Application has been made to this court by the defendant corporation to dismiss the complaint on the ground that it affirmatively appears on the face thereof that the court is without jurisdiction to entertain the same.
The plaintiffs, who are stockholders of the defendant corporation, filed a complaint alleging that the defendant corporation has suspended its ordinary business, is unable to pay its debts as they mature, is operating at a loss and that it is necessary for the protection of its creditors and stockholders that a receiver be appointed. The three plaintiffs collectively own more than 10% of the capital stock of the corporation but none of them individually owns 10% or more of said stock.
It is the contention of the defendant that under the statute, N.J.S.A. 14:14-3, such an action can be brought only by a stockholder who owns at least 10% of the capital stock of the corporation, and that since none of the plaintiffs individually own such 10% the action must be dismissed.
The issue is the interpretation of the statute, the pertinent part thereof being as follows:
"When any corporation shall become insolvent or shall suspend its ordinary business for want of funds to carry on the same, or if its business has been and is being conducted at a great loss and greatly prejudicial to the interest of its creditors or stockholders, any creditor, or any stockholder who owns at least ten per centum (10%) of the capital stock of the corporation, may, in an action,
apply to the Superior Court for injunctive relief and the appointment of a receiver or receivers or trustees. * * *" (Emphasis added)
The most recent amendment to the statute, containing the aforesaid language, became effective on March 19, 1953 with the enactment of L. 1953, c. 14, § 18. The same language appeared in the 1937 revision of the statutes which became law on December 20, 1937, L. 1937, c. 188.
Before December 20, 1937 the language in the prior amendment to this statute, L. 1931, c. 221, enacted April 24, 1931, read as follows:
"Whenever any corporation shall become insolvent or shall suspend its ordinary business for want of funds to carry on the same, or if its business has been and is being conducted at great loss and greatly prejudicial to the interest of its creditors or stockholders, any creditor or stockholder, or stockholders, provided such stockholder or stockholders own at least ten percentum of the capital stock of such corporation, may by petition or bill of complaint setting forth the facts and circumstances of the case, apply to the Court of Chancery for a writ of injunction and the appointment of a receiver or receivers or trustee or trustees. * * *" (Emphasis added)
Thus the question presented is, Did the Legislature, by the enactment of R.S. 14:14-3 in 1937, intend to repeal the prior statute of 1931? Did it intend to change the statute which authorized the institution of such an action by stockholders who collectively owned 10% or more of the capital stock of a corporation to place greater restrictions on the right to institute such an action by requiring that such an action could not be instituted unless one stockholder plaintiff owned individually 10% of the capital stock?
If the contention of the defendant is to be sustained, we could very well have a situation where the stockholders of a corporation would be afforded no judicial relief if the management was conducting the corporate business at a great loss and greatly prejudicial to the interest of its stockholders. Where the stock of a ...