Opinion
March 29, 1935.
April 22, 1935.
Equity — Jurisdiction — Exercise — Corporations — Visitorial power — Internal affairs and management of company — Shareholder's bill.
1. Courts of equity may properly refuse to exercise visitorial powers with respect to corporations organized under the laws of other states, and it is immaterial that the principal place of business and the tangible property of such corporations are within the state. [256]
2. A shareholder's bill against a corporate defendant, a foreign corporation, joining as additional defendants the latter's directors and all shareholders of the corporation's predecessor, the obligations of which had been assumed and the assets taken over by the defendant corporation, and averring failure of the directors to institute proceedings against the shareholders of the prior corporation to recover for alleged misrepresentations by the latter as to the amount of indebtedness of the prior corporation, was properly dismissed, since to grant the relief prayed for would be to interfere with the internal affairs and management of the company. [255-6]
Argued March 29, 1935.
Before FRAZER, C. J., SIMPSON, KEPHART, MAXEY, DREW and LINN, JJ.
Appeal, No. 125, March T., 1935, by plaintiff, from decree of C. P. Allegheny Co., Oct. T., 1934, No. 2161, in equity, in case of Richard P. Kelly v. Brackenridge Brewing Company, Inc., et al. Decree affirmed.
Bill in equity.
The opinion of the Supreme Court states the facts.
Preliminary objections sustained and decree entered dismissing bill, REID, P. J., T. M. MARSHALL and RICHARDSON, JJ., in opinion by REID, P. J. Plaintiff appealed.
Error assigned was decree.
Paul Ginsburg, for appellant.
James R. Orr, with him Louis M. Abramson and Morris L. Marcus, for appellees.
Plaintiff filed this shareholder's bill against the corporate defendant, a foreign corporation. He joined as additional defendants the latter's directors and all shareholders of the corporation's predecessor. The substance of the complaint is failure of the directors to institute proceedings against the predecessor's shareholders to recover for alleged misrepresentations by the latter as to the amount of indebtedness of the prior corporation. These untrue statements were allegedly made during the course of negotiations which resulted in the present company's formation under a plan whereby it took over the entire assets of the old company and assumed all of its obligations. Defendants' preliminary objections were sustained and the bill dismissed. This appeal followed.
The questions here presented were raised and passed upon by this court in McCloskey v. Snowden, 212 Pa. 249. We there held that to grant relief such as plaintiff now seeks would be to interfere with the internal affairs and management of the company, and that in the case of a foreign corporation this would not be done. We are not disposed to depart from our previous holding. It is well established by our decisions that courts of equity of this Commonwealth may very properly refuse to exercise visitorial powers with respect to corporations organized under the laws of our sister states. The fact that the corporate defendant's principal place of business and its visible tangible property are within our borders is immaterial: Madden Electric Light Co., 181 Pa. 617.
The decree is affirmed at appellant's costs.