The effeot of the deoision of this question upon the right to appeal has been urged, but that has no present bearing. It is the duty of this oourt to make suoh decree upon the case as made as appears to be lawful and just. Whether any appeal lies from such decree, when made, is to be determined by the law applicable to that subject. The risk was to be divided among the defendant companies. The presumption is that it was to be divided equally, as nothing to the contrary is shown. The defendants appear to have denied the plaintiffs' rights to policies, and to payment of loss, August 29, 1883, and did not permit them to make proof of loss under the policies, if such were required. The plaintiffs' rights appear to have aocrued upon that refusal. and interest is to be oomputed from that time. Let a decree for the orators be entered for the payment, by the defendants each, respectively, to the oratrix of $3,000, with interest, and one-fourth of the costs of suit, within 30 days from the entry of the decree.
MASON and others
PEWABIO MIN. Co. and others.
(Oircuit Oourt, lV, D. Michigan, N. D. December 28, 1885.)
1·. CoRPORATION DISSOLUTION - ORGANIZATION OF NEW CoMPANY DIRECTORS Oll' PROPERTY TO NEW COMPANY.
A corporation having expired by limitation, the directors. under the Michigan statute authorizing such corporation to continue for three years as a corporation simply for the purpose of suing and sued. and to wind up its affairs, cannot organize a new corporation, and, WIth the consent of a majority of the stockholders of the old corporation. sell the property thereof to the new corporation at a valuation fixed by themselves, and compel the other stockholders in the old corporation to receive shares of stock in the new cor· poration, or their pro rata shares in money. based on such valuation.
SAME-RIGHTS Oll' MINORITY OF STOCKHOLDERS.
In such a case, the minority of the stockholders will be entitled to an injunction to prevent the intended sale, and to a decree directing the sale of the property for cash to the highest bidder, proceeds of the sale to be applied to the payment of corporate debts and a pro rata distribution among the shareholders, with the proviso that, if no bid exceeds the valuation fixed by the directors, the arrangement sanctioned by the majority be carried out, and the property conveyed to the new company ,
In Equity. MA.'r'fHEWS, Justice. The Pewabic Mining Company was organized as a corporation for mining copper and other ores, under the laws of Michigan, on April 4, 1853, for 30 years, with a capital stock ultimately of 40,000 shares of $25 each, invested in a copper mine near Houghton. 1.'he complainants are owners of 2,650 shares of the stock out of the whole amount, all of which has been issued. Although the period for which the company was incorporated expired on April 4, 1883, the directors elected in March of that year, in apparent ignorance of the fact, continued its ordinary business. On Maroh
MASON tl. PEWABIC MIN. CO.
26, 1884, the regular annual meeting of the stockholders for the election of directors,and for other purposes, was held pursuant to no· tice duly given, at which the following resolutions were adopted, against the vote and protest of the complainants: "Resolved, that the board of directors be authorized to sell and dispose of the property of the company ,for a Bum not less than $50.000; that the president and secretary be authorlzed to execute all conveyances necessary to carry out the contract for the sale of the property of this company made by the board of directors, and that the board of directors be and hereby are authorized to close up the business of the company. that the prop"Resolved. that it is the sense of this meeting of erty of this company shall be sold l to a new corporation, organized under the laws of Michigan, on the basis of forty thousand shares: and that the stock of such new corporation shall be issued to and received by the stockholders of this company in payment for the same, stockholders to have the right to receive equal numbers of shares in new company if they so elect, on surrendering certiticates of this company within thirty days after April 12, 1884: and, in case stockholder does not take stock of neW corporation, he is to receive his pro ,'ata share in money." The vote in favor of the adoption of these resolutions was 27,919 shares against 6,754 shares in the negative. On the same day, March 26, 1884, a certificate of incorporation was executed under the laws of Michigan to form "The Pewabic Copper Company," and filed March 28th. Its capital stock-40,I)OO shares of $25 each-was taken up by three corporators, who, with two others. were named as the first directors, being the same as those whocontrollM the old company; and