57 F1d 86

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Case Text

FEDERAL REPORTER.

vol·.57. '

to require the refusal of the prayer for a temporary injunction. The volume of affidavits was large, and the conflict of this testimonyshllrpandemphatic, such as must, in the nature of:the on of ,different judges as to the facts shown. The summary of the proof made in the opinion. of the judge of the circUit court is fairly supported by the record, and shows that· there was proof tending'to support the allegatiQJm oJ the bill. The providing by law for an appeal from an interlocutory order granting an injunction certainly clothes the court Of appeals With the power and charges it with the duty of reviewing, ,and in a proper case reversing, the of the trial court in granting such injunctions; but as to issues of fact, presented as, they only can be presented in such. caSes, the findings or implied in the action of the trial court of the should ,Qe, ,given due weight, and its action, so far as it rests on, Or is affe;ctedl)y, the state of facts proved, should not be reversed unless it is ma,M clearly to appear that it Was improvident and hurtful to the appellant. In this case the most that can be urged against the order, having relation to the state of. the proof is that it was unnecesSarY. It only enjoined the appellants from doing, pending this suit, what the statute forbids and provides may be prevented by injunction. On this appeal from an interlocutory .order, which we affirm, we deem it unnecessary to anticipate the further progress and final hearing of this case by an expression of our views as to the full scope and sound construction of this recent and importaIl't· statute. The order of the circuit court is affirmed·

. , BARR v. PITTSBURGH PLATE-GLASS CO. et aL (Circuit Court of Appeals, Third Circuit. August 15, 1893,)

CORl'(lltATIONB-DIRECTORS':"'INDEPENDENT BUSINESS.·

Dh'eewrs, who are also officers, of llmanufacturing corporation, If act· ing in. ppsitive good falthto 1he corporation and their co-stockholder.i, not precluded from engaging in the. building and operation of other distinct works in the same general business, (here. the manufacture of plateg!ass;) and they do not stand, In respect to said works, in any trust relation to the corp(lration. 51 Fed. Rep; affirmed.
WITH DIREOTORS.

are

A stockholder and a director of a plate-glass manufacturing company bUlltother plate-glass works: and at the solicitation of ot!her stockholders sold them to the company. 'rhey refused to state the cost of the works, and, the consolidation was ,made on the basis of capacity in production. This was ratified by unanimous vote at a stockholders' meeting, and no stockholder not present at such meeting ever objected thereto. ObjeCtion. was thereafter made by a stockholder who had been present, on the ground that the price paid for the new works had been ·excessive. Therenpon the former ownerlil of said works offered to rescind the sale, but ,a qommlttee a,ppoin.ted by the stockholders not Interested in said works reported adversely,1lJ,ereto, which report was ratified by7,Sm out of a total of 7,988 of wqh'dislriterested shares. Held, that a stockho1ders' . bill, relief on the ground of fraud In this tJ:ansaction,'shoUld be dismiS$ed. 51· Fed; .Rep. Il1lirmecL '

BARR

f);

PITTSBURGH PLATE-GLASS CO.

SAME.

The directors and one other stockholder of a manutaclurlng corporatioti, owning among themselves a majority of the stock, conceived that the demands of trade required the erection of additional works, which they desired the corporation to build, but the project .was defeated by minority stockholders. The projectors then proceeded with their own funds to build independent works. Bad faith to the corporation was not imputAble to any of them. When the WQirks were nearing completion the corporation bought them UPOl;l terms not unconscionable in themselves, and which had been approved by a stock vote of 16,706 to 1,174 shares. The vendors, desiring to have the question decided by the minority stockholders, withheld their own votes until a large majority of the other stockholders had voted in favor of the purchase, and then cast theIr votes with the majority of the minority. The plaintiff, a minority stockholder, by his bill sought to reduce the vendm."s' profit. BeldJ, that he was not entitled to rellef. 51 Fed. Rep. 33, affirmed. A director of a joint-stock company may make a valld contract with the company, if In so he deals fairly and honestly with the stockholders who have appointed him their agent. on 00. v. Marbury, 91 U. S. 587, follo,wed. A stockholders' bill, Charging certa!n directors with fraud In contracts made by them with the corporaJtion, and seeking to enforce the restltmion Of, e;x:orbitant profits made by them in such contracts, was dismls&:!d for want ,ofequtty. Belli, that plaintiff must pay the costs.

SAME--DIRECTOR'S CONTRACTS.

COSTS-PLAINTIFF'S FAILURE TO PROVE FRAUD-LIABJUTY.

Appeal from the ,Oircuit Court of the United States for the Western District of Pennsylvania. In Equity. This is a stockholder's bill, filed by Samuel F. Barr, a citizen of the state of Maine, against the Pittsburgh Plate-Glass Company, a corporation of Pennsylvania; Edward Ford, Artemus Pitcairn, Emory L. Ford, and John Pitcairn, Jr., officers and directors of the said corporation; J. B. Ford, Edward Ford, Emory L. Ford, Artemus Pitcairn, and John Pitcairn, Jr., associated together under the firm name of J. B. Co. The bill was filed against the above-named officers and directors on the ground that they controlled the corporation and prevented a suit by the latter. The bill charges combination and conspiracy, on the part of the persons named as respondents, to defraud the corporation, and seeks to charge them as trustees, and to compel a restitution of illegal profits made by them out of contracts with the corporation. A demurrer to the bill was overruled, and a decree thereafter rendered for the respondents. Complainant appeals. The bill alleges, in substance:
(1) 'l'hat J. B. Ford, Edward Ford and Emory L. Ford, sons of J. B. Ford, were the promoters of an organization known as the New York, City PlateGlass Company. organized under the laws of New York, with a capital stock of $6OU,OOO, all of which said Fords took In consideration of a plate-gIlLs.; works plant about to be by them constrncted. (2) TIlRt the plalntiir was au owner of shares 'If Rtock In that company. (3) That the New York City PlateGlass Company. was und<.'r the laws of Pennsylvania, under the name of the Pittsburgh Plate·Glass Company, In August, 1883, taking over to itself all the aSSets of the formN' corporatIon, and having the same capItal stock. (4) That the said John Pitcairn, Jr., Edward Ford, Emory L. Ford. and Artemus Pitcairn, beIng directors of the Pittsburgh Plate-Glass Company. and J. B. Ford, entered into a conspiracy and combination to erect and build similar works of larger capaolty at Tarentum, in AIle-

