Sierra Nevada Silver Mining Co. v. Sears

By the Court,

Upon filing its complaint, plaintiff obtained an order requiring defendants to appear on a certain day, therein *352named, and show cause, if any they could, why an injunction should not issue, and in the meantime defendant Sears was restrained and enjoined from selling, transferring or in any manner disposing of ‘ certain certificates or shares of stock, issued by the Allen Company, to any party, person or corporation than plaintiff. On the return day defendant Sears appeared specially by his attorneys and moved “to quash and dismiss the order to show cause.” The court overruled this motion and ordered that the restraining order be continued until the further order of this court.”

This appeal is taken, by defendant Sears, from the order of the court “refusing to dissolve the injunction heretofore granted in this action.”

Appellant claims that the.injunction ought to have been dissolved, because the complaint fails to show that plaintiff has not a plain, speedy and adequate remedy at law, and argues that it had such a remedy by the ordinary action of replevin. From the allegations of the complaint — which, in this case as presented, must be taken as true — it will be observed, as is therein stated, that it is impossible to measure plaintiff’s injuries in damages. It is alleged that plaintiff made the purchase of the certificates of stock, to buy its peace, to save annoyance, to avoid litigation and to prevent a cloud upon its title; that the value of said shares of stock was merely nominal and could not be estimated like the shares of stock in other corporations having a market value.

Under the provisions of section 202 of the civil practice act (1 Comp. L. 1263), the judgment in action's to 'recover the possession of personal property must be in the alternative, and if the property cannot be delivered, the judgment is satisfied by the payment of damages. In actions of this character, where the remedy at law would be inadequate, and, the injury to plaintiff be irreparable, equity will interfere by injunction and restrain the party wrongfully in possession of the property from disposing of it. (2 Wait’s Pr. 31, 32, and the authorities there cited.) It would, for reasons already stated, be unnecessary for plaintiff to allege the insolvency of the defendant, >and the complaint is not defective in this respect.

*353'The verification to tbe complaint'is in tbe form required by section 113 of tbe practice act (1 Comp. L. 1174), wbicb implies that tbe averments of tbe complaint may be made upon information and belief.

It is argued that tbe plaintiff so carelessly and negligently left tbe certificates of stock standing in tbe name of a trustee regularly indorsed, as to clotbe any person, from whom Sears may have purchased, with tbe indicia of ownership thereof. Counsel upon this, as well as other points, assume that Sears was a tona fide purchaser for value,- — a fact that plaintiff was not required to, and did not allege, and wbicb this Court, under tbe averments of the complaint, is not authorized to presume. There is an allegation in tbe complaint that tbe certificates were in plaintiff’s possession “until tbe same were lost, or, as plaintiff is informed and believes, were stolen from it.” Tbe question whether or not due diligence has been used by plaintiff to recover tbe certificates of stock, or put third parties on notice of its loss, is one that could not be raised by appellant unless it was, at least, shown that be was an innocent purchaser in good faith. It is, therefore, unnecessary to discuss this or other objections urged by appellant.

In our opinion tbe complaint states a prima facie case, and as there was no answer to ihe complaint, nor any showing made upon tbe merits of tbe case, and inasmuch as tbe granting or refusing an injunction pendente lite rests very much in tbe sound discretion of tbe court, we do not think its order ought to be disturbed. This disposes of tbe appeal, and renders it unnecessary to notice tbe preliminary objections, on questions of practice, urged by respondent.

Tbe order appealed from is affirmed.

dissenting:

I dissent upon tbe ground that tbe complaint does not make a ca'se for tbe extraordinary relief sought. Tbe means resorted to by plaintiff for tbe purpose of quieting its title deserve anything but favor in a o( urt of equity. There are certain classes of transactions wbicb, because they are *354universally attended, by opportunities and temptations to commit a fraud, are presumed, from motives- of public utility, to be always fraudulent. It appears to me tbat tbe complaint discloses a transaction of that kind. A corporation finds that another corporation is asserting a claim to a portion of the mining ground owned and possessed by it, and is so “greatly annoyed” thereby that it determines to buy its peace. Instead of pursuing the plain, simple, direct, honest and effective method of accomplishing that object by purchasing its adversary’s quitclaim, it goes to work to secure the control of the antagonist corporation by buying up its stock. The modus operandi is a familiar spectacle. By means of its agents it first gets control of a majority of the stock, and next proceeds to “freeze out” the minority stockholders, which, as they are practically remediless, is an easy operation. It is just possible that a transaction of this kind might be consummated without defrauding the minority; and so is it possible that one who purchases from himself as the agent of the vendor may pay a due regard to the interests of his principal, or a ward make a voluntary donation to his guardian, without being unduly influenced. But such instances are so extremely rare, and so little to be expected, that every presumption is against their bona jfides. The same presumption of fraucl, I think, should attach to the operation attempted by the plaintiff here, and to the consummation of which he invokes the aid of the extraordinary powers of a court of equity. The case made by the complaint is simply this: If the court does not decree the return of the stock of the Allen Company in controversy, the plaintiff will lose the control of the Allen Company, which may then assert its claim to plaintiff’s ground and cloud its title. In view of the extremely liberal remedy afforded by our statute for wrongs of this nature, such a result would not appear to involve irreparable damage to the plaintiff. A recovery of the value of the stock it claims to have lost would restore it to its original position, and it might then proceed by regular and legitimate means to quiet its title or buy its peace. But aside from these considerations, the *355reason, which is conclusive to my mind for denying the injunction and all the equitable relief prayed for is, that the courts, so far from going out of their usual cohrse to aid a transaction of this hind, should sternly discountenance a proceeding which always and inevitably involves temptations and opportunities of fraud, and should therefore be presumed to have been resorted to for fraudulent purposes, especially when there were more direct, legitimate and effective means of honestly accomplishing the avowed object.