vide for the payment of the trust fund now in question and of one other fund. He stated that:

"The documents establishing these trusts have after much research been obtained and will be presented when the case comes up in the orphans' court."

To this letter the Trust Company replied on July 7, making several remarks concerning the contest of the will, and saying that the orphans' court had decided that no one could prevent the ordinary course of administration merely by entering a caveat, not followed by an appeal. The reply also stated that the company

$ * had no knowledge with reference to the trust funds of which you speak. If there were such funds, of course, the claim should have been made at the audit, and it may become necessary for you to file a bill of review, so as to prevent distribution. I beg to notify you to take steps at once in that direction, if you intend so to do. To conclude, if you propose to continue the contest, it will be necessary that you take the proper steps in that direction at once, and also have the awards in accordance with the will as directed by the orphans' court set aside by a bill of review. And I again beg to advise you that this must be done at once, if you desire to prevent distribution."

The plaintiffs took no steps, however, except that in March, 1900, John S. wrote again to the Trust Company, saying, inter alia:

"I desire to give you this additional notice that sixty (60) shares of the Corn Exchange National Bank in the estate of my father, the late John Alexander, belongs to the estate of James C. Alexander, who died in 1868. As shown by the inclosed certificate of the register of wills, I was appointed administrator of the last-named estate. As such, I invested a part of the proceeds thereof in the said 60 shares of stock, and placed the same in my father's hands to be held in trust for the heirs, and it was so entered on his books. Shortly after my father's death, I gave you notice as custodian of the assets of his estate that the said stock was a trust, and am therefore surprised to recently learn from you that probably the stock has since been delivered to Lucian H. Alexander. The heirs of James C. Alexander, after my father's death, demanded of me this stock, and I expected my notice to you would have been respected, until the pending litigation over my father's estate reaches a conclusion.

"In view of the premises, I ask you to recover the said 60 shares of stock, and notify you that, if you refuse or fail to do so, I will hold you responsible for the value of the same and for all damages resulting from your acts or negligence in the matter."

In May, 1904, at the audit of the second account of the executors, which showed that the 319 shares had either been converted or distributed, the plaintiffs appeared by counsel and made no objection thereto.

At this point the matter rested until March, 1912, when the plaintiffs came into possession of an item of evidence concerning the 60 shares that seemed to them to be valuable and that apparently revived their interest. Three years later, they filed the bill now before the court. The estate is, and has always been, solvent, and it has not yet been fully settled. We are informed that sufficient assets are on hand to meet the plaintiffs' claim, if it should be established, either in whole or in part.

[1-3] The single question before us is whether this proceeding in equity should be sustained, and in our opinion the answer should be in

the negative, for reasons that may be briefly given. There is no doubt. that the trust in controversy came to an end when the testator died in 1895. Freedley v. Security Trust Co., George Jones Estate (Del. Ch.) 84 Atl. 883. At that time, therefore, the three plaintiffs were entitled to an equal distribution of the fund, and of course they had the right to proceed at once in any appropriate tribunal by any appropriate form of action. The fund consisted of money received by the testator in the form of dividends, and also of 60 shares of stock. So far as the dividends were concerned, an action at law would have been an adequate remedy, and we see no reason, also, why the plaintiffs could not have adopted the alternative remedy of presenting the claim to the orphans' court at the audit of the executors' accounts. There is no evidence that the testator was to invest these dividends for the purpose of accumulation, and, even if theoretically the money be considered as in his hands, it was not ear-marked, but was simply there as an unidentified sum that he was bound to make good to the plaintiffs whenever the proper time should arrive. Essentially it was a debt that the testator owed, and his estate was bound to discharge it on the same footing as any other obligation for which he might be liable. The amount was easily ascertainable, and the testimony of John S. could have established the existence of the trust as readily at that time as in the present proceeding. But the plaintiffs had a claim also for the stock itself, and if the shares could then have been identified in the hands of the executors, it may well be that the plaintiffs might have maintained a bill in equity to recover the specific property, and in that proceeding they might also have recovered the dividends as an incident to the principal. They knew that the estate held 319 shares of the Corn Exchange stock, and, although on the face of the certificates all these shares were in the name of the testator individually, this did not prevent them from proving that 60 shares were in fact the property of the trust. The production of the testator's books of account could have been compelled, the transfer books of the bank could have been reached, and the testimony of John S. was available then, as now. Moreover, as we understand the decisions of the Pennsylvania Supreme Court (Moore's Estate, 211 Pa. 338, 60 Atl. 987; Crosetti's Estate, 211 Pa. 490, 60 Atl. 1081; Paxson's Estate, 225 Pa. 204, 73 Atl. 1114; Williams' Estate, 236 Pa. 259, 84 Atl. 848), this claim for the shares could have been presented and determined by the orphans' court, which could have disposed of the whole controversy in the exercise of its statutory powers. Assuming, however, that the plaintiffs were not confined to the orphans' court, but could have proceeded in any other court having jurisdiction of the parties and the subject-matter, the fact remains that no action of this or of any other kind was taken before any tribunal, and without objection or appeal the executors were allowed to go on with the settlement of the estate, and with the conversion or distribution of all the shares of stock under the decree of the orphans' court. Of this distribution the plaintiffs had actual as well as constructive notice, and after all the shares had thus been disposed of, either by conversion into money or by an award in specie, we think it clear that the claim became completely a claim for money. The dividends had always been money, and the shares themselves had now been transmuted into money, or

