Case ID: misc_45/html/0228-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Spencer, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Thomas O’Connor, Plaintiff, v. The Virginia Passenger & Power Company, The Atlantic Development Company, Frank J. Gould and Helen Miller Gould, Defendants.
    (Supreme Court, Fulton Special Term,
    November, 1904.)
    Action by a stockholder to compel the cancellation of several lots of the stock, the bonds and the notes of a corporation — Motion to compel the statement in the complaint of a separate cause of action as to each, denied.
    The complaint in an action brought against the Virginia Passenger ¡Sc Power Company, the Atlantic Development Company, Frank J. Gould and Helen Miller Gould alleged that the plaintiff was a stockholder of the Virginia Passenger & Power Company and that the defendants Gould had, by collusion with the directors thereof, illegally obtained possession of certain preferred stock and certain common stock and certain bonds and certain notes of that corporation. The' plaintiff asked judgment for a cancellation of the contracts, whereby the defendants Gould became possessed of the said securities, and for the delivery thereof to the corporation or the payment to the corporation of the value of the securities.
    On a motion by the defendants Gould to require the plaintiff to separately state and number the several causes of action, alleged to be contained in the complaint; which motion was made on the theory that the action was brought by the plaintiff in his own behalf, and that the, manner in which the defendants Gould became possessed of each óf the several securities constituted a fraudulent transfer or conversion;
    
      Held, that the motion should be denied for the reasons, first, that the action was in form a personal one and that the facts alleged did not constitute a cause of action on which the plaintiff in his personal capacity might sue; second, that assuming that the action was brought by the plaintiff on behalf of the corporation, that the complaint was demurrable in that it did not allege that the plaintiff had requested the corporation to bring the action and that the corporation had refused to do so and that the complaint being demurrable the court would not entertain the motion but would require the defendants to test the complaint by the appropriate remedy; third, that the gist of the cause of action was not the conversion or fraudulent appropriation by the defendants Gould of tlie securities of the corporation but the wrongful collusion between them and the directors of the corporation, that the numerous transfers of the securities were simply the particulars of injury resulting from the wrong which constituted the ground of the action and that hence" the complaint did not state more than one cause of action.
    Motion 'by the defendants Gould for an order directing the plaintiff to amend his complaint by separately numbering and, stating the facts constituting plaintiff’s alleged causes of action.
    Charles A. Gardiner (Lewis E. Carr, of counsel), for motion.
    Tuttle, Flint & Eichols (John opposed. L. Hill, of counsel),
   Spencer, J.

The complaint in brief alleges that the plaintiff is a stockholder in the Virginia Passenger & Power Company, a corporation organized under the laws of the State of Virginia,, and that the defendants Frank J. Gould and Helen Miller Gould have by collusion with the directors of said corporation illegally obtained possession of $2,000,-000 of the preferred and $8,400,000 of the common stock of the company; also. $1,000,000 of the fifty-year bonds of the company secured by a $15,000,000 mortgage upon the property of the company; also $3,000,000 of the bonds of the company secured by said mortgage, and also $200,000 of the notes of the company secured by $200,000 of the fifty-year bonds of the company as collateral thereto; and asks judgment for a cancellation of the contracts whereby said defendants Gould became possessed of each parcel of said property, and for a delivery thereof to the corporation or payment of the-value of the property to said corporation.

The defendants Gould contend that the complaint sets forth at least four distinct causes of action, and move to require the plaintiff to amend ^his complaint by separately numbering and stating the. facts constituting each. The motion is made upon the theory that the action is brought by the plaintiff in his own behalf, and that the facts whereby the defendants Gould became possessed of each of the several parcels of property constituted a fraudulent transfer or conversion.

The action is in form a personal one, and the facts alleged in respect to the manner in which the Goulds obtained possession of each parcel of property may be construed as constituting a cause of action for fraud or conversion; nevertheless, it is clear that taking all the facts alleged they do not constitute a cause of action for which the plaintiff in his personal capacity may maintain a suit. The court will not, therefore, require the plaintiff to separately state the facts. It would be an idle ceremony.

The complaint is very voluminous and sets forth the history of numerous transactions, but fails to disclose any,clear idea as to the theory upon which the plaintiff’s right of action depends. I think the pleader intended to set forth a cause of action in equity by a stockholder in behalf of the corporation. If any cause of action is alleged, it certainly belongs to the corporation and not to the stockholder. But the colluding directors are not made parties nor are there any allegations in personam against them, nor is there any allegation that the plaintiff has made demand upon the corporation to bring the action, and a refusal on its part so to do. This last seems to be essential to enable the plaintiff as stockholder to sue in his own name. Flynn v. Brooklyn City R. R. Co., 158 N. Y. 493. There is nothing alleged which brings the case within the ruling of Sage v. Culver, 147 N. Y. 241, and kindred decisions. If this be so, then the facts alleged in the complaint are insufficient to constitute a cause of action in behalf of the plaintiff as a stockholder, and the court will not move in the work of the motion to compel him to separate such facts, but will require the defendants to test the complaint by the appropriate remedy.

I think there is another reason why the present motion must be denied. Assuming that the cause of action is in behalf of the corporation by a stockholder, the gist of the action is not the conversion or fraudulent appropriation by the defendants Gould of the property of the corporation, but the wrongful collusion between them and the directors of the corporation. Gray v. Fuller, 17 App. Div. 29, 35; People v. Tweed, 63 N. Y. 194; Barr v. N. Y., L. E. & W. R. R. Co., 96 id. 444. The numerous transfers of property alleged are simply the particulars of injury resulting from the wrong which constitutes the ground of the action; and while it may not appear clearly that the several transfers of property referred to took place as a result of the same collusion between the defendants Gould and the same directors, the indefiniteness of the complaint, if any, in that regard must be corrected by a different motion.

These conclusions lead to a denial of the present motion, with costs.

Ordered accordingly.