The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1894-05-06


Another chapter in the long and
stubbornly contested case between Nor
ris Goldberg and others upon the one
side and Michael Shaughnessy and 9TH
ers was closed yesterday morning be-
fore Judge Merritt. at which time the
motion for new trial was overruled.
The plaintiff had filed suit in October,
1887. demanding that an accounting be
had between said Shaughnessy and the
Tiewaukee Gold & Silver Mining COM
pany, and that a receiver be appointed.
The matter was committed to Hon.
W. c. Han as referee, the plaintiffs
represented by Judge j. G. Sutherland,
the defendants by Judge w. H. Dick
son and William c. Mckay. A large
mass Of documentary evidence was in
troduced by the plaintiff, whereupon
the defendants attacked it as insult
hcient 10 entitle the petitioners to the
accounting and asked without the in
PRODUCTION of testimony that it be de-
MED. The question was argued eXhaus-
lively. whereupon Referee Hall found
that the facts were mot sufficient to
enuue plaintiffs TO any relief whatever
In court of law or equity. and that
SAL action should be dismissed.
Tho plaintiffs thereupon moved the
coufe to set aside the findings of the
referee, upon which Judge. Merritt yes
terday ruled as follows:
When a stockholder seeks to avail
himself Of a cause of action in favor of
corporation. he must show that its
board Of directors is acting ultra wires
frsan dbl
vests the control in such board and so
long as il acts in good faith and within
lis powers the stockholders are bound.
But such stockhoider must further
show that he has exhausted all of the
means within his reach to obtain within
the corporation itself the redress of his
grievances He must apply to the
board of directors and. If time permits
TO the stockholders as a body in the
matter Of which he complains: or he
must show positively and not by way of
inference that such an application
W I'd be useless. HAYES vs.. Oakland,
lo4 8. :. $50. Quincy vs.. Steele, 30. U.
Tested by these rules, it is evident
that Inc complaint does not state facts
sliIlclent TO constitute q cause of action
II Is alleged in the complaint that
since the year 1883 the duly elected
BOARD OF directors consisted of the two
ms anu VI NG4EludIlS SlauGn-
messy and Mcqueen and L. S. Hills the
latter however ceasing to be a director
IN loo4, that ShdughneSSy and MCQUEEN
refused to recognize the plaintiffs as
directors or stockholders; that Shaugh-
messy has assumed control of the prom
cry OF the corporation and has received
anu placed 10 his own credits all Of
The proceeds thereof. and finally that
al any meeting OF the stockholders for
me election OF a new board no election
would be likely TO be hal by reason of
the tact that said plaintiffs control
precisely one-half the shares of the cor
poiauon and the said Shaughnessy- and
Mcqueen own or control an equal num-
Der ''''4 Il III
While the allegations of the com
plant may be sufficient. in the absence
OF demurrer, as. an averment of
fraud on the part OF Shaughnessv. in
that he without authority and occupv-
ing hduclary relation, placed to his
own credit funds of his cestui o1Ie
trust. Mcqueen is not charged with
fraud nor with participating in
9haughneSsN's fraud. For aught that
appears, his denial of plaintiffs rights
and his support of Shaughnessy are
IN The utmost good faith. and without
any knowledge of the claimed fraud.
II the facts had been stated 10 him bv
the plaintiffs, he might have united
with them in taking the proper steps
10 protect the corporation through the
proper channel to-wit: its board of
directors.
The plaintiffs have never. SO far as
the record discloses, made anv de-
mands IN the board of directors or the
directors individually, or on the stock
holders as a body. and the excuse al
legged Tor not applying to such stock
holders, viz; that no election would be
likely TO be had because Mcqueen
and (hgTohnnECF- al i
one-hat of its stock. is insufficient. in
view Of the fact that Mcqueen is not
Shown 10 have acted fraudulentlv nor
10 be one of the parties who should be
sued by the corporate The plain
tifts have not shown that they have
exhausted their remedy within the
corporation when they simply deal in
probabilities. Their duty was to make
the effort, and the result might have
been better than their forecast.
The iAsuficienCv Of such allega tons
Was decided in the case of Brewer ct
al VS.. PropTietors of The Boston The
atre ct al. 1O4 Mass. 37S
II would have been sufficient excuse
for not applying to the stockholders. if
q case of such urgency had been
aVerred and proved as to show that
great injury would result by the de-
lay incident to such an application.
and II sufficient rea son had been
given for not having taken the proper
steps in the past. But the complaint
does not aver Shaughnessy's insoI-
vency nor any excuse for not having
attempted to get the stockholders 10
act between 1884. when Shaughnessv's
wrongful acts commenced. and 1887
when the complaint was filed: nor does
II even state that between such dateg
meetings of the stockholders had not
been regularly held
I have already decided in the case of
Anderson Us. S. L. B. 6, l. Association
and Lsagham ct al. vs. The Western
i. d $. CO. ct al, at this term of
court. the same question arising in this
case.
As the complaint in this case. in the
respects referred to- was neither aided
by the answer nor by evidence, and as
neither by the answer nor by proof.
nor by admitted allegations. did the
plaintiffs show that they had exhaust
ed their remedy within the CORPORA
ton itself before bringing this suit ii
follows that the conclusion reached bv
the referee that the complaint should
be dismissed is correct
Motion for a new trial is overruled.
The plaintiffs. it was said yesterday.
will appeal to the supreme court
ON HAREAs CoRPUS