had been awarded to another person, so that the claim of the plaintiffs against the estate was now, not for the stock, but for its value, whatever amount that might prove to be. For such a claim an equitable remedy was no longer necessary; no accounting was required, except a mere arithmetical computation, and either a purely legal remedy or the remedy in the orphans' court was adequate. As we regard the matter, the orphans' court was the more satisfactory tribunal, and in practical effect the District Court was of the same opinion, as may be seen by paragraph 9 on page 962 of 238 Fed. In a word, we think that the ground for a bill in equity disappeared after the stock had been converted or distributed, and this is the only subject that concerns us now. In No. 2233, the appeal of the Trust Company, the decree below is reversed, at the costs of the appellees, with instructions to dismiss the bill; but this order is without prejudice to the right of the appellees, either to bring such suit at law as they may be advised to bring, or to present their claim to the orphans' court of Philadelphia county, to be there considered and disposed of as that court may see proper.

The appeal of the plaintiffs, in No. 2245, which seeks to increase the amount of the decree below, is dismissed, at their costs.

DAVIDSON et al. v. AMERICAN BLOWER CO. et al.

(Circuit Court of Appeals, Second Circuit. May 25, 1917.)

The owners of a majority of the stock of a corporation cannot use their power to the prejudice of the minority stockholders, and a court of equity will enjoin all contracts or conspiracies intended to prejudice the rights of the minority stockholders and dissipate the property of the corporation, and for that purpose may enjoin the majority stockholders from voting their stock, although such relief will be granted only under imperative necessity.

[Ed. Note. For other cases, see Corporations, Cent. Dig. $$ 747, 749763, 764.]

2. CORPORATIONS 197-STOCKHOLDERS-PROTECTION OF MINORITY STOCK

HOLDERS.

The individual defendants owned a majority of the stock of a corporation, and one of them had a controlling interest in a second corporation, which was engaged in the same line of business and in competition with the defendant corporation. The defendant corporation claimed patents to certain appliances, and was involved in litigation with the second corporation. One of the individual defendants had been urging a dismissal of the litigation and the gratuitous licensing of the second corporation during the time when he could not vote his stock because of voting trust created at the time the defendant corporation was organized. Held that, where the individual defendants had done nothing illegal and threatened nothing illegal, the rights of the minority shareholders who desired protection will be amply protected by enjoining the individual defendants from wasting the assets of the corporation or attempting to monopolize the business in which it was engaged, and they should not be enjoined from voting their stock.

[Ed. Note. For other cases, see Corporations, Cent. Dig. §§ 747, 749763, 764.]

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

Appeal from the District Court of the United States for the Northern District of New York.

Bill by Samuel Cleland Davidson and others, suing on behalf of themselves and other stockholders of the American Blower Company similarly situated, against the American Blower Company and others. From a decree for complainants, defendants appeal. Modified and affirmed.

See, also, Sirocco Engineering Co. v. B. F. Sturtevant Co. (D. C.) 208 Fed. 147; 209 Fed. 624.

