Opinion
January, 1898.
J.J. Bennett, for plaintiff.
W.H. Sage, for defendants.
Counsel for the plaintiff treats the action as one for damages; counsel for defendants, as one for equitable relief. The complaint is so drawn that it is disputable which it is for. It is a jumble the like of which has come to be far too common. It is stamped as a complaint in equity by being brought in behalf of the plaintiff and all other stockholders and all creditors of the corporation, as shown by the title and by allegations of the complaint. Such an action cannot be at law. The accounting asked for also shows the same. The action being in equity, the defendant corporation is a necessary party defendant, for the accounting would have to be to it. Moreover, there is no allegation that the present directors were requested by the plaintiff to bring the action and refused. A stockholder may not bring an action as a champion of the corporation unless the directors refuse to do so, and thus commit a breach of duty. If, however, the defendants continued to be the directors of the corporation up to the time of the commencement of the action, no such request was necessary. It is never necessary to make such a request of the directors who commit the breaches of trust complained of, for the law does not require that which is idle or absurd. It would not be sufferable for directors to bring and pretend to prosecute such an action against themselves. But the court is not to presume that the defendants continued as directors since 1893, for there is an election of directors each year. If the action could be deemed at law, for $18,000 damages, the complaint does not state facts sufficient. It alleges that when the directors transferred the property to creditors, or to themselves, (or to both, if that be what is meant), the corporation was insolvent. That being so, there is no fact alleged to show how the stockholders were damaged thereby, for they would get nothing no matter how carefully the assets might be liquidated and distributed. Later on the complaint alleges that the corporation was made insolvent by the said acts of the directors; but the plaintiff has to be held to something. The demurrer is sustained.
Demurrer sustained.