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La. Ann. 1614, 30 L.R.A. 648, 18 So. 642 (neglect of majority to elect officers and dissensions).

Maine.-Pride v. Pride Lumber Co. (1912) 109 Me. 452, 84 Atl. 989.

Maryland. Davis v. United States Electric Power & Light Co. (1893) 77 Md. 35, 25 Atl. 982; Du Puy v. Transportation & Terminal Co. (1896) 82 Md. 408, 33 Atl. 889, 34 Atl. 910.

Minnesota.-Rothwell v. Robinson (1890) 44 Minn. 538, 47 N. W. 255 (recognizing power); Talser v. Peerless Tire Co. (1919) 144 Minn. 150, 174 N. W. 731 (rule applied in case of foreign corporation); Owens v. J. L. Owens Co. (1924) 161 Minn. 6, 200 N. W. 845. See also Mitchell v. Bank of St. Paul (1862) 7 Minn. 252, Gil. 192; Northwestern Nat. Bank v. MickelsonShapiro Co. (1916) 134 Minn. 422, 159 N. W. 948 (recognizing inherent power of equity to appoint receiver pendente lite for corporation).

Mississippi. Brent v. B. E. Brister Sawmill Co. (1913) 103 Miss. 876, 43 L.R.A. (N.S.) 720, 60 So. 1018, Ann. Cas. 1915B, 576.

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Missouri. Cantwell v. Columbia Lead Co. (1906) 199 Mo. 1, 97 S. W. 167; Ashton v. Penfield (1911) 233 Mo. 391, 135 S. W. 938; Ward v. National Ice Cream Co. (1922) Mo. -, 246 S. W. 554 (recognizing power); Blades v. Billings Mercantile Co. (1911) 154 Mo. App. 350, 134 S. W. 579 (recognizing power); Bates v. Werries (1917) 198 Mo. App. 209, 199 S. W. 758; State ex rel. Priest v. Calhoun (1920) 207 Mo. App. 149, 226 S. W. 329, writ of certiorari quashed in (1921) 289 Mo. 506, 233 S. W. 483 (recognizing power). See also Hill v. Gould (1895) 129 Mo. 106, 30 S. W. 181 (rule implied); State ex rel. Connors v. Shelton (1911) 238 Mo. 281, 142 S. W. 417 (insolvent corporation).

Montana. State ex rel. Independent Dist. Teleg. Co. v. Second Judicial Dist. Ct. (1895) 15 Mont. 324, 27 L.R.A. 392, 48 Am. St. Rep. 682, 39 Pac. 316; State ex rel. Boston & M. Consol. Copper & S. Min. Co. v. Second Judicial Dist. Ct. (1899) 22 Mont. 220, 56 Pac. 219; Jacobs v. Jacobs Mercantile Co. (1908) 37 Mont. 321, 96 Pac. 723 (recognizing power). See also

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Forrester v. Boston & M. Consol. Copper & S. Min. Co. (1899) 22 Mont. 430, 56 Pac. 868, 1135.

Nebraska.-Ponca Mill Co. v. Mikesell (1898) 55 Neb. 98, 75 N. W. 46; Forrest v. Nebraska Hardware Co. (1912) 91 Neb. 735, 137 N. W. 839. See also Miller v. Kitchen (1905) 73 Neb. 711, 103 N. W. 297.

