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tificates of this company, within 30 days after April 12, 1884, and in case a stockholder does not take stock of the new corporation he is to receive his pro rata share in money.

The vote in favor of the adoption of the resolutions was 27,919 shares, against 6,754 shares in the negative. A new corporation, called the Pewabic Copper Company, was thereupon organized under the laws of the same state, also with a capital stock of 40,000 shares, at $25 each, which was taken up by the defendant corporators, who, with two others, were named as the first directors, being the same persons who controlled the old company. The third article of this association declared that no cash is actually paid on the capital stock—the cash value of real and personal property conveyed to the company contemporaneously with its organization being the sum of $50,000. The bill prayed for an injunction and restraining order, forbidding the defendants from carrying out the purpose of transferring the property of the Pewabic Mining Company to the new corporation, and for the appointment of a receiver to take charge of the effects of the old company, that they might be sold, the debts of the company paid, and the remainder of the proceeds distributed among its stockholders. Upon the issues made and proof taken the trial court decreed that the business of the Pewabic Mining Company be wound up, and that all of its assets"be sold at public vendue for cash to the highest bidder: Provided, that if at such sale the bid for the aggregate of the property and assets should not be in excess of $50,000 above the amount of the debts of the company existing at the time of the sale, then the arrangement for the sale of such property, made at the stockholders' meeting in Boston on the 26th day of March, 1884, as set up in defendants' answer, shall be carried out under the direction of the special master, hereinafter designated, and as provided by the resolution adopted by the stockholders at said meeting."

The decree proceeded to refer the cause to a special master for these purposes and with these powers: That he should ascertain the assets, property, and debts of the company, and that after ascertaining and reporting the same to the court the master should proceed, upon giving the required notice, to sell the property at public sale to the highest bidder in one body, with a provision to the effect that, if the highest bid for such property at such sale should amount to more than $50,000 over and above the indebtedness of the company"then that the arrangement for the sale of said property, made at said meeting of the stockholders at Boston, must be set aside and held to be null and void, and the Pewabic Mining Company be enjoined perpetually from selling to the Pewabic Copper Company, and that company is enjoined from receiving its transfer of the property."

The decree further declared that the directors of the old company“are not liable to pay to complainants and other stockholders any money received by them since the expiration of the charter of said Pewabic Mining Company, April 4, 1883, and that an accounting by said defendant directors is hereby denied as to such expenditure made by them after the expiration of the charter."

This last provision of the decree in favor of the directors of the old company was reversed by the Supreme Court, while the other portions of the decree were by it affirmed; the court saying:

"With regard to the main question, the power of the directors and of the majority of the corporation to sell all of the assets and property of the Pewabic Mining Company to the new corporation under the existing circumstances of this case, we concur with the Circuit Court. It is earnestly argued that the majority of the stockholders-such a relatively large majority in interest -have a right to control in this matter, especially as the corporation exists for no other purpose but that of winding up its affairs, and that, therefore, the majority should control in determining what is for the interest of the whole, and as to the best manner of effecting this object. It is further said that in the present case the dissenting stockholders are not compelled to enter into a new corporation with a new set of corporators, but have their option, if they do not choose to do this, to receive the value of their stock in money. It seems to us that there are two insurmountable objections to this view of the subject. The first of these is that the estimate of the value of the property which is to be transferred to the new corporation and the new set of stockholders is an arbitrary estimate made by this majority, and without any power on the part of the dissenting stockholders to take part, or to exercise any influence, in making this estimate. They are therefore reduced to the proposition that they must go into this new company, however much they may be convinced that it is not likely to be successful, or whatever other objections they may have to becoming members of that corporation, or they must receive for the property which they have in the old company a sum which is fixed by those who are buying them out. The injustice of this needs no comment. If this be established as a principle to govern the winding up of dissolving corporations, it places any unhappy minority, as regards the interest which they have in such corporation, under the absolute control of a majority, who may themselves, as in this case, constitute the new company, and become the purchasers of all the assets of the old company at their own valuation. The other objection is that there is no superior right in two or three men in the old company, who may hold a preponderance of the stock, to acquire an absolute control of the whole of it, in the way which may be to their interest, or which they may think to be for the interest of the whole. So far as any legal right is concerned, the minority of the stockholders has as much authority to say to the majority as the majority has to say to them: “We have formed a new company to conduct the business of this old corporation, and we have fixed the value of the shares of the old corporation. We propose to take the whole of it, and pay you for your shares at that valuation, unless you come into the new corporation, taking shares in it in payment of your shares in the old one.' When the proposition is thus presented, in the light of an offer made by a very small minority to a very large majority, who object to it, the injustice of the proposition is readily seen; yet we know of no reason or authority why those holding a majority of the stock can place a value upon it at which a dissenting minority must sell, or do something else which they think is against their interest, more than a minority can do."

