This bill does not set forth that the complain:mts were shareholders at the time of the transactions of which they complain; it does not set forth any efforts which have been made by complainants to obtain redress from the corporation; it is, therefore, in these particulars insufficient. It is not enough to say that it appears from the bill that the corporation would probably refuse relief. The rule is imperative that efforts shall be made to obtain relief in that direction before such a suit as this shall be commenced in the courts. On this ground the demurrer to the .Ii!.l will be sustained.
anet others v.
In ON Co. anet others.!
(Circuit Court, lV. D. Michigan, N. D. June, 1883.)
OFFICERS OF A COHPORATWN DEALING WITII TIIEMSELVES-CONTRACT VOIDAIlJ.E.
Uffieers of a corporation are but agents, and cannot, as such officers, while acting for the corpo,ation, deal with themselvcs, to the detriment of the corporation for whom they are acting. All such contracts, if not Yoid, ar" Yordable at the option of the corporation.
BAME-El<'FECT OF 8TOCKHOLDi4 S' lIlEETING.
property to themselves, or to another corporation formed for the purpose and exclusively owned by t hem, un Ie,s such lease IS made in good faith, and is supp,,·'ted by an adequate considemtion; and in a suit, properly prosecuted, to set lISI11e such a contract, the bUl'llen of proof, showing fairness and adequacy, is upon the party or parties claiming thereunder. All doubts will he solved in favor of the corporat.on fur whom such stockholders assumed to act.
their vote,. in a stocklulders' meeting, lawfully authorize its officers to lcase its
Nor can the holders of a majority of the capital stock of a corporation, by
BAMFo-POWER OF .MAJORITY.
The holdl'rs of a majority of the stock of a corporation may legally control the company's business, pre<crihe its general pulicy, make themselves its agents, and take reasonabll' cumpensation for their services. Bllt, in thus assmuing the control, they also take upon themselves the correlative dutv of diligence and good faIth. They caunot lawfully manipulate the company's business in own interests, to the injury of other stockholders.
An owner of capital stock in a corporation. who sues for and all other shareholders, and snccessfully prosecutes the action, for a wrong done to the corporation, is entitled to be reimhursed his actual and necessary expenditures, ineludinp; attorney's fees, out of the corporate funds. 6. S.UlE-C· oF. GHA..'i1TED. The flhlr hr:,thers S. leased the mine of the Iron Co. for five yeurs, at a royalty of 50 ceuts per ton of are mined, they to furnish the requisite mach,ner,V, which was to he by the les.;or upon the expiration of the lea.;e. They ineorporatcd the W. Hematite Co. tooperale the mine, they being the sale owuers of it, stock. Shurtly hefure the expiration of their lease, being unahle to obtain a renewal of it, they purchased a majority of the stock of the Iron Co., and cailed a meeting or its stockholders, hut at which no other stockholder attended. That meeting ordered an expenditure of $50,000 of the company's capital in sinking a shaH in the mine to facilitate its operation; directed a lease for 18 years of the mine, machnery, and all of the company's other property to the W. Hematite Co. at a royalty of 25 cents per ton of or" mined, with cedain
t Reported b)' J. C. Harper, Esq., of tbe Cincinnati bar.
MEEKER V. WINTHROP IRON CO.
advantages to the lessee; vo"ted one of the brothers a salary of $3',000 11 year as president; and in pursuance of said action such a lease was executed by two of the brothers, acting as president and se?retary of the oW. Iron Uo., a!1d by the other two acting as secretary and superIntendent of the 'V. Hematite Co. Upon a bill filed hv stockholders in behalf of themselves and all other stockholders, held, that such a lease was inequitable, and 11 fraud upon the rights of stockholders not concurring therein.
In Equity. Morris J: Uhl, for complainants. C. T. Walke?' and Mr. Crocker, for defendants. BAXTER, J. The defendants, the Winthrop Iron Company and the Winthrop Hematite Company, are corporations orgamzed under the laws of Michigan. The capital stock of the former consists of an iron ore mine rated at $500,000. In August, 1877, it made a lease thereof to the St. Clair Brothers, a partnership composed of the four defendants by that name sued herein. Soon after securing said lease they organized the Winthrop Hematite Company, for the purpose of working the mine thereunder. They continued thus to operate until the summer of 1881, when they made an effort to obtain a renewal thereof to the Winthrop Hematite Company. But failing to secure it, they pmceeded to purchase a majority of the capital stock of the Winthrop Iron Company, and assume control of its business. At their instance a stockholders' meeting was called for October, 1881. The meeting was accordingly held by one of the St. Clairs, (who acted for himself and brothers,) assisted by W. S. Hollert, their attorney, and one G.B. Breese. Neither Hollert nor Breese owned any stock in the company. Hollert was made president, and Breese secretary, of the meeting. Being thus organized they adopted certain resolutions, in which, among other things, they removed two directors of the company, and appointed three of the St. Clairs in their stead; authorized the sinking of a shaft at the mine, and appropriated $.,)0,of the company's money to complete and equip it; authorized and dIrected a lease of the company's mine for 18 years from and after December 1, 1882,-the time at which the former lease was to expire,to the Winthrop Hematite Company; and soon thereafter Eugene G. St. Clair as president, and J. N. St. Clair as secretary, of the Wmthrop Iron Company; and Eugene G. St. Clair as secretary, and A. St. Clair as superintendent, of the Winthrop Hematite Company, professing to act for and in behalf of their respective companies, entered into a contract wherein and whereby it was agreed that saicl first company should lease its mine, with all the improvements. machinery, etc., thereon, for 18 years to the Winthrop Hematite Company at a royalty of 25 cents per ton. The relief sought by complainants, who sue as well for all other in the Winthrop Iron Company as for themselves, is a les0IsslOn of said lease and an account of rents and profits; and to " v.17,no.l-4