The opinion of the court was delivered by: FORMAN
Plaintiff filed a complaint in which he alleges that the defendant was organized under the New Jersey Corporation Law approved April 7, 1875 (Revision of New Jersey, 1709-1877, pp. 174-180), with authorized capital stock of $90,000,000, issued and outstanding, represented by 450,000 shares of preferred stock and 450,000 shares of common stock, each class having a par value of $100 per share.
He alleges that the New Jersey law of 1875, under which the defendant was incorporated, limited the existence of corporations organized under it to 50 years. Defendant's certificate of incorporation provided that it was to commence business on January 10, 1891, and its existence was to terminate in 50 years. It was also provided therein, among other things, that the holders of preferred stock should be entitled to a fixed annual dividend of 7% before any dividend should be set aside or paid on the common stock and that "the holders of the preferred stock shall be entitled to no dividend beyond the seven percentum aforesaid."
Plaintiff alleges that he acquired 200 shares of the common stock of the corporation in June 1930 and at other times thereafter; that he was notified in October 1940 by defendant of a meeting of stockholders, which was to be held on November 20, 1940, for the purpose of amending the certificate of incorporation of the defendant to extend its existence by substituting the date "January 10, 1991," in place of the date "January 10, 1941"; that he attended the meeting and voted his 200 shares against the adoption of the proposed amendment. However, it was adopted by a vote of two-thirds in interest of each class of stock. Plaintiff claims that he immediately notified defendant that the period for which he invested his capital would expire on January 10, 1941, and that defendant was required to pay him the full value of his shares as of that date, but that defendant refused to make such a payment and has used plaintiff's capital without his consent since January 10, 1941.
Another ground for his complaint is that the provision to pay annual dividends of 7% on the preferred stock, as contained in the certificate of incorporation, was fully satisfied on January 10, 1941, since preferred stockholders were not entitled to dividends beyond that date, and that the common stockholders had a right to all the surplus on January 10, 1941, particularly those common stockholders who did not assent to the extension of the existence of the defendant.
He alleges that no provision was made in the amendment extending its corporate existence whereby his right as a nonassenting common stockholder to his proportionate share in the surplus was protected. He contends, therefore, that the terms of his contract were altered because of the extension and that dividends were paid to the holders of preferred stock after January 10, 1941, in violation of his contractual rights.
Judgment was demanded by him on both counts in the sum of $32,000 which he computed in the following manner:
He refers to the original investment
in the 200 shares of stock
and alleges that those shares had
a value of $100 each or a total of . . $20,000
His proportionate share by virtue
of his holding of 200 shares
of common stock in an item designated
"Earned Surplus, $10,142,226.25"
in "Consolidated Balance
Sheet December 31, 1940," of the
defendant amounted to the sum
of $22.50 per share, or . . . . . . . . 4,500
He further alleges that from
1930 to 1940, inclusive, the defendant
transferred to its account
known as "Reserve for Depreciation
$45,205,036.27", as identified in its
"Consolidated Balance Sheet December
31, 1940", the sum of $16,123,874.14. He
alleges that by
reason of his holdings of 200
shares of common stock, his pro rata
share of the last mentioned
sum was $37.50 per share, or an
aggregate sum of . . . . . . . . . . . 7,500
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