New Jersey. Edison v. Edison United Phonograph Co. (1894) 52 N. J. Eq. 620, 29 Atl. 195 (dissensions; recognizing rule); Sternberg v. Wolff (1898) 56 N. J. Eq. 389, 39 L.R.A. 762, 67 Am. St. Rep. 494, 39 Atl. 397, subsequent proceedings in (1898) 56 N. J. Eq. 555, 42 Atl. 1078; Morse v. Metropolitan S. S. Co. (1917) 87 N. J. Eq. 217, 100 Atl. 219, modified on other grounds in (1917) 88 N. J. Eq. 325, 102 Atl. 524 (company no longer an operating concern); Re New Jersey Refrigerating Co. (1923) 95 N. J. Eq. 215, 122 Atl. 832 (dissensions; corporation in process of voluntary dissolution); Kron v. Trenton Automotive Collateral Co. (1924) 96 N. J. Eq. 162, 124 Atl. 757 (recognizing power). See also Archer v. American Waterworks Co. (1892) 50 N. J. Eq. 33, 24 Atl. 508 (recognizing power); Posselt v. D'Espard (1917) 87 N. J. Eq. 574, 101 Atl. 178. New York. Abbot v. American Hard Rubber Co. (1861) 33 Barb. 578, 21 How. Pr. 193 (ultra vires sale of corporate property); Blatchford Ross (1869) 54 Barb. 42, 37 How. Pr. 110; Hallenborg v. Greene (1901) 66 App. Div. 590, 73 N. Y. Supp. 403; Welcke v. Trageser (1909) 131 App. Div. 731, 116 N. Y. Supp. 166. See also Lawrence v. Greenwich F. Ins. Co. (1829) 1 Paige, 587 (neglect of majority stockholders); Redmond v. Enfield Mfg. Co. (1872) 13 Abb. Pr. N. S. 332 (stating that equity may irterfere by injunction or receivership to prevent a fraud on company or stockholders); Kelly v. Mariposa Land & Min. Co. (1875) 4 Hun, 632.

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V.

Ohio.-Cincinnati, H. & D. R. Co. v. Duckworth (1887) 2 Ohio C. C. 518, 1 Ohio C. Dec. 618, 21 Ohio L. J. 36 (recognizing power).

Oklahoma.-Union State Bank v. Mueller (1918) 68 Okla. 152, 172 Pac.

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650; Oklahoma Sheep & Cattle Co. v. Hastings (1920) 80 Okla. 109, 194 Pac. 223; White v. Tullahassee Realty Co. (1921) 82 Okla. 75, 198 Pac. 584. See also Exchange Bank v. Bailey (1911) 29 Okla. 246, 39 L.R.A. (N.S.) 1032, 116 Pac. 812 (insolvency alleged).

Oregon.-Baillie v. Columbia Gold Min. Co. (1917) 86 Or. 1, 166 Pac. 965, 167 Pac. 1167 (mining corporation which had closed mine).

Pennsylvania.-Schipper Bros. Coal Min. Co. v. Economy Domestic Coal Co. (1923) 277 Pa. 356, 121 Atl. 193 (dissensions). See also Cowan v. Pennsylvania Plate Glass Co. (1898) 184 Pa. 1, 38 Atl. 1075 (recognizing rule).

South Carolina.-Klugh v. Coronaca Mill. Co. (1903) 66 S. C. 100, 44 S. E. 566.

Texas. Houston Cemetery Co. v. Drew (1896) 13 Tex. Civ. App. 536, 36 S. W. 802; Talfurrias Immigration Co. v. Spielhagen (1910) 61 Tex. Civ. App. 111, 129 S. W. 164; Berkshire Petroleum Corp. v. Moore (1925) Tex. Civ. App. 268 S. W. 484. See also Bounds v. Stevenson (1916) Civ. App., 187 S. W. 1031.

Tex.

Utah. Stevens v. South Ogden Land, Bldg. & Improv. Co. (1896) 14 Utah, 232, 47 Pac. 81.

Virginia. (1868) 18 Gratt. 819, 98 Am. Dec. 692 (where directors of railroad illegally gave lease of property).

Stevens v. Davison

Washington. Cameron v. Groveland Improv. Co. (1898) 20 Wash. 169, 72 Am. St. Rep. 26, 54 Pac. 1128 (threatened insolvency); Ridpath v. Sans Poil & C. R. Ferry & Transp. Co. (1901) 26 Wash. 427, 67 Pac. 229 (recognizing power); Hampton v. Buchanan (1908) 51 Wash. 155, 98 Pac. 374; Van Horn v. New Western Shingle Co. (1909) 54 Wash. 117, 113 Pac. 42; Boothe v. Summit Coal Min. Co. (1909) 55 Wash. 167, 104 Pac. 207, 19 Ann. Cas. 1255 (dissensions); Kennedy Drug Co. v. Keyes (1910) 60 Wash. 337, 11 Pac. 175. See also Secord v. Wheeler Gold Min. Co. (1909) 53 Wash. 620, 102 Pac. 654, 17 Ann. Cas. 914 (recognizing power).

