Babcock v. Schuylkill & Lehigh Valley R. — 31 N.Y. St. Rep. 643

Majority

p. 643

Edward B. Babcock, Resp’t, v. The Schuylkill & Lehigh Valley R. Co., App’lt.

(Supreme Court, General Term, First Department,

Filed May 9, 1890.)

Headnote

1. Jurisdiction—Foreign corporations.

The courts of this state have jurisdiction of an action brought by a resident stockholder of a foreign corporation to compel another foreign corporation to perform an agreement to issue stock to the first named, company in pursuance of a consolidation agreement.

2. Same—Parties.

In such action it is not necessary to make the corporation of which plaintiff is a stockholder, or its officers, parties defendant, cs such company, by the consolidation, was dissolved and ceased to exist.

Appeal from interlocutory judgment overruling demurrer.

This action is brought by the plaintiff on behalf of himself and all other stockholders of the Pottsville & New York Bailroad Company, similarly situated, to obtain specific performance of an alleged contract between the defendant and the said Pottsville &. New York Bailroad Company. The plaintiff alleges that in March, 1887, two certain Pennsylvania corporations, the Potts-ville & New York Bailroad Company and the Schuylkill & Lehigh Valley Bailroad Company, were merged and consolidated and that defendant is such consolidated corporation; that as a part, of the consideration for the said consolidation it was agreed between the consolidating companies that the consolidated company should deliver to the Pottsville & New York Bailroad Company for the benefit of its stockholders, but subject to the use of so^ much thereof as might be necessary to provide for the payment of any debts, claims or demands against either of the consolidating companies, $250,000 par value of the defendant’s first mortgage bonds, $500,000 par value of its full paid capital stock, and $25,000 in cash; that the said sum of $25,000 cash was sufficient to pay off all debts, claims and demands against the consolidating companies in full; that no part of the said bonds or stock has been issued to the said Pottsville & New York Bailroad Company or to its stockholders; that at the time of the consolidation the plaintiff was the owner of twentyone thirtieths of the then outstanding stock of the Pottsville & New York Bailroad Company; that the plaintiff has requested the issue to him of twenty-one thirtieths of the said bonds and stock by the defendant, but that defendant has refused so to do, although it has abundant stock and bonds unissued in its treasury; that by the merger and consolidation aforesaid the Pottsville & New York Bailroad Com-

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pony was dissolved and ceased to have any officers representing, it other than the officers of the defendant; that the interests of those officers are antagonistic to the said alleged claim of the stockholders of the Pottsville Company against the defendant, and that said officers have repeatedly denied the validity or existence of any such claim; that the railroad of the defendant is only in course of construction, and that the said stock and bonds have no present market value.

Judgment is then demanded that the defendant issue to the plaintiff twenty-one thirtieths of the said bonds and stock, and that, in case of failure so to deliver, the defendant pay to the plaintiff the sum of $500,000 damages.

The defendant demurs to the complaint on three grounds: First, that the court has not jurisdiction of the subject of the action; second, that there is a defect of parties defendant, in that neither the Pottsville & New York Bailroad Company, nor the directors or managers of said company, at the time of its dissolution, if such dissolution has taken place, are made parties defendant ; third, that the complaint does not state facts sufficient to constitute a cause of action.

Joseph H. Choate, for app’lt; T. G. Shearman, for resp’t.

The learned justice in the court below overruled the demurrer to the complaint upon the proposition that on the facts stated the court had jurisdiction to award the plaintiff such damages as he might have sustained by the wrong alleged to have been done by the defendant, and this upon the concession that •the equitable relief solicited could not be afforded for the reason that this court had .not jurisdiction arising from the facts stated to grant it. It thus appears that the question of equitable jurisdiction was not subjected to any formal examination.

The cases upon which the counsel for the appellant chiefly relies to sustain his contention that this court has no jurisdiction in actions of this character,' viz.: Howell v. Chicago & N.W. R. Co., 51 Barb., 378 , and Redmond v. Enfield, 13 Abb., N. S., 332, are, however, overruled in the case of Prouty v. Michigan S. & N. I. Ry. Co., 1 Hun, 655 , decided in this department, in which it was stated in the course of the opinion, speaking of the section of the Code relating to the subject, “ This is a broad and unqualified provision containing nothing to justify the restriction placed upon it by the special term in deciding the case of Howell v. Chicago & N. W. R. Co. just mentioned.”

The language of the section declared that an action might be maintained by a resident of the state against a corporation created by or under the laws of any other state, government or country, for any cause of action; and this was regarded as sufficiently comprehensive to include actions like the one in hand. Ives v. Smith, 19 N. Y. State Rep., 566.

The case of Boardman v. Lake Shore & M. S. R. Co., 84 N. Y., 157 , has no application to the ease thus presented, for that company was declared as a result of its consolidation to bé a domestic corporation in an action brought against it. 70 N. Y., 220 .

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It is not necessary for the purposes of this case to question the accuracy of the decision in Prouty v. Mich. S. R. Co., supra, inasmuch as the court of appeals has not yet reversed it or doubted its propriety.

It must be assumed, therefore, that the court below, if an examination had been made, would have arrived at the result herein declared and maintained the jurisdiction of this court to grant the equitable relief asked for in this action.

It does not seem necessary to give any extended consideration to the second ground of demurrer, alleging a defect of parties in the omission to include the Pottsville & N. Y. R. Co., or the directors or managers thereof, after the dissolution of that company had taken place, for the reason that the merger and consolidation of that company into the defendant company is alleged and admitted, and not only admitted, but that such merger and -consolidation was duly authorized by the laws of Pennsylvania, of which state both corporations were creations.

The defendant company included the Pottsville & N. Y. Co.; and as the result the latter company was dissolved, and ceased to have any legal existence as alleged in the complaint and admitted by the demurrer.

This conclusion renders it necessary to affirm the judgment of the court below.

Van Brunt, P. J., and Daniels, J., concur.'