The court proceeded to liken the rights of the parties to that suit in regard to the assets of the dissolved corporation to those of a partnership on its dissolution, and concluded its opinion upon that point as follows:

"We do not say that there may not be circumstances presented to a court of chancery, which is winding up a dissolved corporation and distributing its assets, that will justify a decree ascertaining their value, or the value of certain parts of them, and making a distribution to partners or shareholders on that basis; but this is not the general rule by which the property in such cases is disposed of, in the absence of an agreement.”

In all this I see nothing to justify the decree appealed from. There the corporation had ceased to exist. Its former directors had become trustees, whose duty it was to reduce the property of the corporation with all reasonable diligence into cash, and, after paying the legitimate

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indebtedness, to distribute the proceeds remaining among the stockholders. Instead of doing so, they organized a new corporation, to take over the property of the old one, and offered to award to the dissenting stockholders their proportionate shares of the stock of the new company, to pay them for it on the basis of $50,000 for the entire property. In that case the minority stockholders of the corporation that had ceased to exist asked that its property be sold, and the court so decreed, but in doing so directed that in the event no bid in excess of $50,000 should be received that the resolution that has been referred to should be carried out, and payment made to the complainants on the basis of $50,000 as the value of the company's property; the defendants by their answer having continued their offer to pay on that basis. That portion of the decree awarding the complainants the protection mentioned does not appear to have been appealed from by either party, and was not reviewed by the Supreme Court. While affirming the order directing the sale, as has been seen, that portion of the decree appealed from which denied to the complainants an accounting by the trustees of the dissolved corporation was reversed.

Here the complainants were minority stockholders of an existing corporation, not asking for, but protesting against, the sale of its property. I think the cases wholly unlike, and am of the opinion that the judgment should be reversed, and the case remanded to the court below, with directions to enter a decree for the return to the Anaconda Copper Mining Company of the 30,000 shares of its capital stock, together with any and all dividends that have been paid thereon, and annulling the sale and conveyance to it of the properties of the Alice Gold & Silver Mining Company, the appellants to recover costs of suit.

How a sale of all of the property of a private corporation, for an inadequate price and which is otherwise unfair and wholly illegal, made by its board of directors with the consent of a majority of the stockholders, but in spite of the dissent of a minority of them, can be subsequently rendered legal by offering the property at public sale, to see if at such sale it will bring more, I am unable to understand. The offer at public auction of property of the nature of that here involved, even if there be bidders, is, in my judgment, but little, if any, test of its real value. Many courts have refused to permit evidence of what property brought at a judicial sale at public auction to be given in proof of value, while others, although admitting it, refer to it as only slight evidence. Martinett v. Maczkewicz, 59 N. J. Law, 11, 35 Ati. 662; In re McAusland (D. C.) 235 Fed. 189, 190; Rickards & Co. v. Bemis & Co. (Tex. Civ. App.) 78 S. W. 239; Street Ry. Co. v. Walsh, 197 Mo. 392, 94 S. W. 860.

In the present case there was no bidder at all; thus, according to the decision of a majority of this court, there was rendered legal and valid the sale and conveyance of the entire property of an existing corporation, which sale and conveyance it was found and adjudged by the court below, and is found and adjudged by this court, were at the time they were made unfair and wholly illegal.

From that conclusion I respectfully dissent.

GILBERT, Circuit Judge (with whom concurs WOLVERTON, District Judge). We concur in the opinion of Judge ROSS, except in his conclusion that the sale to the Anaconda Company should be annulled.

(10, 11] It cannot be denied that the majority of the stockholders of the Alice Company had the right to sell the corporate property. After the sale, and at a meeting regularly called and held under the authority of the laws of Utah, the requisite number of the stockholders passed a resolution directing that the corporation be dissolved, its affairs wound up, and its assets distributed. The appellants had no power to prevent dissolution against the will of the majority. Nor had they the right to say that a sale should not be made to the Anaconda Company, if that company outbid others. They had, however, the right, and that right the court below secured to them, to have the property sold free from the effect of any unfair combination between the majority stockholders and the Anaconda Company.