the third article of association declared that "no cash is actually paid in on the capital stock. The cash valne of the real and personal property conveyed to the company contemporaneously with its organization is the sum of fifty thousand dollars." It was provided by a statute of Michigan (1 How. St. 1244-, § 4867) "All corporations whose charters shall expire by their own limitation, or shall be annulled by forfeiture or otherwise, shall nevertheless continue to be bodies corporate for the term of three years after the time when they would have been so dissolved, for the purpose of prosecuting and defending suits by or against them, and of enabling them gradually to settle and close their concerns, to dispose of and convey their property, and to divide their capital stock; but not for the purpose of continUing the business for which sueh porations have been or may be established." The present bill was filed March 31,1884, its main object being to prevent by injunction the proposed sale of the property of the abic Mining Company to the Pewabic Copper Company, and to have the same sold, under the orders of the court, at public auction, to the highest bidder for cash, and the proceeds, after payment of the debts of the corporation, divided ratably among the stockholders. It also prays as against the officers and directors of the company an account of all moneys received by them since April 4, 1883, including ments on stock alleged to have peen made and paid, and which it is averred were illegally used in the prosecution of the business of
corporation after its dissolution, and at a loss. The general grounds of the relief prayed for are that the transactions complained of are illegal for want of power on the part of the defendants to undertake them, and on the further ground that they are fraudulent as against the complainants,-particularly that the price fixed upon the property of the company as the consideration of its sale and conveyance is grossly inadequate. The answer insists upon the lawfulness of the proceedings questioned, and that the proposed sale and conveyance of the corporate property to the new company is in good faith, for its fair value, and. is the best mode of disposing of it for the benefit of the stockholders, and denies all fraud charged. Under the statute quoted above the Pewabic Mining Company continued to be a body corporate after April 4, 1883, notwithstanding the expiration of the time limited in its charter for the prosecution of its business for the purpose of winding up its affairs. For this purpose it continued to exist as a corporation, and could do all necessary corporate acts suitable to that end. And it retained its corporate organization, acting through directors and officers, elected and appointed as had been customary, and its stockholders continued to be such, with all their rights and powers; The directors in office at the time when the corporation was dissolved as to future business did not cease to be such, and become statutory trustees for winding up, nor were. the stockholders converted into cestuis que trltstent merely of the assets of the company. The existence of the company as a corporation was prolonged for three years, in order that it might as a corporate body do the acts and things authorized by the statute, to the end that it might gradually settle and close its concerns by disposing of and conveying its property, and dividing its capital stock. Nevertheless, the corporation itself, and the directors officially, for the purposes of the statute, were trustees for the creditors and stock. holders, and were bound to exert all their powers in the disposition of the property for the equal benefit of those equally entitled. It is a matter of much doubt, as it appears to me, whether, in view of the language and purposes of the act, as against a dissenting stockholder, the corporation and its directors have a discretion to sell the property of the company in liquidation otherwise than for cash; but, without denying the power, it is very clear that they have no right to reorganize the company and its business by the formation of a new corporation, to which its property is conveyed in exchange for its stock, so as to compel dissenting stockholders to continue in the business which the statute has declared shall be wound up. And, as they have no power to compel all the stockholders to accept interests in the new enterprise in exchange for their shares in the old, neither can they impose arbitrary and unfair terms and conditions upon them for refusing to do so. This is the feature in the proposed plan of transferring the assets of the Pewabic Mining Company to the Pewabie Copper Company which presents to my mind the insuperable
MASON'll. PEWABIO MIN. CO.