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(1912) 151 Wis. 337, 138 N. W. 1013,
Ann. Cas. 1914B, 237; Goodwin v. Von
Cotzhausen (1920) 171 Wis. 351, 177
N. W. 618.

England.-Featherstone v. Cooke
(1873) L. R. 16 Eq. 298 (dissensions);
Trade Auxiliary Co. v. Vickers (1873)
L. R. 16 Eq. 303 (same).

In a suit for appointment of a receiver, where insolvency was not alleged, the court in Columbia Nat. Sand Dredging Co. v. Washed Bar Sand Dredging Co. (1905; C. C.) 136 Fed. 710, in holding that the relief sought for by a minority stockholder should be granted, said: "Courts will not take the property of a corporation out of the possession of its owners at the suit of a minority stockholder, without there is a very grave necessity therefor; but where the facts recited in a bill charging mismanagement show that the board of directors, who are responsible for the mismanagement, are the majority stockholders, and that they are managing the corporation for their own benefit, and diverting its funds and income to themselves, the minority stockholders, or any of them, would be entitled to relief, either by injunction, where that remedy could correct the evil, or, if necessary, the appointment of a receiver, and the majority stockholders who violated their trust would have no just cause of complaint. A receiver will be appointed where the majority stockholders are clearly violating the chartered rights of the minority and putting their interest in imminent danger, or where the holders of the majority of the stock neglect to elect officers. . . Such temporary receivership may be created where the corporation is entirely solvent, yet the corporate officers, by mismanagement or fraud, are jeopardizing the property. This gives stockholders and creditors a right to complain and ask for a receivership. And it is not enough to defeat jurisdiction in equity that there is a remedy at law. The remedy

must be complete, prompt, and efficient."

It has been said, in a case where a receivership was sought for a solvent corporation to manage its affairs in the interest of its stockholders, that the vital question touching the propriety of appointing a receiver is not whether there have been mere irregularities or minor and comparatively trivial faults of commission or omission on the part of the directors and officers of the company, but whether there has been such fault, wilfulness, or recklessness in their management of its property and affairs-such flagrant disregard of their official dutyas to show their unfitness to control its business, and to establish the probability of serious and substantial disaster or of ruin to the corporate enterprise should they further continue in charge. Carson v. Allegany Window Glass Co. (1911; C. C.) 189 Fed. 791.

A court of equity will not, at the instance of a stockholder, appoint a receiver for a corporation on the ground of fraud and mismanagement on the part of the directors, except as a last resort, when considered to be absolutely necessary for the preservation of the trust fund. United Electric Securities Co. v. Louisiana Electric Light Co. (1895; C. C.) 68 Fed. 673. See also cases under I., supra.

And it was said in Hutchinson v. American Palace-Car Co. (1900; C. C.) 104 Fed. 182, that the same principles apply with reference to the exercise of discretionary powers for the appointment of receivers, as to the exercise of such powers for a preliminary injunction; that courts of equity ought not, on the application of minority interests in the stock of a corporation, to interfere with what has been approved by the majority, unless the complainants have a clear and substantial grievance; that merely a technical injury, or one which involves only nominal consequences to the complainant, or circumstances which are doubtful, are not sufficient. Fraud, gross negligence, or ultra vires acts must be clearly shown to warrant a court of equity in appoint

ing a receiver for a corporation; and the court will not assume, in the absence of proof, that the directors are not acting in good faith. Taylor v. Cuban Land & S. S. Co. (1901; C. C.) 106 Fed. 437. (The appointment of a receiver was sought in this instance on the ground of insolvency and fraud.)

