
    SALE OF TREASURY STOCK TO DIRECTORS.
    Circuit Court of Hamilton County.
    Edward C. Hall v. William H. Hall et al.
    Decided, March, 1908.
    
      Corporations — Rights of Stockholders with Reference to New Issue of Stock — Waiver—Stock of the.New Issue Becomes Treasury Stock, When — Sale of Treasury Stock Otherwise than in the Open Market —Combinations of Stockholders to Control — Cumulative Voting.
    
    1. Where full opportunity was given stockholders to take their pro rata share of. a new issue of stock and they failed to do so, they Will be deemed to have waived their right thereto, and purchasers from them four years later of their stock of the original issue acquire no rights thereby in the new issue, but such new stock remaining untaken becomes treasury stock, which may be legally sold by the board of directors.
    2. In the absence of fraud or other illegal action, complaint will not' lie because of the obtaining of control of a corporation by a combination of stockholders or by cumulative voting; nor will a sale of treasury stock in furtherance of such a design be set aside by a court, where made in the presence of all the parties and by the proper officers, and in the absence of any claim that the stock would have sold for more in the open market or that it would bring more at a re-sale.
    
      Albert Bettinger, for plaintiff.
    
      Wm. L. Dickson, for Wm. H. Hall, Chloa Hall Kemper, Fred S. Kemper.
    
      W. C. Cochran, for' the Hall’s Safe Company.
    Gieeen, J.; Swing, J., and Smith, J., concur.
   The plaintiff seeks to set aside the sale of fifty-four shares of the capital stock of the defendant corporation, the Hall’s Safe Company, to the defendant, Chloa H. Kemper, upon the ground that these shares being part of an increase of capital stock should have been apportioned ratably to the holders, including the plaintiff, of the original stock of the company, and that any sale thereof without the consent of the stockholders was illegal and void.

The testimony shows that plaintiff received more than his proportion of such increase, when based upon the number of original shares held by him at the time of the increase, and that those stockholders who did not receive their full quota, having every opportunity to do so, waived their right thereto.

A. Acton Hall and Mr. and Mrs. Clark, as original stockholders, declined to take any of the increase, and when' four years later they transferred the stock to the plaintiff the- right which they had surrendered did not survive as an incident to the stock, and could not be rightfully asserted by him.

The fifty-four shares, therefore, became treasury stock, which could be legally sold by the board of directors.

The control of the board of directors and the sale of the stock was effected -by cumulative voting and by the defendant stockholders combining against the plaintiff, which in the absence of fraud or other illegal element are binding upon him. Thé stock was_ sold at a regular meeting of the board of directors, at which plaintiff was present and stated -that he would give $250 per share; but a written proposal from the defendant, Chloa IT. Kemper, to purchase at $300 per share was accepted and the sale made.

It is not claimed that the stock is worth more, nor that the company will be benefited by a resale; but the whole controversy arises from a determination on the part of plaintiff to retain a majority of the stock, and thereby the control of the company, and a like determination on the part of the defendant stockholders to secure such control; and having decided that the plaintiff as an original stockholder is not entitled to any of the fifty-four shares, the court will not interfere and set aside a sale which although not made in the open market yet was in the presence of all^the parties by the proper officers and not illegal.

The petition will be dismissed.  