Collins v. Consolidated Water Co.

Plaintiff sued to compel the directors of the defendant corporation to dissolve the corporation and to distribute the assets among the stockholders. The individual defendants, together with the plaintiff, made up the entire list of stockholders. The corporation and those defendants constituting the board of directors (who also represented the majority of the stockholders) demurred by general and special demurrer. This demurrer was sustained and plaintiff declined to amend. Judgment went for the demurring defendants and plaintiff has appealed on a bill of exceptions.

The gravamen of the complaint is that the original purpose of the corporation has been fulfilled; that the directors are exercising corporate powers beyond the scope of the purposes of the incorporation; and that the corporation should therefore be dissolved. The complaint was filed February 28, 1929; the judgment was entered September 21, 1929. Thus, the rights of the parties under the judgment appealed from are to be determined by the law relating to corporations existing prior to the amendments in 1931.

[1] Under the law then existing the right of a corporation to exercise corporate powers could not be inquired into in a private suit, but such inquiry could be had only upon quo warranto at the instance of the attorney-general. (Civ. Code, sec. 358;Westlake Park Inv. Co. v. Jordan, 198 Cal. 609, 618 [246 P. 807].)

Likewise, under the law then existing, a suit by minority stockholders for the involuntary dissolution of a corporation upon the grounds specified in this complaint did not lie, but such a suit must have been instituted by the state. (Sec. 803, Code Civ. Proc.; French Bank Case, 53 Cal. 495, 550, 553;Lyon v. Carpenters' Hall Assn., 66 Cal.App. 550, 552 [226 P. 942].)

The judgment is affirmed.

Sturtevant, J., and Spence, J., concurred.

A petition for a rehearing of this cause was denied by the District Court of Appeal on May 4, 1932, and an application by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on May 31, 1932.