[Download] "Spiegel v. Beacon Participations" by Supreme Court of Minnesota * eBook PDF Kindle ePub Free
eBook details
- Title: Spiegel v. Beacon Participations
- Author : Supreme Court of Minnesota
- Release Date : January 01, 1937
- Genre: Law,Books,Professional & Technical,
- Pages : * pages
- Size : 88 KB
Description
RUGG, Chief Justice. This suit in equity was filed on September 26, 1932. The plaintiff, in 1928, purchased and still owns twenty-five shares of class A stock of Beacon Participations, Inc. (hereafter called the defendant), a corporation organized on May 11, 1928, under the laws of this Commonwealth. The defendant was organized by the active directors of the Beacon Trust Company (hereafter called the bank) to buy, sell and deal generally in stocks, bonds and securities. It is charged in the bill that the defendant has claims against its present and former directors and that the present directors, by reason of personal interest and being nominees of guilty directors, are not proper persons to be entrusted with the prosecution of this proceeding; that it is brought by the plaintiff as a minority stockholder in behalf of the defendant and of the plaintiff and other stockholders who may choose to join. There is no intervening petition by other stockholders before this court. The plaintiff prosecutes its suit alone. The allegations of the bill fall into four classes: (1) The defendant directors are liable to the defendant because, on June 4, 1928, they caused it to buy from the bank, for the price of its face value of $520,000, a note of Beacon Building Trust, Inc. (an affiliate of the bank), payable to the bank and indorsed by it without recourse. The defendant was an affiliate of the bank, and all of its directors with a single exception were directors of the bank. At that time, the note was of little or no value, as the individual defendants then knew, and its maker was not financially responsible. The purchase was made to further the interests of the bank rather then those of the defendant; and the individual defendants, in disregard of their obligations to the defendant, caused it to buy the note. This was a wrongful, improper, unsound and imprudent use of the funds of the defendant, and the investment was allowed to continue until it became utterly worthless. (2) The individual defendants caused losses to the defendant by illegal and improper use of its funds in a joint trading account with Jordan Lyman Co., Inc., a Massachusetts corporation dealing in securities, of which the defendants Jordan and Lyman were officers and directors, without requiring said corporation in the first instance to furnish its proportionate share of the necessary capital or adequate security therefor, and by culpable neglect in failing to demand security when a threatened loss became apparent. (3) The individual defendants illegally declared and caused to be paid dividends out of the capital of the corporate defendant at times when there were no net earnings or surplus out of which such dividends could rightly be paid. (4) The individual defendants caused the corporate defendant to purchase in the open market shares of its own class A stock, and to pay for the same out of its treasury large sums of money, at excessive prices, at a time when its capital was impaired.