Statement of the Case.

Upon final hearing, the Circuit Court decreed that the equity of the case is with the complainants, and "that the affairs of the Pewabic Mining Company be and are hereby decreed to be wound up." It then directs that "all the assets and property of the Pewabic Mining Company be sold at public vendue for cash to the highest bidder: Provided, That if at such sale the bid for the aggregate of the property and assets should not be in excess of $50,000 above the amount of the debts of the company existing at the time of the sale, then the arrangement for the sale of such property, made at the stockholders' meeting in Boston on the 26th day of March, 1884, as set up in defendants' answer, shall be carried out under the direction of the special master, hereinafter designated, and as provided by the resolution adopted by the stockholders at said. meeting." It was further ordered that "the cause be referred to Peter White, as special master, for the following purposes, and with the following powers, to wit: That said master proceed to ascertain the assets and property and the amount of debts of said Pewabic Mining Company, and to this end he may consider the evidence already taken in the cause, and may further, upon notice to the solicitors of the different parties, set days for hearing evidence, and either party may produce witnesses as in the ordinary course of a master's proceedings, and that he report to this court the proceedings and findings thereon, and that after ascertaining the assets and debts of said company, and making report thereof to this court, said master shall proceed to the sale of said property at public vendue to the highest bidder in one body, after giving the notice required by law, and that he make report thereof. And it is further decreed that if the highest bid for such property at such sale shall amount to more than $50,000 over and above the indebtedness of said Pewabic Mining Company, then that the arrangement for the sale of said property, made at said meeting of the stockholders at Boston, must be set aside and held to be null and void, and the Pewabic Mining Company be enjoined perpetually from selling to the Pewabic Copper Company, and that company is enjoined from receiving its transfer of the property." It is then decreed "that the

Argument for Defendants in Error.

defendants Vivian, Billings, Perkins, Buttrick and Demmon, directors of said Pewabic Company, are not liable to pay to complainants and other stockholders any money received by them since the expiration of the charter of said Pewabic Mining Company, April 4, 1883, and that an accounting by said. defendant directors is hereby denied as to such expenditure made by them after the expiration of the charter."

The complainants in the bill prayed an appeal from that part of the decree which refused the prayer for an accounting on the part of the directors of the Pewabic Company of their transactions since the date of the expiration of the charter. This appeal is numbered on our docket 168. The defendants all appeal from the principal decree, which directs a sale of the property and the distribution of its proceeds among the stockholders of the Pewabic Mining Company in the event that a sum is bid for all of said property in a lump which exceeds the amount of the indebtedness of the Pewabic Mining Company and the sum of $50,000, which appeal is numbered 240.

Mr. Don M. Dickinson (with whom was Mr. Alfred Russell on the brief) for Mason and others.

Mr. Thomas H. Talbot for Pewabic Mining Company and

others.

The complainants have no absolute right to a compulsory sale. An order of sale in such a case as this is, like an injunction, "not of right but of grace." Sparhawk v. Union Passenger Railway Co., 54 Penn. St. 401, 454. A court of equity is not bound to decree a dissolution, even when a majority of directors and stockholders request it to be done. In re Niagara Ins. Co., 1 Paige, 258. The necessity for it must be clearly shown. In the present case it is entirely unnecessary. Fifteensixteenths of the stockholders resist the application for it. "The particular interest of the few must give way to the general interest of the many." In re Niagara Ins. Co., ubi supra. The evidence shows that it is for the interest of the stockholders that the business should be continued. The interest

Argument for Defendants in Error.

of the complainants in a compulsory sale is adverse to that of a great majority of the stockholders. Under such circumstances the interest of a "corporator" is not to be considered, Irvin v. Susquehanna &c. Turnpike Co., 2 Penn. 466, 471; but the interest of the "company." Filder v. London, Brighton &c. Railway Co., 1 Hem. & Mil. 489; Waterbury v. Merchants' Union Express Co., 50 Barb. 157, 168; Belmont v. Erie Railway Co., 52 Barb. 637, 662. The court will always inquire whether the bill is really a stockholders' bill, or whether it is brought to serve other purposes of the complainant. Forrest v. Manchester, Sheffield &c. Railway Co., 4 De G. F. & J. 126, 130; Sparhawk v. Union Passenger Railway Co., 54 Penn. St. 401, 454; Ffooks v. Southwestern Railway Co., 1 Sm. & Gif. 142, 167; Robson v. Dodds, L. R. 8 Eq. 301.

