A syndicate, of which A and B were members, was formed to
purchase a mine, and it was agreed before the purchase, as a
condition of A's subscription, that he should "control the
management of the mine." After the purchase, a board of directors
was organized, of which A &, B were members. At a meeting of
the Board, of which A had notice, resolutions were passed at the
instigation of B prohibiting the treasurer from paying checks not
signed by the president and vice-president, and countersigned by
the secretary, directing that all orders for supplies and materials
from San Francisco should be made through the head officer there,
authorizing the vice-president in the absence of the president, to
sign certificates of stock and other papers requiring the
president's signature, and authorizing the superintendent of the
mine, in the absence from the mine of the president, to draw on the
company at San Francisco for indebtedness accruing at the mine,
held that these resolutions were not inconsistent with the
control of the mine by A.
Page 115 U. S. 52
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
This is a bill in equity filed by a stockholder and director of
the Fresno Enterprise Company, a California corporation owning the
Enterprise mine, against another stockholder and director to
restrain him "from attending any meeting of the board of directors
to enforce" certain resolutions passed at a previous meeting "which
give the vice-president authority to sign checks or certificates of
stock" when the complainant, the president of the company, is "not
in the City of San Francisco, or which authorize the superintendent
to draw drafts on the company when" the complainant is "not at the
mine," and also restraining the defendant
"from voting on . . . five thousand six hundred and sixty shares
of stock, issued to him under the contract of third May, 1881, or
any other shares of stock owned by him at any meeting of the
stockholders for electing directors, or amending the bylaws,"
and "that on the final hearing," the complainant "be decreed to
have a continuing proxy for said five thousand six hundred and
sixty shares."
The general ground on which the complainant seeks his relief is
this:
In May, 1881, an association of capitalists, called in the bill
a "syndicate," to which both the complainant and defendant
belonged, bought 51,000 of the 100,000 shares of the capital stock
of the company, and, in the contract under which the syndicate was
formed, it was agreed that the complainant was "to control the
management of the mine." In the purchase the complainant became the
owner of 17,000 shares, and the defendant of 5,660. Other persons
divided the remaining 28,340 shares between them. The 49,000 shares
not purchased
Page 115 U. S. 53
were held by persons outside of the syndicate. At a meeting of
stockholders, held a few days after the purchase, for the election
of directors, the complainant and the defendant, with one other
member of the syndicate, were elected directors, as the
representatives of the purchasers, and two others not in the
syndicate as representatives of the minority stockholders. The
complainant was elected president of the board of directors, and
general manager of the mine. The defendant and the directors who
were elected in the interest of the minority stockholders seem to
have been of opinion that some additional rules for the government
of the affairs of the company were necessary, and so, as is
alleged, by false representations, the defendant, in December,
1881, induced some of the members of the syndicate to agree to the
adoption of the following resolutions by the directors:
"
Resolved that the Bank of California, the treasurer of
this company, be, and is hereby, instructed to pay only such checks
as are signed by the president or vice-president and countersigned
by the secretary."
"
Resolved that all orders for supplies and materials
from San Francisco for the company shall be made through the head
office in San Francisco, and payment for the same shall be made by
checks signed by the president or vice-president and countersigned
by the secretary at the office in San Francisco."
"
Resolved that in the absence of the president from the
office of the company in San Francisco, the vice-president, in
accordance with the bylaws, be and is hereby, authorized to sign
all certificates of stock that are legally issued by the secretary,
as well as all papers requiring the signature of the president, if
he were present at the office."
"
Resolved that in the absence of the president from the
mine, that the superintendent at the mine be, and is hereby,
instructed to draw drafts on the company at San Francisco for all
indebtedness accruing at the mine."
These resolutions were adopted by the board on the 4th of
January, 1882, at a regular meeting held that day, of which the
complainant had knowledge, but which he did not attend. A quorum of
directors was present at the meeting, and the
Page 115 U. S. 54
defendant voted for the resolutions. It was to restrain the
defendant from aiding the directors in the enforcement of these
resolutions, and from voting his shares acquired under the
syndicate contract, except in accordance with the will of the
complainant that this bill was brought.
We are unable to discover any ground for equitable relief in the
case made by the bill. It is undoubtedly true that the defendant
was anxious to have the complainant interested in the mine, and was
willing to become one of a number of persons, of whom the
complainant should be one, to purchase enough of the stock to make
the aggregate of their holdings a majority of the entire capital of
the company. It is also true that the defendant, and all the other
members of the syndicate, yielded to the condition insisted on by
the complainant, that "he should have the control of the management
of the mine" if the purchase of a majority of the stock was made;
but this was necessarily subject to such reasonable rules and
regulations as should be adopted in a proper way, either by the
stockholders or the directors, for the government of the conduct of
the officers of the company. No attempt has been made to remove the
complainant from his office of general manager. He still "controls
the management of the mine," so far as anything appears in the
bill. All that the directors have done by their resolutions, of
which complainant is made, is to prohibit the Bank of California,
the treasurer of the company, from paying any checks of the company
except such as are signed by the president or vice-president, and
countersigned by the secretary; to direct that all orders for
supplies and materials from San Francisco should be made through
the head office in San Francisco, and paid for in checks signed and
countersigned as above; to authorize the vice-president to sign
certificates of stock, and all other papers requiring the signature
of the president, when the president was away from the office, and
authorizing the superintendent at the mine, in the absence of the
president, to draw drafts on the company at San Francisco for debts
incurred there. We see nothing in this inconsistent with the
control of the mine itself by the complainant "as if he owned
it."
Page 115 U. S. 55
Without, therefore, deciding whether, if the members of they
syndicate should undertake to remove the complainant from the
control of the management of the mine without just cause, he could
have preventive relief in equity, we affirm the decree.
Affirmed.