Page:Federal Reporter, 1st Series, Volume 8.djvu/81

FAEWELL V. HOUOHTON COPPEil WORKS. 67' In Equity. Hearing on pleadings and proofg. Ban. H. Bail and G. V. N. Lothrop, for complainant. ' T. L. Chadboume and Ashley Pond, for all defendants except the' Houghton Copper Works. WiTHBT, D. J. The Houghton Copper Works was organiaed under the laws of Michigan in 1871, among other things, for the purpose of manufacturing copper, with a capital stock of $250,000, divided into 10,000 shares of $25 each. Complainant is a stockholder, and brings this suit to set aside a sale made by a majority of the directors to defendant Edwards, October 6, 1879, for the priee of $10,000. The sale comprised all the real estate, works, and property of the Company. The object sought to be aocomplishsd was to close out the property and wind up the business, and such is manifestly the effect if the sale is valid. The sale is attacked principally uj^on three grounds : (1) That it was made without authorifcy of the stockholders, inasmuch as three-fifths in interest of the entire stock of the company, at a meeting called for that purpose, did net vote to authorize the sale; (2) that a majority of the directors, convened without notice to all the directorsj possessed no power to make the sale ; and, lastly, that the sale was fraudaient, it being made with intent to deprive complainant of his-^rights as a stockholder. According to the records of the company, the stockholders, Sep- tember 20, 1876, authorized a sale of all the property of the cor- poration; but it is said that three-fifths in interest of the entire stock was not represented and did not vote in favor of authorizing the directors to sell. Comp. Laws, § 2888. Whether this objection is valid depends upon two questions : (1) Whether certain of the capital stock owned by the company, and carried in the name of the treasurer, was to be counted in determiaing the three- fifths in interest of the entire stock, part of it having been subscribed and immediately transferred to the company to be subsequently disposed of in the interest of the corporation, while other of the stock so held had been purchased at a sale of stock delinquent for non-payment of assessments ; (2) whether the prima fade evidence made by the records of the stockholders' meeting, stating that 8,387 shares — more than three-fifths, excluding shares owned by the corporation — voted in favor of authorizing the directors to sell, has been rebutted. The entire capital stock was subscribed at its par value, but, as stated, nearly one-half of the subscriptions wereintendedto bemerely nominal, and such stock was at once transferred to the treasurer for the com- pany, on whieh, of course, no assessments were paid. None of this stock was, in - my opinion, to be counted in determining whether