And it was said in Smith v. Chase & B. Piano Mfg. Co. (1912) 197 Fed. 466, that courts, on proper application, will appoint receivers for insolvent corporations whose assets have been diverted and dissipated, but will seldom, if ever, assume the management and control of a solvent and going concern, where relief may be had by pursuing some other course.

Although appointment of a receiver for a corporation is a power to be exercised with the greatest caution and only in the plainest cases, yet such receivers may be necessary under some circumstances even though the corporation is solvent; and in a proper case the appointment will be made to protect the interests of a minority stockholder from fraud and maladministration which affects materially or destroys the value of the minority holdings. Henry v. Ide (1923) 209 Ala. 367, 96 So. 698, holding that the appointment of a receiver pendente. lite in this instance was proper. See also earlier appeal reported in (1922) 208 Ala. 33, 93 So. 860, holding that insolvency of the corporation was not necessarily a condition to the granting of a receivership on the ground of fraud, the question of solvency relating only to the matter of the adequacy of the remedy at law.

And in Original Vienna Bakery Coffee & Natatorium Co. v. Heissler (1893) 50 Ill. App. 406, in which the appointment of a receiver sought by minority stockholders on the ground of fraudulent entries by the president in the books of accounts was denied, the court said: "Past conduct and past conditions may be taken into consideration in determining what the present situation is and the future will be, but a receiver will not be appointed because of things done or attempted at a past time, when the

present situation and the prospects for the future are not such as to warrant taking the control of the property out of the hands of its owners.

Courts proceed with extreme caution in the appointment of receivers to take the property of a corporation out of the control of its officers, and are much more readily moved too [to], by proper orders, restrain the doing of improper acts and compel the recognition of undoubted rights. . . . We do not mean to hold that in no case will a receiver be appointed for a solvent, prosperous, and actually going corporation, but the circumstances to justify such appointment must be extraordinary, and something more must be shown than past misconduct and a mere apprehension, based thereon, of future misdoing.

. None of the officers or directors of this company are shown to be insolvent."

The power of a court of equity, independent of statute, to appoint a receiver for a corporation at the instance of minority stockholders is a discretionary one, to be exercised with great care, and only in cases where there is fraud or spoliation, or imminent danger of the loss of the property if immediate possession is not taken by the court, and these facts must be clearly proven; but where these conditions have been fully met, courts do not hesitate to appoint receivers over the property of corporations for the benefit of all concerned during the controversy. Davis v. United States Electric Power & Light Co. (1893) 77 Md. 35, 25 Atl. 982.

So, in Rothwell v. Robinson (1890) 44 Minn. 538, 47 N. W. 255, it was said that the appointment of a receiver of a solvent corporation, on the application of a minority of the stock, is a very drastic remedy, which can be justified only in a strong case; that, however, the management of the corporate affairs by the directors, elected by the majority of the stock, might, even in the absence of positive fraud or illegal acts, be so grossly incompetent or negligent as to justify the appointment of a receiver to preserve the property from destruction.

It was held, however, that the facts were not such in this case as to warrant this relief.

And even though courts of equity, apart from statute, do not exercise jurisdiction over a corporation to dissolve it and distribute its assets, at the instance of minority stockholders, yet they will afford a stockholder relief from the malfeasance of those intrusted with the management of the corporate business, and to that end, when necessity exists, may appoint a receiver. French v. Gifford (1870) 30 Iowa, 148. But in this case, where appointment of a receiver was sought for a savings bank, it was held that an injunction restraining the officers from continuation or repetition of the conduct complained of, and an order compelling them to account to the institution or the stockholders for any losses sustained by their malfeasance, would furnish an adequate remedy without loss or injury to the corporation, and that a receiver should not have been appointed.

And it is said in First Nat. Bank v. Fireproof Storage Bldg. Co. (1925) 199 Iowa, 1285, 202 N. W. 14, that, even in the absence of insolvency, and without a dissolution of the corporation, circumstances may arise which will justify the appointment of a temporary receiver. But in this instance the court found it unnecessary to determine whether, independently of the dissolution of the corporation, the receiver had been properly appointed at the instance of a minority stockholder on the ground of mismanagement and the use of corporate funds for his own benefit.