This is an appeal from an order of Judge Ray, in the District Court of the United States for the Northern District of New York, enjoining the individual defendants Foss and Gifford, who own or control a majority of the capital stock of the American Blower Company, from combining to waste its property, and from combining together or with others to monopolize the business of manufacturing or selling multiblade or propeller fans and blowers for exhaust or blowing, and from voting their stock, and also enjoining the defendant the American Blower Company, its officers, agents, and inspectors of election from permitting the stock of the said defendants to be voted.

O. F. Hibbard, of New York City, for appellant Foss. William S. Haskell, of New York City (Millis, Griffin, Seely & Streeter, of Detroit, Mich., of counsel), for appellants.

Winthrop & Stimson, of New York City (Henry L. Stimson and George Roberts, both of New York City, of counsel), for appellees. Angell, Bodman & Turner, of Detroit, Mich. (Henry E. Bodman, of Detroit, Mich., of counsel), for intervening appellees.

Wm. J. & Wm. C. Roche, of Troy, N. Y., for certain intervening complainants.

Before COXE, WARD, and ROGERS, Circuit Judges.

WARD, Circuit Judge. The manufacture and selling of the fans and blowers in question is a distinct and separate business of an interstate as well as intrastate character carried on by less than a dozen companies in this country. In the year 1899 the B. F. Sturtevant Company did and it still does the largest part of this business. Next to it was the American Blower Company, a corporation of Michigan. The defendant Foss owned a majority of the stock of each of these companies. In 1902 the complainant Davidson began to sell in this country a new multibladed fan patented by him, called the Sirocco fan. It was admittedly superior to any fan then manufactured for the same purpose, and Davidson incorporated his business in the year 1907 under the name of the Sirocco Engineering Company.

In 1907 the Sturtevant Company began to manufacture a similar fan, called the multivane fan, because of which the Sirocco Company began a suit against the Sturtevant Company for infringement of Davidson's patents. The defendant Foss in that year entered into negotiations with a view to consolidating the Sirocco and the Blower Company, which resulted in the formation of a new company, the American Blower Company of New York, one of the defendants in this suit. The incorporation took place early in January, 1909, and

of effect as between the parties as of January 1st. It was advantageous to each company, because it gave the Blower Company a better fan than its own and to the Sirocco Company much-needed capital. The consolidation was carried through by an exchange of the new company's stock for the stocks of the old companies, and the defendant Foss continued to hold the majority of the stock of the new company. The complainants say that they did not know how much stock Foss owned in the old company, because it was not all in his name on the company's books; but because he did control the Sturtevant Conipany, and because of the pending infringement suit, they took precautions to prevent his influence from being detrimental to their interests. The corporate existence of the Sirocco Company was maintained to prevent the patent suit from abating, and it was made a part of the agreement that a majority of the stock of the new company should be put in a voting trust, two out of the three trustees to be stockholders of the Sirocco Company. This trust was to continue for five years, the longest term permissible under the laws of the state of New York. Furthermore, the granting of licenses under the Davidson patents was also put under the control of a board of three trustees who represented the Sirocco interests.

After the formation of the new company the defendant Foss continually advised the discontinuance of the patent suit against the Sturtevant Company and the granting of a license under the Davidson patents to that company and other manufacturers without royalty. The burden of his correspondence was that there should be an arrangement between the two companies for the purpose of regulating and raising prices. This the Blower Company steadily refused to do, and continued to conduct its business in competition with that of the Sturtevant Company and all other companies engaged in the trade with constantly increasing success. At the time the bill was filed the two companies did 70 per cent. of the trade in the United States, 40 per cent. by the Sturtevant Company and 30 per cent. by the Blower Company. October 9, 1913, the District Court handed down a decision sustaining the Davidson patents. Sirocco Engineering Co. v. B. F. Sturtevant Co.. 208 Fed. 147.

January 1, 1914, the voting trust was to expire by limitation, at which time it would be within the power of the defendant Foss to elect a board of directors agreeable to him. The minority stockholders naturally feared such a board would terminate the pending patent litigation and grant a gratuitous license to the Sturtevant Company. January 20, 1914, was the date of the annual meeting of the Blower Company, but it was adjourned to February 19th, and thereafter from time to time, in pursuance of orders of the District Court. February 10, 1914, the complainants requested the board of directors of the Blower Company to file a bill such as the present bill, which request. was declined.

February 26, 1914, the complainants brought this suit in equity, alleging that the defendants had combined to waste the assets of the Blower Company, to divert its business to the Sturtevant Company and to violate the Sherman Act of July 2, 1890, by raising prices and re