Appeal, No. 235, Jan. T., 1956, from decree of Court of Common Pleas No. 2 of Philadelphia County, March T., 1955, No. 461, in case of Henry P. Carr v. Carr O'Brien Company et al. Decree reversed.
Francis T. Anderson, with him Gray, Anderson & Schaffer, for appellants.
Thomas C. Egan, with him Harry Polish, for appellee.
Before Stern, C.j., Jones, Bell, Chidsey, Musmanno and Arnold, JJ.
OPINION BY MR. JUSTICE BELL
The plaintiff, a minority stockholder of Carr O'Brien Company, stock brokers, filed a complaint to prevent the majority stockholders and the officers and directors from fraudulently converting the business to their own use and to the use of a new corporation known as Joseph L. O'Brien Company. He prayed for (1) an injunction restraining defendants from transacting business under the corporate title of Joseph L. O'Brien Company and (2) for a decree directing them to resume and conduct the securities business under the aforementioned corporation, Carr O'Brien Company, or in the alternative giving him the same interest in the new Company as he had in the old Company, and (3) (a) for an accounting and (b) for a receivership of both Companies. In the light of plaintiff's own conduct, some of these prayers were, as we shall see, extraordinary.
Defendants denied the material allegations and the charges of fraud, and averred that "plaintiff's purpose and object in instituting this action and in making the scandalously false statements contained in the complaint are to extort money from the defendants." Testimony was taken, and appraisers were appointed by the Chancellor who approved their report. The Chancellor then, in effect, rejected the report and entered a decree adjudging the defendants to be trustees ex maleficio, and ordering them to account to plaintiff (a) for the property and assets obtained from Carr O'Brien Company and (b) for all profits made by Joseph L. O'Brien Company.
Carr O'Brien Company was incorporated under the laws of Pennsylvania on July 12, 1937, for the purpose of buying, selling and dealing in stocks, bonds and other investment securities. They were, in practical effect, dealers in "over the counter" securities, and during
the entire existence of the Company their earnings or net income was exceedingly small. The Company had an authorized capital of $52,000., consisting of $25,000. of first preferred stock, $25,000. of second preferred stock, and 500 shares of common stock which had a par value of $5.00 a share. Plaintiff owned 125 shares of common stock; his total investment in the Company was $1,250. for which he now claims $20,000.
Plaintiff, from the time of the incorporation of the Company down to May 4, 1953, was President of the Company and a director. The officers of the Company were active in the business, and each of them received a commission or compensation which was payable, of course, before the net earnings of the Company were determined. As of December 31, 1954, the Company had six employes. At a special stockholders' meeting on May 4, 1953, a new President was elected and plaintiff was not re-elected a director. Thereupon, on May 18, 1953, plaintiff wrote a letter to counsel for the Company demanding that his name be taken out of the corporate name and not be used in connection with the business of Carr O'Brien Company. He then prepared a resolution in writing to have his name taken out of the Company. In addition to the letter and resolution, plaintiff testified that he did not want his name to be used in connection with the business of Carr O'Brien Company because he had lost entire confidence in Mr. O'Brien and he did not want his name to be associated with him. He next withdrew his securities, took with him his list of customers and ...