Latimer v. Eddy

Sutherland, J.

This action was brought under sections 33 and 35 of the statute conferring equity jurisdiction over corporations and their managers, trustees and officers in certain cases. (1 R. S. 462, 463, 1st ed.) The principal relief asked for by the complaint is, the removal of the individual defendants, trustees of the corporation, from their office of trustee.

I see no reason to doubt that the. action was properly brought in the name of the plaintiff as a trustee. (See § 35 above referred to.) The preliminary injunction which was granted in this case, and which the plaintiff moved to have continued, restrained the individual defendants from acting as trusteees, and from managing, controlling, or interfering with the affairs, property, assets, &c. of the corporation, and from receiving any of such property, &c. and from consenting to be voted for, or to be re-elected trustees, and from acting as trustees on such re-election.

It is evident that the continuance of the injunction must absolutely have stopped all further legitimate operations and business of the corporation for an indefinite period; for the individual defendants are a majority of the trustees, and, according to the by-laws, a majority of the trustees must meet to act, and the stockholders can act only through the trustees or directors.

It should be particularly noted that the complaint in this action does not ask for a receiver; that the action is not brought to procure a dissolution of the corporation, or distri- ' bution of its assets. The complaint contemplates the continuance of the corporation, and of its legitimate business and operations under the administration of the new trusteess.

■ Perhaps the power of the court to restore and continue the preliminary injunction which was granted in this case can not be questioned, though such injunction absolutely restrained the individual defendants from acting as trustees, and thus must be presumed to have stopped all the business and operations of the corporation; for by the third subdivision of sec*67tion 33, above referred to, power is expressly given to suspend any trustee or officer, from executing his office, whenever it shall appear that he has abused his trust; but it is clear that such injunction should not be restored and continued unless a receiver can be appointed. A receiver would be necessary to preserve the property of the corporation, and to protect the interest of the stockholders, and of the creditors of the corporation, if it has any. The appointment of such receiver must absolutely suspend all legitimate business and operations of the corporation, for an indefinite period, unless the court can and does give such receiver power to carry on the business and operations of the corporation in California.

I even doubt the power of the court to appoint a receiver in this case without such power.

There is, certainly, no express provision of the statute, giving the court power thus to suspend all the business and operations of a corporation in such a case, and the general principle is, that a court of equity has no visitorial power over corporations, except such as may be expressly conferred on it by statute.

I think the order appealed from should be affirmed, with $10 costs.

Leonard, J. concurred.