Bailey v. Guaranty Liquidating Corp.

ROTH, J.,

pro tem.

Appellant, a shareholder of respondent corporation, brought this action, predicated upon the provisions of section 345, Civil Code, for himself and in behalf of other shareholders, against respondent corporation and its' officers seeking an injunction against defendants to restrain them from performing five different kinds of functions which respondent corporation and its officers contemplated performing. The complaint is in five counts, one count for each of the alleged unauthorized acts, as follows: Expenditure of moneys by respondents for (1) the purpose of erecting dwellings and business structures on vacant properties and the sale thereof; (2) to develop and operate mining claims and mines; (3) the distribution of certain of its assets

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in kind, in return for preferred shares and/or cash; (4) the payment of a liquidating dividend without calling in the outstanding preferred shares by respondents for the purpose of stamping thereon the payment of such dividend; (5) the exchange by respondent corporation of its stocks for other stocks and the purchase of its outstanding preferred shares.

A general demurrer was sustained to appellant’s amended complaint without leave to amend. Judgment was entered upon the order sustaining such demurrer without leave to amend, and from said judgment this appeal is taken.

An examination of the articles of incorporation of respondent corporation discloses that the purposes for which it was formed are: 11 To acquire and liquidate certain specific assets, to-wit, claims against, interest in and/or assets comprising the receivership estate in that certain action in the United States District Court for the Southern District of California, Central Division, in Equity No. S-103-C, entitled,

‘Fred J. Weiler, Complainant,

vs.

Guaranty Building and Loan Association of Los Angeles, a corporation, et ad., Defendants’.”

The purposes of the corporation, however, were considerably amplified by other provisions in the articles following said purpose clause, said statement being: “As-a means of effecting such liquidation, and ancillary to such purpose, this corporation is formed for the following purposes:” Whereupon follow in thirteen numbered paragraphs an enumeration of powers, which are as broad as those found in thei charters of most corporations organized to perform a variety of businesses. Paragraph two of the articles contains specific authority to construct and deal in dwelling houses, and other structures, properties and mines, and is direct authori- 4 zation to respondent and its officers to do the very things’ which are complained of in counts one and two of appellant’s complaint.