It is said, also, in Green v. Felton (1908) 42 Ind. App. 675, 84 N. E. 166, that a receiver should be appointed in cases of actual wrong, injustice, and injury in the management of the business. But in this instance, where minority stockholders sought the appointment of a receiver of the company, the charges of fraud and mismanagement were not proved, and a receivership was denied.

In Cantwell v. Columbia Lead Co. (1906) 199 Mo. 1, 97 S. W. 167, in which it was held that a cause of ac

tion was shown for appointment of a receiver for a corporation, sought by a minority stockholder because of a fraudulent scheme of the majority of the directors and stockholders, to wreck the corporation and wipe out the interests of the minority, the court, after observing that courts have hesitated to take the affairs and assets of a corporation out of the hands of its board of directors and administer them through receivers, said: "But when all this has been said, it may further be said that this court has never denied power in a chancellor to prevent a scheme of irreparable injury and wrong, merely because the movers in that scheme speak and act in a corporate capacity, rather than in an individual capacity. That solvent corporations are wrecked for purely selfish and illegal purposes, that minority interests are 'frozen out,' that business immorality has run amuck under the assumption that courts are powerless, is too true. But the assumption is wrong. Judicial hesitancy does not mean judicial, atrophy or paralysis. The board of directors of a corporation are but trustees of an estate for all the stockholders, and may not only be amenable to the law, personally, for a breach of trust, but their corporate power, under color of office to effectuate a contemplated wrong, may be taken from them when, by fraud, conspiracy, or covinous conduct, or extreme mismanagement, the rights of minority stockholders are put in imminent peril, and the underlying, original, corporate entente cordiale is unfairly destroyed. It would be a sad commentary on the law if, when the trustee of a corporate estate is making an improper disposition of it, or has shown improper partiality towards one of its conflicting parties, or has put the estate in a fix it is liable and likely to be either wasted or destroyed, or mercilessly taken from all and given to a part, a court could not reach out its arm and preserve and administer the estate. We have never so declared the law."

And in considering the power of a court of equity to appoint a receiver

for a corporation at the instance of a minority stockholder, the court in Ashton v. Penfield (1910) 233 Mo. 391, 135 S. W. 938, said that corporate insolvency may be a factor worth considering, when present, but that actual insolvency is not necessary to the exercise of equitable jurisdiction and the supervision of a chancellor through a receivership, where there is such gross mismanagement or fraudulent conduct of corporate affairs as tend to work corporate disaster and wrong to shareholders.

So, in Morse v. Metropolitan S. S. Co. (1917) 87 N. J. Eq. 217, 100 Atl. 219, modified on other grounds in (1917) 88 N. J. Eq. 325, 102 Atl. 524, the court said that it did not find that the courts of that state had in any way limited the general doctrine prevailing in England and throughout this country, that whenever, because of gross abuse of trust, because of dissensions among the members of the board of directors or the stockholders, because there is no properly constituted board, or because the company has failed of its purpose, there is a necessity for judicial intervention, a court of equity may intervene under its general jurisdiction and appoint a receiver and grant such other relief as may be necessary.

And it has been held that if no one is authorized to take charge of and conduct the affairs of a corporation, the owners of a majority of the stock neglecting to elect directors to take charge of its property, the minority stockholders will not be permitted to suffer as a consequence of such neglect, but a court of equity may properly appoint a receiver to take charge of the property and preserve it for the benefit of the stockholders generally. Lawrence v. Greenwich F. Ins. Co. (1829) 1 Paige (N. Y.) 587.

In Miller v. Kitchen (1905) 73 Neb. 711, 103 N. W. 297, where a minority stockholder unsuccessfully sought appointment of a receiver of a hotel company, the court lays down the rule that a receiver will not readily be appointed in a stockholder's suit for mismanagement of corporate affairs, where neither the corporation nor the

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