where the purpose of the petitioners is to enable them to consult with and obtain proxies from other stockholders to be used at a coming election of directors. In such a proceeding it is unnecessary to make the receivers parties to the proceedings, as they have nothing to do with the stock and internal management of the company.15 Suits by Stockholders. 281. In Wolf v. Pennsylvania R. R. et al., Mr. Justice Mitchell in discussing the right of a stockholder to enforce a corporate right after refusal of the corporation to act said: “The right of an individual stockholder to act for the corporation is exceptional and only arises on a clear showing of special circumstances, among which inability or unwillingness of the corporation itself, demand upon the regular corporate management and refusal to act are imperative requisites. And the refusal by the corporate management must appear affirmatively to be a disregard of duty and not an error of judgment, a nonperformance, of a manifest official obligation, amounting to a breach of trust. Beach on Private Corporations, Sec. 878. There must be averred and proved an actual application to the directors and a refusal by them to bring suit or to allow plaintiff to do so in the corporate name and where misconduct of the directors themselves is alleged the bill must show an effort to secure plaintiff's rights through meetings of the corporation: Beach, Secs. 882, 885. The shareholder should set forth in his bill the efforts that he has made to induce the corporation to act in the matter, should allege its refusal or failure to sue,' and 'facts showing that he has left undone nothing which in reason he might have done to prevail on the corporate management to bring the action;' Taylor on Corporations, Secs. 138, 140. See also Morawetz on Corporations, Secs. 241, 244. "The authorities are agreed that if it sufficiently appears that a demand would be useless, it need not be made: Beach, Sec. 886. A mere averment that as the lessee owned a majority of stock of the lessor and elected its officers, who allowed themselves to be 'kept in absolute ignorance of its business,' is 15 Com. v. Philadelphia & Reading R. R., 3 Dist. 115 (1893.) insufficient, neither is it sufficient to excuse a demand from an inference that by reason of the circumstances of their election, the directors will violate their duty and commit a breach of trust."16 Where a stockholder of a railroad company, which is controlled by another company, files a bill for an account, there being nothing in the bill to indicate that the presidents of the respective companies have any such interest as would properly make them parties, they should not be made parties to the suit. Such a bill is demurrable if the stockholder fails to state when he acquired the stock upon which his right to an accounting depends.17 Amendment. 282. Where suit was brought against the "Pennsylvania Railroad Company, operating the Allegheny Valley Railroad," and service was accepted by counsel for the Pennsylvania Railroad Company, an amendment will be allowed whereby the words "Pennsylvania Railroad Company operating" were stricken out and "company" inserted after Allegheny Valley Railroad, upon the ground that the Pennsylvania Railroad was not operating the road at that time.18 Jurisdiction. 283. After the defendant has gone to trial on the general issue, in an action for damages to real estate, he will not be permitted to question the jurisdiction of the court, because the property injured is located in another county, where under the plaintiff's statement he might have raised the objection before trial.19 Change of Venue. 284. The Act of April 14, 1834, P. L. 395, relating to change of venue in cases brought by and against canal and 16 195 Pa. 91 (1900.) 17 Wolf v. Shortridge, 22 Pa. C. C. R. 81 (1898); 8 Dist. 1 (1898.) 18 McBride v. Pennsylvania R. R., 32 Pitts. 224 (1902.) 19 Magee v. Pennsylvania Schuylkill Valley R. R., 13 Super. Ct. 187 (1900.) railroad companies is repealed by the Act of March 30, 1875, P. L. 35, "relating to and authorizing change of venue in civil cases. "20 Execution. 285. Under the Act of April 7, 1870, before the property and franchises of a corporation may be sold by special fi. fa. demand must be made at the principal office of the company as provided by the Act of June 16, 1836, and the sheriff of the county in which the writ issues in order to make demand may go to any county within the Commonwealth where the principal office is situated.21 20 Felts v. Delaware, Lackawanna & Western R. R., 170 Pa. 432 (1895.) 21 Smith v. Altoona & Philipsburg Connecting R. R., 182 Pa. 139 (1897.) CHAPTER XLIV. 286. Appointment. 287. Actions Against Receivers. 288. Actions by Receivers. Appointment. RECEIVERS. 289. Receiver's Sale. 286. Upon a petition for a receiver upon the ground of insolvency and mismanagement, the petitioner must show an undoubted right in immediate danger from abuse of the power exercised by the defendants.1 Actions Against Receivers. 287. If a railroad company and its receivers are jointly sued by a passenger for injuries sustained while the road is being operated by the receivers, and the railroad company has not been served and does not appear, a judgment cannot be entered against the railroad company on a verdict in favor of the plaintiff.2 Under the third section of the Act of Congress of March 3, 1887, 24 Stat. at L. 552, ch. 373, receivers appointed by any court of the United States may be sued in the State courts in respect to any transaction connected with the property held by them without previous leave of the court in which such receiver was appointed. Actions by Receivers. 288. In a suit on a surety bond, given to plaintiff, a receiver of a railroad, his successors and assigns, to recover for the use 1 Gracey v. Pittsburg Trolley Co., 27 Pitts. 109 (1897.) 2 Ault v. Cowan, 20 Super. Ct. 628 (1902.) 3 Hill v. Baltimore & Ohio R. R., 7 Dist. 473 (1897.) of certain locomotives, it is no defence to set up a sale of the locomotives by the receiver as working a release of the surety.* Receiver's Sale. 289. In Pennsylvania, under the Acts of April 11, 1862, and March 23, 1877, equity has jurisdiction of the foreclosure of railroad mortgages, hence in receivers' sales, the equity rule that liens are not barred unless the holder has notice, prevails. Liens upon property held by a receiver are not divested by virtue of sale made by him. If the order of sale makes no mention of prior liens, the sale passes the title in the property as it is in the receiver, subject to any existing incumbrances. Receiver's Certificates. 290. The courts will authorize the issuance of receivers' certificates for the completion of an unfinished railroad, where such action is requested by the holders of ninety-six per cent. of the bonds, and the non-consenting bondholders are protected in their priority of lien. 6 4 Monsarratt v. Equitable Trust Co., 14 Super. Ct. 541 (1900); affirming 30 Pitts. 305 (1900.) 5 Fidelity Title & Trust Co. v. Schenley Park & Highlands Ry., 189 Pa. 363 (1899); 29 Pitts. 371 (1899.) 6 In Rutherford v. Pennsylvania Midland R. R., 178 Pa. 38 (1896), Chief Justice Sterrett said: "As to the equitable power of the court to appoint a receiver of an insolvent railroad company when a proper case is presented, there cannot be any doubt. Such appointments as already intimated, rest in the sound discretion of the court, exercised with a view to the interests-both public and private-that may be involved. This is also true in the main, as to the power of the court to authorize its receiver to raise money necessary for the preservation and completion of a railroad, and to make the same chargeable as a lien thereon. Whether as a general rule the power to order receiver's certificates for the completion of a railroad, and make them a lien prior to existing bonds, should not be limited to 'going concerns may be regarded as an open question; but, in view of the fact that the decree in this case was made upon the request of a very large majority of the bondholders, and those who did not join in the request are sufficiently protected by the form of the decree, it is unnecessary in this case to further consider the subject. The ground upon which courts act in all such cases is the enhancement of the security of the bondholders. When it appears that the holders of over ninety-six per cent. of the bonds assented to the decree, it is fair to assume that the security of the bonds, as a class, is not likely to be impaired thereby.'" |