[12] The court below followed the rule of Mason v. Pewabic Mining Co., 133 U. S. 50, 10 Sup. Ct. 224, 33 L. Ed. 524, which holds that any stockholder can require that, upon dissolution, the corporate property shall be sold to the highest bidder for cash, and not to another corporation in which the majority stockholders are interested, and on terms fixed by them. There is no essential difference in principle between that case and this, and no substantial difference in the facts. The only difference is that in the Pewabic Case the minority stockholders were in court, insisting on their right to a sale at public auction, while in the case at bar the minority assert that no sale whatever should be made. Upon the law and the facts they are in no position to prevent a sale, nor to thwart the purpose of the majority to sell to another corporation. When they subscribed to their stock, they assented to the laws of Utah governing the distribution of assets of corporations, and they must abide by them. Nor is any relevant distinction to be found in the fact, as asserted, that in the Pewabic Case the corporation had ceased to exist, while in the present case the corporation was still in existence. It is true that the charter of the Pewabic Mining Company had expired; but under the laws of Michigan it continued to be a body corporate, for all purposes except that of continuing in business, and among the permissible functions of its continued existence as prescribed by law was that of winding up its affairs, disposing of its property. and dividing its capital stock. In 10 Cyc. 1302, it is said:

"So if, in the exercise of a sound discretion, the majority of the shareholders deem it expedient to do so, they may sell out the whole property of the corporation to a new corporation, taking payment in its shares, to be distributed among such of the old shareholders as may be willing to take them. If it is conceded that such action on the part of the majority is lawful, then the principle follows that the judicial courts will not examine into the affairs of the corporation for the purpose of determining whether the action is expedient, or for the purpose of scanning the motives which have led to it."

In J. H. Lane & Co. v. Maple Cotton Mills Co., 226 Fed. 692, 141 C. C. A. 448, the Circuit Court of Appeals for the Fourth Circuit said:

"The courts cannot pass upon the question of expediency of dissolution and sale, for that is the very question which the Legislature has authorized the majority of the stockholders to decide.

The courts cannot say that

the discretionary power of the majority, conferred by the statute, does not ex. tend to the dissolution of a prosperous corporation, or to a dissolution which will probably result in practical consolidation by the purchase of the property by another corporation. The fact that the state has not provided for consolidation without a dissolution of the corporation and sale of the property by no means implies that there is any policy of the state against dissolution and sale resulting in consolidation."

The majority of the stockholders have rights which the court must recognize and protect. They have the right to retain the benefit of the sale already made unless a sale for a higher price can be made. This was the protection afforded the majority stockholders in the Pewabic Case, and it is here afforded by the decree of the court below.

The decree is affirmed.


(Circuit Court of Appeals, Second Circuit. June 21, 1917.)

No. 270.


A membership news gathering association, such as the Associated Press, composed of members each of whom is, or represents, the publisher of a newspaper, is entitled to protection by injunction against acts of a competitor, inducing members to violate their contracts made by the charter and by-laws of the association, or the confidential relations created by

their membership. 2. Words AND PHRASES—"News.”

Facts, even after ascertainment, are not "news," unless they have that indefinable quality of interest which attracts public attention. Neither is news always synonymous with facts, in the sense of verity. The word "news" means no more (laying aside hoaxing and intentional falsehood) than apparently authentic reports of current events of interest.

[Ed. Note.--For other definitions, see Words and Phrases, First and


News, although not literary property, where it has a commercial

value, is property, and as such entitled to legal protection. 4. NEWSPAPERS C 7-News-PUBLICATION.

The property right of a press association in news gathered from all parts of the world for distribution to its members for publication in different cities throughout the United States is not lost by publication in one or more localities, but such property remains in the association until

all of its members have had the benefit of the service. 5. TRADE-MARKS AND TRADE-NAMES Ow68PROTECTION OF PROPERTY RIGHTS


Complainant, the Associated Press, is a membership association for the gathering and distribution to its members, who are publishers of newspapers throughout the United States, of news, both foreign and domestic. It has no capital stock; but the expense of the service is borne ratably by the members. Defendant is a stock corporation, which gathers and distributes news to customers for profit. It induced certain members of complainant to give its agents access to news furnished by complainant, and also copied foreign news items furnished by complainant from bulle For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

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