of officers in a foreign corporation.40 Thus in a case where a writ of quo warranto was asked for, in order to inquire into the regularity of the election of officers in a foreign corporation, the court gave as a reason for refusing the writ that the courts of the State of charter, "of whose jurisdiction there is no doubt, might give a contrary decision, and thus produce serious conflict.' On this ground a decision seems questionable in which a writ of quo warranto was allowed to restore to his position one who claimed the office as superintendent in a foreign corporation; the court saying that while it could not restore him to the office it could replace him in his agency within the State.43 " 41 § 307. Stock and stockholders. The right to a share in a corporation must be determined by the law of the charter; as for instance whether the corporation has a lien on the stock for the debt of a former stockholder.43 And a bill cannot be maintained against a foreign corporation to compel it to issue stock to one who claims to be a stockholder. "The determination of the question who shall be entitled to receive from the corporation certificates of its stock, so that they shall thereby become members of it, is one which does not alone affect the external relations of the corporation, but involves its organic laws, which are necessarily local and require local administration." 44 The court has no right "to exercise authority over the organization, the corporate functions, the by-laws, nor the relations. between the corporation and its members; nor to determine the rights and obligations of the corporation or its members, arising under the law of its creation, and depending on such 40 Hartley v. Welsh, 23 Pa. Co. Ct. 78. 43 Bishop v. Globe Co., 135 Mass. 132. 44 Devens, J., in Kansas & E. R. R. C. Co. v. Topeka, S. & W. R. R., 135 Mass. 34, 40, 46 A. R. 439. local law." 45 It is immaterial that service may be had on the corporation and jurisdiction obtained over it; the reason for refusing jurisdiction of the subject-matter is the impropriety and futility of interfering in the internal affairs of the corporation. "The proceeding is such as not merely to affect its external relations, but also to involve its organic laws which are necessarily local, and require local administration." 146 In accordance with this view, no action can be maintained to procure the cancellation of stock in a foreign corporation as illegally issued,47 to restrain an increase of stock,48 to determine the title to the share between two claimants,49 to prevent the forfeiture of stock,50 or to restore one who claims to be a member to his rights as such.5 In a case in an inferior court in New York, however, where the transfer books were within the State and the corporation interposed no objection to the jurisdiction, a bill to compel the transfer on the books of the foreign corporation of stock assigned to him was held not open to attack on demurrer.52 The court said: "Whether, when all the facts are developed on the trial, it will appear that the court should refrain from granting the decree prayed for on the ground that it could not be enforced or whether the relief should be granted because a part compliance can be compelled here on the ground that the case may be so plain that the decree would be adopted and enforced by the courts of New Jersey, are questions that will be addressed to the sound discretion of the trial court, but although argued at length they are not presented by these demurrers." 45 Smith v. Mutual L. I. Co., 14 All. (Mass.) 336, 341. 48 Ibid, p. 343. 47 Gregory v. New York, L. E. & W. R. R., 40 N. J. Eq. 38; American Grease Co. v. Vogellus, 23 Pa. Co. Ct. 664, 9 Pa. Dist. R. 217. 48 Bill v. Sierra Nevada L. W. & M. Co., 29 L. J. Ch. 176. 49 Wilkins v. Thorne, 60 Md. 253. 50 Sudlow v. Dutch Rhemish Ry., 21 Beav. 43. 51 Smith v. Mutual L. I. Co., 14 All. (Mass.) 336. 52 Ernst v. Elmira M. I. Co., 24 Misc. 583, 54 N. Y. S. 116. But when the legal relation between a claimant of a share and the foreign corporation is not in question, but only the equitable right to the stock as between two claimants, this right may be determined, as it in no way involves the internal affairs of the corporation. Thus where a plaintiff claimed that he was entitled to stock held by the individual defendant as trustee, and filed a bill against the individual defendant, asking for a conveyance and an injunction pending suit against his voting on the stock, and against the foreign corporation to restrain it from receiving the vote, it was held that the bill must be dismissed as to the corporation, but could be maintained against the individual; and he was enjoined pending a decision of the principal question.53 And in a Kentucky case it was held that the courts of a State in which a cancellation of a subscription to stock in a foreign. corporation had been agreed to might pass on the legality of the cancellation.54 § 308. Assessments and dividends. A bill cannot be maintained to order a foreign corporation to levy an assessment on the stockholders 55 or to restrain an assessment; 56 and a bill will not lie to order the payment of dividends 57 or to restrain such payment.58 But an action at law may be maintained against a foreign corporation for guaranteed dividends on preferred stock, for that does not affect the internal affairs, and does not require any corporate act in declaring a dividend; it is only the collection of a debt.59 On the same principle a contract to pay a certain part of the divisible surplus of a foreign corporation cannot be en 53 Harper v. Smith, (N. Y. App. Div.) 87 N. Y. S. 516. 