were radical and fundamental, or that the Legislature had not reserved the power to amend and alter the charters. (Decided 1st March, 1877.) In any aspect therefore, in which this case may he viewed, we are of opinion, that the injunction was properly refused. Order affirmed.