George N. Fletcher & Sons v. Alpena Circuit Judge

Hooker, J. The relator is a stockholder in a corporation named the Alpena Portland Cement Company. A bill of complaint was filed by it, in which it was sought to restrain the sale of certain bonds by said cement company, and a preliminary injunction was issued as prayed. An. application to dissolve this injunction was heard, and tho court rendered, an opinion in which the facts found by him were stated, and an order made continuing but so modifying the injunction that the defendants might sell the bonds (which draw 6 per cent, interest) at a price not below 75 cents on the dollar. Thereupon this application was made for a mandamus to compel a continuance of the injunction as originally made. In accordance with our uniform practice where no issue is joined, we must take the answer of the circuit judge as, conclusive of the facts. From this we may say, in brief, that the Alpena Portland Cement Company found it necessary to change its machinery, so as to make its product by an improved method, in order to compete with others, and let contracts for such machinery to a large amount. Having no means to meet its obligations, it decided to issue the bonds of the company bearing 6 per cent, interest, and to sell them below par. Counsel for relator insist that such action would conflict with the usury law. [513] We think that such an issue and sale of bonds would be usurious, and, in the absence of a statute forbidding it, the defense of usury might be successfully made by the corporation against a plaintiff who should be shown not to be a bona fide holder. But such a contract is not void, and usually such defense can be made only by the debtor, or possibly one in privity with him. 2 Comp. Laws, § 4857, and cases cited. If it be conceded that the relator’s claim, that the threatened transaction would be usurious if consummated, is correct, we must nevertheless refuse to interfere with the discretion of the circuit judge, unless we must say, from his finding of facts, and the law applicable to the case, that the relator has a clear legal right to this relief, regardless of any equitable considerations, or, as counsel seem to argue, an absolute right to prevent the corporation from making a usurious contract. We cannot hold that this contract is “ultra vires,” in the ordinary sense of the term, for, while illegal contracts generally might be, it is everywhere settled that usurious contracts are good in the hands of bona fide holders, and, as we have seen, our statute not only does not make them criminal, but it does not in terms prohibit them, and expressly declares them not to be void; and they are good as to all of the world, except the debtor, and he may waive his right to treat them otherwise by neglecting to plead usury. We are of the opinion that a stockholder may enjoin the making of a usurious contract where it is not inequitable for him to do so as between himself and other stockholders, and when he will suffer injury from the transaction. See 10 Cyc. p. 968, subd. 9. The claim is made in this case that great injury will result to the corporation, and consequently to other stockholders, if it be not permitted to proceed with the sale of its bonds, to provide money with which to pay its obligations, a failure to do which means bankruptcy, and it is further stated that [514] complainant’s opposition is based upon a design to embarrass the corporation, and acquire its property at a nominal price through a foreclosure of a prior mortgage, of the bonds secured by which complainant is a large holder. It is clear that such action, if taken, would absorb the interest of other stockholders. Whether or not there is a foundation for such a charge, of for the counter-charge which complainant’s counsel make, we cannot consider, except as it may appear from the finding of fact; and from this, and the record in the case, we must admit the possibility of such a situation as the defendants allege. We have often held that mandamus is a discretionary writ, and should not issue when it would work an injustice. Van Akin v. Dunn, 117 Mich. 423 (75 N. W. 938); Tennant v. Crocker, 85 Mich. 328 (48 N. W. 577); Pistorius v. Stempel, 81 Mich. 133 (45 N. W. 968); Baker v. Board of State Canvassers, 111 Mich. 380 (69 N. W. 656); MacKinnon v. Auditor General, 130 Mich. 554 (90 N. W. 329). This rule is as applicable to the circuit court as to this court. The complainant invokes the equitable remedy by injunction. Ordinarily this court will not review the exercise of the judicial discretion of the chancellor, and it is only when the issue or denial of an injunction violates a clear legal right, or is a clear abuse of discretion, that this court will interfere. That cannot . be said in this case unless we can say that the stockholder is entitled to enjoin a usurious contract, under any or all circumstances, as a matter of law. This we cannot say. See Gamble v. Water Co., 123 N. Y. 108 (25 N. E. 201, 9 L. R. A. 527); Handley v. Stutz, 139 U. S. 417 (11 Sup. Ct. 530). See, also, 10 Cyc. p. 968, subd. 9, and p. 970, subd. 146. The writ is denied. Moore, C. J., and Montgomery, J., concurred with Hooker, J.