54 Scottish S. Co. v. Starks, (Ky.) 87 S. W. 455. 55 North v. Weaver E. M. B. M. Co., 3 Pa. Co. Ct. 316. 56 Taylor v. Mutual R. F. L. Assoc., 97 Va. 60, 33 S. E. 385, 45 L. R. A. 621. 57 Berford v. New York Iron Mine, 56 N. Y. Super. 236, 4 N. Y. S. 836. 58 Howell v. Chicago & N. W. Ry., 51 Barb. (N. Y.) 378. 59 Prouty v. Michigan, S. & N. I. R. R., 1 Hun (N. Y.), 655. forced, since nothing is due until the books have been made up and the surplus declared, and the foreign court cannot order that to be done.60 §309. Proceedings for accounting. 61 Where proceedings are instituted against officers of a corporation for an accounting and a restoration of property wrongly abstracted by them from the corporation, a bill may be brought in any jurisdiction where the officers are found. Thus upon a complaint by a minority stockholder against the majority alleging that the defendants had without authority increased the capital stock and issued it to themselves, and praying for a direction that it be returned and cancelled, the court of New York where the defendants were found took jurisdiction. Judge Cullen said: "The learned trial judge, in his opinion, has said, 'If this were an action simply to compel an accounting and the restoration, by parties within the jurisdiction, of property wrongfully taken or withheld, and to restore it even to a foreign corporation, the power of the court to entertain jurisdiction of the action could not be questioned.' This is, unquestionably, a correct statement of the law. . . . The right of the plaintiffs as stockholders to compel a restoration by the officers to the corporation is coextensive with the right of the corporation itself. Surely the corporation would not be confined to the courts of the State which created it, but could pursue its officers in whatever jurisdiction it might find them; otherwise it would be remediless if those officers remained without the State." So it was held in Massachusetts that where all the property of a foreign corporation was situated in that State and the directors resided therein, they might be held to account for corporation property wrongfully appropriated, though ordinarily the court would not interfere in internal management. 62 60 Fisher v. Charter Oak L. I. Co., 52 N. Y. Super. 179. 61 Ernst v. Rutherford, etc., Co., 56 N. Y. S. 403, 38 App. Div. 388. 62 Richardson v. Clinton Wall Trunk Mfg. Co., 181 Mass. 580, 64 N. E. 400. [Chap. XIII. The court said: "This part of the present plaintiff's case is rather in the nature of a suit by the corporation against wrongdoers whose persons and property are in this Commonwealth." But such action cannot be maintained by a creditor.63 $310. Proceedings to restrain fraudulent dealings with property. A court will not restrain the directors or majority stockholders of a foreign corporation from fraudulent disposal of the property. Thus, it will not enjoin the assignment of the property 64 nor the leasing of its property and franchises for an inadequate rental.65 "It is almost too obvious for remark that this court cannot regulate the internal affairs of foreign corporations, nor can it enforce its decrees out of this State." 66 So a bill to compel a foreign corporation to do its duty to its stockholders and investigate an alleged fraud on the corporation cannot be maintained.67 But a suit may be maintained against the assignee within the State of a foreign corporation to recover the property on the ground that it was transferred by fraud; the bill being allowed to lie at suit of a stockholder.68 The suit does not involve the internal affairs of the corporation in any way. § 311. Proceedings to restrain the misuse of property. A court will also unquestionably assume jurisdiction over a suit to prevent a corporation from misusing property, and especially land, within the State. This was an important feature of an Illinois case where the directors of a foreign cor 63 Miller v. Quincy, 88 App. Div. 529, 85 N. Y. S. 310. 64 Barclay v. Talman, 4 Edw. Ch. (N. Y.) 123. 65 Gregory v. New York, L. E. & W. R. R., 40 N. J. Eq. 38; Madden v. Pennsylvania E. L. Co., 181 Pa. 617, 37 Atl. 817, 38 L. R. A. 638. But see Nash v. Hall, 11 Misc. 468, 32 N. Y. S. 701. 66 Gregory v. New York, L. E. & W. R. R., supra, at p. 44. 67 Morris v. Stevens, 6 Phila. 488. 68 Kidd v. New Hampshire Traction Co., (N. H.) 56 Atl. 465. |