Martin v. Carl

Kintner, J-, by special assignment, delivered the opinion of the Court. This is an - appeal from an order of the Circuit Court for Montgomery County overruling the appellants’ demurrer to the amended bill of complaint and from a decree of that court ⁵⁶⁷ granting an interlocutory injunction. No question has been raised on the right to appeal from what in form is an interlocutory decree and, as it appears that the case was fully heard on the merits and the rights of the parties completely adjudicated, we shall treat the decree as final. Martin’s Dairy, Inc., a Maryland corporation, was chartered in 1947.

It had an authorized capital stock of 1500 shares. It was a family corporation, the stockholders being six brothers and sisters, each of whom held 185 shares or a total of 1110 shares issued and outstanding, leaving 390 unissued shares. The company owned real estate, a dairy plant, chattel property used in connection therewith and operated in Montgomery County. A balance sheet of October 30, 1955, showed a net worth of $121,129.87.

The appellants, Calvin S. Martin as president and David F. Martin a director, apparently dominated and controlled the company, though they held but a third of the stock. The other four (three sisters and a brother), holding two-thirds of the stock, were dissatisfied and determined to sell all of their stock. A provision of the charter required a stockholder wishing to sell first to offer his stock to the corporation. One of the questions in the case is whether this requirement was complied with.

The four dissatisfied holders, after rejection by the corporation of their offers to it of their stock, contracted to sell their 740 shares to William F. Carl and Sarah F. Carl, his wife, two of the appellees. Thereupon a reorganization of the corporation took place and William F. Carl replaced Calvin S. Martin as president. The latter, having refused to turn over the corporation’s books, records, accounts, money and chattel property to the new management, this bill was filed. The original plaintiffs were the four stockholders, their purchasers and their new directors.

A demurrer to the bill was sustained on the ground that the corporation was a necessary party. Thereupon the appellees were allowed to amend by adding the corporation as a party plaintiff. A demurrer to the amended bill was overruled and the appellants re-filed their answer to the amended bill. ⁵⁶⁸ The first question raised by this appeal is the correctness of the ruling on the demurrer. There can be no doubt that the corporation was a necessary party.

Its property rights were affected as a result of the confusion caused by the conflicting claims of the majority and minority stockholders. It is argued that the bill is rendered multifarious by joining the corporation as a plaintiff. Under the present rules (Maryland Rules of Procedure 313 d R 2) joinder of parties and causes of action have become a matter of convenience and fairness. In the present case the rights of the parties are all affected by the alleged wrongful acts of the appellants and a single remedy suffices for all.

Nor is there any unfairness to the appellants. They are called upon only to defend a single course of conduct which it is alleged affects the appellees in different ways. It is argued that the appellees have an adequate remedy at law, namely mandamus. Talley v. Dadds, 161 Md. 558 , is cited as authority.

That case held that where the only issue is the validity of the election of officers of a corporation equity has no jurisdiction. But in the present case much more is involved. The four majority stockholders have contracted to sell all of their stock to Mr. and Mrs. Carl for $160,000. That contract is conditioned upon certain things being done by the sellers: they are to secure the election of a board of directors desired by the purchasers; they are to see that all