Stokes v. Continental Trust Co. Of City Of New York

186 N.Y. 285, 78 N.E. 1090 (1906)

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Nature of the Case

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Facts

Continental Trust (D) is a domestic banking corporation with capital stock of $500,000 at a par value of $100 each. Stokes (P) was an original stockholder owning 221 shares at the time of the suit. The board of directors voted on increasing the amount of stock for the benefit of Blair & Co., an influential firm of private bankers in the City of New York. D had a surplus of funds making its book value $309.69 per share. A stockholders meeting was then called to vote on this increase and sale, and the actions passed overwhelmingly. P voted to increase the stock but against a sale to Blair & Co. P demanded the right to a proportional number of new shares and demanded a subscription to an additional 221 shares at par. This demand was refused. The stock par value was increased to $450 and sold to Blair. P again demanded to subscribe and was again refused. The stock increased to over $700 by the time of the trial. The trial court ruled for P and held that D did not have the power or authority.