objection to its confirmation. The complainants are required to receive shares in the new company in exchange for those they hold in the old, or, in the alternative, accept their proportion of $50,000 as the value of the whole. This sum was arbitrarily fixed by the direct· ors and majority of the stockholders, who were to take the property at that sum. It made no difference to them what nominal valuation was adopted, as their relative interests were not changed. But the valuation was adopted, not with reference to a sale of the property to others, but to themselves, and is therefore no fair criterion for es· timating the value of the shares of those whom they sought to compel, if they parted with their interests, to do so only to their former associates. It is true that the defendants in their answer state that the sum named was a fair equivalent for the whole capital stock, at its market value; but that may not have been a fair value for the property which that capital stock represented.· It is impossible for me, in deciding upon this point, to ignore the nnding of the special master appointed for the very purpose of inquiring into the question of value, and who reports, upon the testimony taken, that, in his opinion, the property to be sold is worth nearly $500,000. And the complainants themselves offer in their bill to bid $75,000 for it. Whatever power, therefore, the company by its directors and a majority of its stockholders may be supposed to have under the statute to sell the corporate assets for the purpose of liquidation, the proposed conveyance to thePewabic Copper Company, in consideration of its assumption of the debts of the Pewabic Mining Company, which the answer alleges to be part of the understanding, and the exchange of the stock of the former for that of the latter, with the obligation of dissentients to accept their proportion of $50,000 as the estimated cash value of the whole, cannot be regarded as a sale at all, for purposes of liquidation. Its effect is simply to exclude the minority from all further interest in the property by compelling them, without their consent, to part with their interests at the price fixed by those to whom they are to be transferred, and that price, as it is now made to appear, far below the fair value of the property; The equity of the ease I find, therefore, to be with the complainants to have the propertyof the Pewabic Mining Company sold for cash to the highest bidder under a decree of this court, the proceeds of sale to be applied to the payment of its debts, and the remainder to be distributed pro rata among the stockholders. It is possible, however, that the property, when offered, may not bring more that $50,000 in addition to the debts, the amount of which, I believe, appears from statements on file. If no higher bid is made, there is no reason why the arrangement sanctioned by the majority of the stockholders and proposed by the company should not be carried out. To that end, the decree should provide that unless, when offered for sale, there should not be a bid in excess of $50,000 above
the amount of the debts, the arrangement referred to may be executed under the direction of the special master appointed to conduot the sale. A decree may be prepared accordingly.
(Oin'cuit OQwt, N. D. I()UJa, E. D. November Term, 1885.)
RAILROAD COMPANIES-CONDEMNATION PROCEEDINGS-ALLOWANCE BY COURT Oll' INTEREST ON DAMAGES-IOWA STATUTE.
On an appeal from the award of a sheriff's jury in proceedings to condemn land for rlght of way, the court should, in the order made for the recording of the verdict rendered, provide for the jayment of interest from the time when the company deprived the owner 0 the use of his property until the damages are all paid.
S. &ME-DIRECTION TO MABsIUL TO OUST CoMPANY Ill' IT FAIL TO PAY DAMAGES
§ 1258. A circuit court, to which an appeal from the verdict of a sheriffs Jury in condemnation proceedings has been removed from the state court, in the order entered on the verdict of the jury in that court awarding damages, should not direct the marshal to oust the railway company from the occupancy of the premises in case the damages assessed are not paid, but should leave the parties to their rights under the statute.
Assessment of Damages for Right of Way. Charles A. Clarke, for plaintiff. W. J. Knight and Burton Hanson, for defendant. SHIRAS, J. This proceeding was originally commenced before a sheriff's jury, in Linn county, Iowa, for the purpose of assessing the damages caused to plaintiff by reason of the fact that the defendant had located its track over certain premises owned by plaintiff adjoining the city of Cedar Rapids. From the award of the sheriff's jury an appeal was taken, under the provisions of the state statute, to the circuit court of Linn county, from which court the cause was removed to this court, and at the present term the case was heard before· a jury, and a verdict rendered assessing the damages at $1,600. By the express instructions of the court, the jury was directed to ascertain and assess the damages at the time the condemnation proceedingswere had under the statute, and the assessment was made by the sheriff's jury, which was on the thirty-first of October, 1883, Two questions are now presented to the court for determination, towit: (1) Can the court, in the order to be made for the recording of the verdict, provide for the payment of interest on the damages assessed by the jury? aIid(2) should the court provide, in case the damages are not paid by the company, that the marshal of thifl court shall oust the railway company from the premises in question? 1. In the cases of Daniels v. Chicago, I. Ii N. R. Co., 41 Iowa, 52,