Evans v. Brown

by Morrison Waite

United States Supreme Court

109 U.S. 180

Evans  v.  Brown

R. D. Mussey, for appellants.

Frederic Ullmann and L. D. Norris, for appellees.

WAITE, C. J.

This is a motion to dismiss an appeal because the decree appealed from is not a final decree. The motion papers show that the appellees, Meeker, Brown, and Brooks, a minority of the stockholders of the Winthrop Iron Company, on or about the twelfth of November, 1881, filed a bill in equity in the circuit court of the United States for the western district of Michigan against the Winthrop Iron Company, the Winthrop Hematite Company, and certain directors of the iron company who were the stockholders of the hematite company, the object and purpose of which was to set aside as fraudulent and void the proceedings of the stockholders of the iron company at a meeting held in Chicago on the first of October, 1881, and to have a receiver appointed to take possession of the property of the company and manage its affairs. The effect of the proceedings of the meeting complained of was, as alleged, to authorize a lease of the property of the iron company to the hematite company from and after the first of December, 1882, for the personal advantage of the majority stockholders of the iron company, regardless of the rights of the minority. The stockholders of the hematite company were also elected directors of the iron company, and constituted a majority of the board. On the second day of October, 1882, the cause was submitted to the court upon the pleadings, proofs, and arguments of counsel. From the proofs it appeared that, notwithstanding the pendency of the suit, the iron company had, on the thirtieth of November, 1881, executed a lease to the hematite company, according to the vote of the stockholders. On the sixth of April, 1883, a decree was rendered which, in effect, adjudged that the proceedings of the meeting were in fraud of the rights of the minority stockholders, and that the lease which had been executed in accordance with the authority then given was 'null and void, for the fraud of the defendants, the Winthrop Hematite Company and the St. Clair Bros.,' the majority stockholders and directors of the iron company, 'in procuring the same.' By the same decree a receiver was appointed to take charge of and manage the business of the iron company, evidently because a majority of the board of directors, after the election at the October meeting, were considered unfit to control its affairs, as their personal interests were in conflict with the interests of the company. Both the iron company and the hematite company, as well as the defendant directors of the iron company, were ordered to 'forthwith surrender and deliver to' the receiver all the property of the iron company, and 'all corporate records and papers.' The receiver was fully authorized to 'continue the management of the business of the * * * company, with power to lease or operate its mines and plants until the further order of the court.' The decree further ordered an accounting before a master by the hematite company and the defendant directors of the iron company, for all profits realized from the use of the leased property after the first of December, 1882, the date of the beginning of the term under the lease which had been set aside. There was also an order for an accounting by the defendant directors 'concerning the ores mined by them, and the royalty upon such ores due and owing by them to the * * * company, and concerning the rights and obligations of the lessor and lessee, under and according to a lease mentioned in the bill, * * * expiring on December 1, 1882.' At the foot of the decree is the following: 'And the court reserves to itself such further directions as may be necessary to carry this decree into effect, concerning costs, or as may be equitable and just.' From this decree the appeal was taken.

In our opinion the decree as entered is a final decree, within the meaning of section 692 of the Revised Statutes regulating appeals to this court. The whole purpose of the suit has been accomplished. The lease made under the authority of the meeting of October, 1881, has been canceled, and the management of the affairs of the company has been taken from the board of directors, a majority of whom were elected at that meeting and committed to a receiver appointed by the court, plainly because, in the opinion of the court, the rights of the minority stockholders would not be safe in the hands of directors elected by the majority. In order that the receiver may perform his duties, the defendants are required to turn over to him the entire property and records of the company. The accounting ordered is only in aid of the execution of the decree, and is no part of the relief prayed for in the bill, which contemplated nothing more than a rescission of the authority to execute the fraudulent lease, or a cancellation of the lease if executed, and a transfer of the management of the affairs of the company from a board of directors, whose personal interests were in conflict with the duty they owed the corporation, to some person to be designated by the court. The litigation of the parties as to the merits of the case is terminated, and nothing now remains to be done but to carry what has been decreed into execution. Such a decree has always been held to be final for the purposes of an appeal. Bostwick v. Brinkerhoff, 106 U.S. 3, [S.C.. 1 SUP. CT. REP. 15,] and cases there cited. In Forgay v. Conrad, 6 How, 204, it was said by Chief Justice TANEY, for the court:

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