Mason v. Pewabic Mining Co.
133 U.S. 50 (1890)

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U.S. Supreme Court

Mason v. Pewabic Mining Co., 133 U.S. 50 (1890)

Mason v. Pewabic Mining Company

Nos. 168, 240

Argued December 17-18, 1889

Decided January 13, 1890

133 U.S. 50




On the dissolution of a corporation at the expiration of the term of its corporate existence, each stockholder has the right, as a general rule, and in the absence of a special agreement to the contrary, to have the partnership property converted into money, whether such a sale be necessary for the payment of debts, or not.

Directors of a corporation, conducting its business and receiving moneys belonging to it after the expiration of the term for which it was incorporated, will be held to an account on the dissolution and the final liquidation of the affairs of the corporation in a court of equity.

In equity. The Court, in its opinion, stated the case as follows:

These are an appeal and a cross-appeal from a decree of the Circuit Court of the United States for the Western District of

Page 133 U. S. 51

Michigan. On March 31, 1884, there was filed in the circuit court for that district the bill of complaint of Thomas G. Mason, William Hart Smith, and Sullivan Ballou, who describe themselves as "citizens of the State of New York," against the Pewabic Mining Company, a corporation existing under the laws of the State of Michigan, Johnson Vivian, a citizen of the State of Michigan, and Henry Billings, Thomas H. Perkins, Alden B. Buttrick, and Daniel L. Demmon, citizens of the State of Massachusetts, and the Pewabic Copper Company, a corporation created under the laws of the State of Michigan. The bill professes to be filed in behalf of the complainants above named, and of all the stockholders in the Pewabic Mining Company who may desire to join herein and take the benefit of the proceedings of the court. The bill is too long to copy in full in this opinion. The substance of it is that the complainants were members of the Pewabic Mining Company, a corporation organized under the laws of Michigan on the 4th day of April, 1853, with a capital stock of twenty thousand shares, of $25 each, afterwards increased to forty thousand, which was invested in a copper mine near Houghton, Michigan. The complainants allege themselves to be, at the time of the filing of the bill, the owners of 2,650 shares of the stock of the company. They allege that the charter of the company expired on April 4, 1883, but that nevertheless the directors who were elected in March of that year, disregarding this fact, continued the ordinary business of the corporation, and, among other things, made an assessment of $88,000 on the capital stock, which was paid. They further allege that at the annual meeting of the stockholders on the 26th of March, 1884, for the election of directors and for other purposes, the following resolutions were adopted, against the vote and the protests of the complainants:

"Resolved that the board of directors be authorized to sell and dispose of the property of the company for a sum not less than $50,000; that the president and secretary be authorized 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,

Page 133 U. S. 52

and hereby are, authorized to close up the business of the company."

"Resolved that it is the sense of this meeting of stockholders that the property shall be sold 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 number of shares in new company, if they so elect, on surrendering certificates of this company, within thirty days after April 12, 1884, and in case a stockholder does not take stock of the new corporation, he is to receive his pro rata 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, a certificate of incorporation under the laws of Michigan was executed forming the Pewabic Copper Company, and filed two days afterwards. Its capital stock was also 40,000 shares at $25 each, which was taken up by the defendant corporators, who, with two others, were named as the first directors, being the same persons who controlled the old company. The third article of this association declared that no cash is actually paid on the capital stock. The cash value of real and personal property conveyed to the company contemporaneously with its organization is the sum of $50,000.

The Constitution of the State of Michigan declares, Article XV, section 10, that no corporation, except for municipal purposes or for the construction of railroads, plank roads, and canals, shall be created for a longer time than thirty years. A statute of Michigan (1 Howell's Statutes

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