Equity Co-operative Packing Co. v. Hall

Bobinson, J.

(dissenting). The purpose of this suit is to obtain a writ of mandamus commanding Thomas Hall, as secretary of state, to receive and file amended articles of - incorporation, increasing the capital stock from $1,000,000 to $3,000,000. The writ of mandamus may be issued to a person to compel the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station. Comp. Laws, § 8457. The question is: Was it the plain duty of Thomas Hall to receive and file the amended articles without receiving the regular incorporation fee of $5 for every $10,000 increase of the capital stock, as provided by statute? Sections 4509, 4510.

In October, 1916, the plaintiff filed with the secretary of state articles of incorporation signed by seven persons as directors, viz.: M. P. Johnson, Tolley, N. D.; A. M. Baker, Fargo, N. D.; F. J. Lee, Valley City, N. D.; Anthony Walton, Minot, N. D.; P. H. Casey, Lisbon, N. D.; J. C. Bergh, Hendrum, Minn.; J. C. Leum, Mayville, N. D.

The articles are in effect: (1) The purpose of the corporation is to do a general packing-house business, with its principal office at Fargo; (2) the number of directors shall be seven; (3) the amount of its capital stock shall be $1,000,000. The stockholders shall be entitled to receive a cumulative dividend of 8 per cent.

In accordance with the statute the plaintiff paid the secretary of state the sum of $533. Manifestly the plaintiff was incorporated under the general laws, and under such laws it was not entitled to in*531■crease its capital stock without paying a fee of $5 for each 10,000 of the increase. The application for the writ was based merely on the presentation made to Thomas Hall. This suit is based on a verified complaint, dated February 5, 1919, and on a copy of the by-laws of the company. The complaint avers that plaintiff is a co-operative packing company; that it was the purpose of the original incorporators to organize as a co-operative corporation under chap. 92, Laws 1915, and that by mistake of their counsel, who drafted the articles, they organized as they did under the general laws; that the by-laws provide for the distribution of profits in accordance with chapter 92; that in 1918, at a special meeting of the stockholders, a majority of all the stockholders voted to accept the benefits and to be bound by the provisions of chapter 97, Laws 1917. On October 30, 1918, it filed in the office of the secretary of state a written declaration, signed and sworn to by its president and secretary, stating that at such special meeting the stockholders, by a majority vote, agreed to accept the benefits and to be bound by the provisions of said chapter 97; that at a meeting of the stockholders in January, 1919, at which more than two thirds were present, they voted to amend the articles of incorporation by increasing the capital stock to $3,000,000, and the secretary of state was duly requested to file and record such amendment on payment of $11, but he demanded an additional sum of $1,000.

The complaint is in the nature of a bill in equity, appealing to the court to excuse the carelessness of the plaintiff and its counsel, by which they incorporated under the general laws, when their purpose was to incorporate under chap. 92, Laws 1915, but it does not appear that any such excuse was presented to the secretary of state, or that the statute made it his plain duty to act the part of a clairvoyant or a mindreader so as to determine what the plaintiff intended to do, and to correct its mistakes. Furthermore, it does appear from a copy of the by-laws (§ 28), submitted as a part of the complaint, that it is not the purpose of the plaintiff to distribute its earnings in accordance with chapter 92. By said § 28 it is provided that, after a sinking fund has been provided and all running expenses and dividends paid, a sum not to exceed 10 per cent of the remaining net profits shall be paid to the American Society of Equity for educational purposes, which shall be prorated among the several states, and the remainder of the net *532profits shall be apportioned among the patrons as a patronage dividend. • Now it is clear that does not accord with chapter 92, and it does not appeal to equity. It does not show an honest and good-faith purpose to deal fairly with the stockholders and to compete successfully against the great packers, who do not give away 10 per cent of their net earnings. Furthermore, there is no showing that the contemplated increase of stock is in accordance with the letter or the' spirit of the Blue Sky Law (Laws 1915, chap. 91). Clearly the application should be denied.