REPORTER, vol.,57.

gheny county, Pa., about a mUe distant from the works of the Pittsburgh .Q()ntpany, and to 'compel the said Pittsburgh Pl1l.te-Glass Company toptll'chase thesarae, to prev,mt a dlJJlgerous and competition therefrom, for the price of 10,000 sbares of the capital stook of said companY,of the par yalull of $1,000,000, worth then in the market $155 per share, making the real consideration $1,550,000: and that at. the time the !;aid Jobn Pitcairn, Jr., I-Jdward Emory Ford, Artemus Pitcairn. and J. B. FQrd held together '4,350 shares oot of 6,000 shares of the capital stock.: that said sa;Ie Wlll! consummated; that any information as to the actual cost of the;workS was refused to stockholders; and the bill avers that the actual oostot the saJd works did not exceed $647,000. (5) That thereupon the capital stock of the Pit1l>burgh Plate-Glass Company was increased to the amount .of$2,OOO,000, and purchase-money shares, all a.f<oresaid, were issued to' the vendors: and that, a division Of the purchase-money stock having been made, the said J. B. Ford was made to appear as the owner of 4,000 shares, John Pitcairn, Jr., of 8.212 shares, EmQry J.,. Ford of 500 shares, Artemus Pitcairn of :ZOO shares. That the bo:ud of directors at that time consisted of John Pitcail'll, ,Jr., Edward Ford, Emory L. Ford, Artemlls Pitcairn, and JObn Scott, dead,) Edward F.ord being the president, Emory L. I!'or;d, secreW.I,'Y, .I).nd. John Jr., having resigned the vice presidency, A,rtemus Pitcairn succeeded him in that office. (6) The bill furtheravern that the said John Pitcairn, Jr., Edward Ford,E. L. Ford, and Artemus Pitcairn, directors of S,aid, company, entered into' a conspiracy, with J. B. Ford to erect another lJJld additional plate-glass works at Ford Oity, Armstrong county, Pa., and to compel the Pittsburgh Plate-GlassOompany to purohase the same, at suOb price as thelmight see fit to. exact, by reason of the menace which said works so constructed woUld PTesent of disastrous or ruinous. competitionshou).d the Pittsburgh Plate-Glass ComplJJlY not make the putchase' 'of the same; and tMt these perSons -formed It conspiracy, under the name of J. B. Ford & Co., to construot such worl.{S, and at the date of the 1i1ing of 1Jhepill had proposetLto to the Pittsburg1h Plate-Glass bonds lUld $750,000 of the capital stock Company for $750,000 of of the companY;Jo. be lssuedatpa"r, the bonds to mature .in three, four, llJIld five years, with interest at 6 per cent.: and that the capital stock. of the company at that time commaIided a premium of $62.50' per share, so that the price aforesaid in realityamollnted to $1,068,750: and that the said works when completed would not cost mOre than $1,000,000., (i) That said clirectors and J. B. lJ"ord clairred the right to build competitive wor!;:s for ,their own benefit, to be operated by themselves, or to' be sold to others for that purpose; and that said Foro City works were then in partial operation. and constituted a direct threat. and m lIUlce to the Pittsburgh Plate-Glass 'Company to compel them to accede to the demands of the syndicate; and thp,tsaid syndicate contTollf.'d seven-tenths of the capital stock of said Gompany, upon the then capitalization of the eompany. (8) That the directors, together with J. B. Ford, fur pursuance of such conspiracy, by their lIDdue Infiuence and efforts,. had procured a vote authorizing the acceptance of said offer to sell said Olty works, and to that endb-ad taken steps to procure an increase of the capital stock of the company to $2,750,000, and to procure the amendment of their charter powe.rs to enable them to carry on their corporate business in other cOlmties than the county of Allegheny. (9) That'an the members of the board of directors of the PittsQurgh Plate-Glass Company, and all the officers thereof except the treasurer, were members of the syndicate firm of J. B. lJ"ord & Co., and were interested in the consummation of the proPQsed sale of the Ford City works, and that seven-tenths of f!lecapital stock of the company. were hpld. by tllem. , 'Vlle bill then proceeds to that the said directors, acting in concert with the said J.B. he, th.e said J. B. II'ord, knowing their otliC'lal and tnlSt aI'l) prohibited from acting Ini derogation of .the interests they represent as officers and to the. prejudice of the Pittsburgh Plate(}iass Company, and that the works so erected by them were equit'l.bly till" property of said Pittlsburgh plate-Glass Company, for the construction or which they, said COrpQrat!on, should pay the actual cost thereof, with such reasonable profit as the. court might allow to the constructors thereof.

57 F. 86 -

57 F1d 86