The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-02-14


QUESTION OF STANDING.
THE first question that is raised by the
averments of the plaintiffs bill is the ques-
ton whether the plaintiffs have any stand
ing in a court of equity on the theory on
which they have grounded their cause of
action. The plaintiffs allege that having
learned that the stock which they pur-
chased in the open market was tainted with
fraud. and that the whole number of shares
of stock that they had bought was indis-
tinguishable that they were unable TO
ascertain what shares of stock originated
IN the fraudulent conspiracy Whlch ne
charges and what shares of stock represent
a portion of the original and valid capital
stock OF the company, they come into court
and elect TO repudiate and ask the
court to cancel an aliquot part
OF their two hundred shares OF OF
stock in the proportion that 1900 shares or
stock, the original valid shares, bear 10 the
$1,000 shares. which they charge were
brought forth as the result OF this fraudu-
lent conspiracy. They ask the court to aid
them in making an election by virtue or
which they shall be relieved from the bur-
them if they retain the 40 shares of stock
which they claim are tainted with fraud,
and that the court shall adjudge that they
are entitled to do that and at the same time
to retain sixty shares of stock, which they
ask the court TO adjudge are valid and
planned of.
LAW AFFORDS NO RELIEF.
THE question arising then, is this: Can
a party who makes single purchase of
stock as a SINCE act of contract. repudiate
either with or without the assistance of the
court so much of the single and indivisible
contract as may be burdensome to him and
involve him in liability to suits and dam
ages by reason of his retention of ii, and
at the same time retain the other portion
of the stock which he alleges in his bill
would be beneficial for him to retain. After
the best reflection that 1 can give to the
subject, II seems to me impossible that the
chase was entirety. The contract was
an entirety, and it is elementary that the
court Is possessed of no power to make
new contract between parties entirely dis
tinct and different from the contract that
they have entered into. And il is further
familiar in law that where a party has been
led into a contract by fraud that has been
practiced upon him, he is required with
either TO repudiate the fraudulent contract
In toto or else to retain the property that
ne mas rsGeiTed as the result OF the con-
into. and to sue at law for the purpose of
recovering the damages that he has sus-
tanned by reason of the fraud that has been
practiced upon him So that on this ques-
ton it seems to me that there is no possi-
bility of the plaintiffs recovering on the
theory that stands at the very front of their
bill.
"A further objection is made to the bill
that 1t is multifarous. Multfariousness
consists In stating against the same party
two or more independent causes of action in
the same bill, or. it may consist in stating
one or more causes of action against a por-
ton of the defendants and another cause of
action against another portion of the de-
PENDANTS. Here, SO far as the plaintiffs seek
to be relieved of the fraudulent stock that
they allege they purchased, and TO have 1t
Cancelled. and to have the valid portion of
il adjudged to be valid, and they adjudged
to be stockholders and entitled to the rights
| of stockholders in the corporation in respect
| of that-in SO far as that cause of action
is concerned, ii is one which belongs alone
| to the plaintiffs. 1t is a cause of action
| which does not present right of action in
| favor of the corporation or in favor of any
| that inureS exclusively to the benefit of the
| plaintiffs and in which no other stakeholder
In the corporation is directly or legally con-
| cerned. The portions of the bill in which
| the plaintiffs as stockholders seek TO re-
| dress the wrongs that have been suffered by
| the corporation by reason OF the wrongful
diversion of 81, 900 shares of stock, and by
| reason of the wrongful gift of &. 100000 or
more of the proceeds of the bonds to Nc
| Kee and Werner, is a cause of action that
concerns the entire body of stockholders as
the cestuis pue trust who are entitled. after
| the payment OF debts. 10 have that fund
| distributed among them.
TWO CAUSES OF ACTION
1.-The primary right to enforce any cause
of action that exists for such wrongs as
that is in the corporation, and a stock
holder cannot intermedde by bringing a
suit to recover such assets as that until
he has shown that Ii is impracticable that
the just rights of the stockholders can be
reached through corporate action. The two
causes of action then, that are set out in
this bill of complaint are distinct and in
dependent. one being a cause of action tha-
belongs individually and exclusively to the
plaintiffs and the other a cause of action
in which the plaintiffs have nothing except
common with the owners OF the 40, $40 other
shares OF stock. 1t would seem, on the
statement OF the proposition, to be manifest
that 1t would be homogeneous and not in
harmony with the practice of a court of
chancery in a single bill to prosecute causes
| of action diverse in their character.
In my judgment, these two causes of action
are so entirely independent-one IA cause
| OF action belonging primarily 10 the plain
tiffS and the other d cause OF action be-
| longing primarily TO the corporation and
| If SUED tor by a stakeholder Inuring solely
to the corporation-they are so diverse in
| character that ii would need but little ar
gument to chow that the action cannot be
| maintained.
1t is further objected that the plaintiffs
in this case, having become purchasers of
| the stock, although they were good-faith
purchasers OF it. took it and hold it by no
| better or different title than the transfer
| OF 1t to them. 1t is clear that the shares
| OF stock in corporation are not governed
| by the law merchant, nor are they gov
| erned by the statute of this State touching
| bills of exchange and notes made payable
1 In a hank in this State. Securities OF that
| character In the interest of commerce and
commercial dealings are placed upon
| footing SO as that If they reach the hands
| or an innocent purchaser for value before
! maturity. the holder acquires them by a
new and indefeasible title which enables
| him TO collect the contents of the bill or
promiSsory note without regard to the de-
1enSeS, legal or equitable. between the orig
| inal parties TO the bills or notes But
| stocks are mere chooses in action, governed
/ by the principles of the common law. and
by the common law such chooses in action
are no better or higher evidence of title or
/ right in the hands of assignee than they
| were in the hands of the assignor. That
| is the general rule, rule that in any judg-
| ment. Is applicable to this case. and without
a reference 10 the adjudications that have
been read 10 the court, the court would
have reached the same conclusion by the.
application of the general principles of law
| with which the members of the bar as
We'll as the court are familiar. So that i'm
/ this case, see no principles of the law that
| the suit on the ground that the stock that
| they had purchased. by the tran sfer or as
signment of il, had acquired any right
| or equities that the sock did not possess
| In the hands of the transferer or assignor
And this view seems to be supported by
| the authorities that have been read, which
are in harmony with the understanding
| that the court has of the principles in
volved in this sort of contracts.
EQUITY RULE 49,
1T is not necessary that the court should
| express any opinion with reference to the
| scope and effect of the ninety-fourth rule in
| equity. The rule seems TO be so plain and
/