Opinion
Argued October 4, 1921
Decided December 6, 1921
George L. Ingraham, Ernest G. Fifield and Howard C. Reid for appellant.
William C. Cannon and Harold W. Bissell for respondent.
The order of the Appellate Division should be affirmed, with costs, and the questions certified answered in the affirmative.
Neither in the complaint nor in the affidavits on the motion for a temporary injunction are we given any information as to the laws of the state of Delaware with regard to the sale of all the assets of one corporation to another. We must assume that these laws are similar to the general rules prevailing in this state, excluding from consideration any peculiar statutory provisions. If the act of the corporation was ultra vires, it was a breach of the implied contract between it and its stockholders which they might resist. In the absence of a statute permitting it, no corporation, against the protest of a stockholder, may transfer all its property and assets to another corporation, to the end that the latter may take its place and carry on its business. This is a practical dissolution of the first corporation. ( People v. Ballard, 134 N.Y. 269.) At least this may not be done unless the corporation is insolvent and the sale is effected to save its stockholders from further loss.
Although the plaintiff was not a stockholder at the time of the sale, he had such an interest in the stock to the knowledge of every one, that when he later acquired the pledged stock, he might under the peculiar circumstances of this case equally resist. He, in reality, was the one injured. By a conspiracy he was deprived of the control of the corporation, which control formed part of the value of the pledge. The action was taken, not to benefit the corporation but to injure the plaintiff and to deprive him of what he was entitled to acquire when the pledge was sold. The consent of Newton did not estop him. At the time it was given there was no privity between them.
HISCOCK, Ch. J., HOGAN, CARDOZO, POUND, McLAUGHLIN, CRANE and ANDREWS, JJ., concur.
Order affirmed.