It is within the power of a court of equity to permit the majority to go on with the work, imposing such terms in favor of the minority as it shall deem just. Lanman v. Lebanon Valley Railroad, 30 Penn. St. 42; State v. Bailey, 16 Indiana, 46, 51; S. C. 79 Am. Dec. 405.

The case nearest parallel to the present is to be found in England. A quarry company being in process of liquidation, with a view to winding up, the holders of a majority of the paid-up shares conceived the purpose of continuing the company, and accordingly, by a representative, prayed that "all further proceedings in relation to the winding up of the company might be stayed." One holder of a hundred and fifty shares, considering the experiments intended by the majority, and for which he would have to contribute, "would be fruitless," appeared in opposition to the above prayer, being “desirous that the liquidation should proceed, and the slate quarry sold in the usual way." He was not allowed to stand in the way of the wishes of his fellow-shareholders. He was merely allowed fourteen days "within which to elect whether he will remain a member of the company, or will retire and give up his shares;" on his election to retire, the value of his interest to be referred for ascertainment, and thereafter to be paid by the petitioner. In re South Barrule Slate Quarry Co., L. R. 8 Eq. 688.

Opinion of the Court.

MR. JUSTICE MILLER, after stating the case as above reported, delivered the opinion of the court.

With regard to the main question, the power of the directors and of the majority of the corporation to sell all of the assets and property of the Pewabic Mining Company to the new corporation under the existing circumstances of this case, we concur with the Circuit Court. It is earnestly argued that the majority of the stockholders-such a relatively large majority in interest - have a right to control in this matter, especially as the corporation exists for no other purpose but that of winding up its affairs, and that, therefore, the majority should control in determining what is for the interest of the whole, and as to the best manner of effecting this object. It is further said that in the present case the dissenting stockholders are not compelled to enter into a new corporation with a new set of corporators, but have their option, if they do not choose to do this, to receive the value of their stock in money.

It seems to us that there are two insurmountable objections to this view of the subject. The first of these is that the estimate of the value of the property which is to be transferred to the new corporation and the new set of stockholders is an arbitrary estimate made by this majority, and without any power on the part of the dissenting stockholders to take part, or to exercise any influence, in making this estimate. They are therefore reduced to the proposition that they must go into this new company, however much they may be convinced that it is not likely to be successful, or whatever other objections they may have to becoming members of that corporation, or they must receive for the property which they have in the old company a sum which is fixed by those who are buying them out. The injustice of this needs no comment. If this be established as a principle to govern the winding up of dissolving corporations, it places any unhappy minority, as regards the interest which they have in such corporation, under the absolute control of a majority, who may themselves, as in this case, constitute the new company, and become the pur

Opinion of the Court.

chasers of all the assets of the old company at their own valuation.

The other objection is that there is no superior right in two or three men in the old company, who may hold a preponderance of the stock, to acquire an absolute control of the whole of it, in the way which may be to their interest, or which they may think to be for the interest of the whole. So far as any iegal right is concerned, the minority of the stockholders has as much authority to say to the majority as the majority has to say to them, "We have formed a new company to conduct the business of this old corporation, and we have fixed the value of the shares of the old corporation. We propose to take the whole of it and pay you for your shares at that valuation, unless you come into the new corporation, taking shares in it in payment of your shares in the old one." When the proposition is thus presented, in the light of an offer made by a very small minority to a very large majority who object to it, the injustice of the proposition is readily seen; yet we know of no reason or authority why those holding a majority of the stock can place a value upon it at which a dissenting minority must sell or do something else which they think is against their interest, more than a minority can do.

We do not see that the rights of the parties in regard to the assets of this corporation differ from those of a partnership on its dissolution, and on that subject Lindley on Partnership says, Book 3, c. 10, § 6, sub-div. 4, page 555, original edition:

"In the absence of a special agreement to the contrary, the right of each partner on a dissolution is to have the partnership property converted into money by a sale, even though a sale may not be necessary to the payment of debts. This mode of ascertaining the value of the partnership effects is adopted by courts of equity, unless some other course can be followed consistently with the agreement between the partners, and even where the partners have provided that their shares shall be ascertained in some other way, still, if owing to any circumstance their agreement in this respect cannot be carried out, or if their agreement does not extend to the event which has in fact arisen, realization of the property by a sale is the only alternative which a court of equity can adopt."