Kearney v. Beverly Hills Corp.

Adkins, J., delivered the opinion of the Court. This appeal is from an order sustaining the demurrer to the original bill of complaint filed, and from an order refusing leave to file an amended bill offered by plaintiff. The original bill alleges that the defendant is a body corporate of the State of Maryland; that plaintiff is the holder of ten shares of the common stock of said corporation; that Lawrence Schoenlein, Jr., is in complete control of said corporation, either holding in his own name or in the name of relatives all the balance of the stock issued, except that held by plaintiff; that plaintiff has been informed that the said corporation is about to dispose of' its remaining assets, and thereafter is to be dissolved, and that, although plaintiff has made demand upon said Schoenlein, thei president of said corporation, plaintiff has been deprived of the right to participate in the proceeds of said corporation, and he has been advised by the president that he will not be permitted to share in the assets of the corporation upon the dissolution thereof; that the said Schoenlein is in complete control of all the assets, papers, and documents of the corporation, and that plaintiff has no remedy save in a court of equity to prevent the said Schoenlein from disposing of the corporate assets and depriving plaintiff of his share of the proceeds; that plaintiff has never received any dividends or payment of any sort on account of said shares of stock held by him. The prayer of the bill is for an injunction to restrain defendant, its officers, agents, servants, and employees from disposing of any and all of the assets of said corporation pending the determination of this suit; that the defendant be required under oath to answer the bill and disclose and ¹³⁸ account in detail for the monies and other assets which it has received and disbursed from January 1st, 1924, to date; and for general relief.

The chancellor, in the order sustaining the demurrer, granted plaintiff leave to file an amended bill within ten days, “it being understood that the said leave to amend extends only to a bill of complaint seeking only to> establish the plaintiff’s alleged claim to be a stockholder of the defendant corporation holding ten shares of stock therein and also seeking a right of discovery and accounting, it being further understood that the right to an injunction against the sale of the defendant’s assets, as claimed in the original bill of complaint, is hereby excluded and, as to- the said right to. am. injunction in the said bill of complaint, the demurrer is sustained without leave to amend unless and until the plaintiff shall file in these proceedings within five days from the date hereof a good and sufficient bond in an amount to be approved by this court and until the legal sufficiency of said bond shall have been approved by the clerk of this court.” Subsequently plaintiff offered an amended bill of complaint, leave to file which was refused. The proposed amended bill, in addition to the allegations in the original bill, alleged that the amount of the authorized capital stock of the corporation was two thousand shares of the par value of fifty dollars each; that the ten shares held by plaintiff was more than five per cent, of the stock outstanding; that, although plaintiff has made demand upon him therefor, the said Schoenlein has refused to give plaintiff any information about the affairs, assets, liability and business of said corporation, and has refused plaintiff permission to examine the books and paper’s of the corporation; that said Schoenlein, through his office as president and his ability to control the votes of the other stockholders, is engaged in converting into’ cash all of the corporate assets by sale and collections,. and when he has done so intends to divide said cash among the stockholders of the corporation other than plaintiff; that, if he is allowed to convert the assets into cash and divide the proceeds thereof, plaintiff will suffer a great loss, ¹³⁹ as the said Schoenlein is heavily indebted to creditors who are pressing him for payment of overdue claims. The prayer of the amended bill is the same as that of the original bill. The original bill was clearly demurrable.

It contains no statement of the number of shares of stock authorized or outstanding, or of the nature of the business, and gives the court no information on which it could properly act; and neither the certificate of incorporation nor a copy thereof is filed as an exhibit, nor the certificate of stock alleged to be owned by plaintiff or a copy thereof. ■' Ho fraud