Case Name: Harriet A. Watkins et al., as Administrators, Plaintiffs, v. The Watkins & Turner Lumber Co. et al., Defendants
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1896-05
Citations: 17 Misc. 227
Docket Number: 
Parties: Harriet A. Watkins et al., as Administrators, Plaintiffs, v. The Watkins & Turner Lumber Co. et al., Defendants.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 17
Pages: 227–229

Head Matter:
Harriet A. Watkins et al., as Administrators, Plaintiffs, v. The Watkins & Turner Lumber Co. et al., Defendants.
(Supreme Court, St. Lawrence Special Term,
May, 1896.)
• 1. Pleading — Demurrer.
A complaint in an equitable action which shows that the plaintiff is entitled to some relief will not be held bad on demurrer because all the relief demanded cannot be granted.
2. Corporations — Misconduct of trustees.
Where it appears that the corporation is wholly within the grasp of the trustees and its management is conducted for their pecuniary profit and advantage to the destruction of the interests of the stockholders, the court will intervene to afford such relief as may be necessary.
3. Same — Pleading.
An action by a stockholder for relief against the misconduct of the trustees, where an accounting is asked, should cover all acts of the trustees, whether active or passive, which come within the purview of . the mismanagement.
4. Same — Parties.
Where such an action is brought by an administrator who is also a beneficiary of the estate he represents, it is immaterial that he is not named individually as a party, as he will be bound personally by the judgment.
Demurrer to complaint.
A. X. Parker, J. G. McIntyre and Thomas Spratt, for plaintiffs.
• T. F. Conway and Theo. H. Swift, for defendants.

Opinion:
Russell, J.
The right of a stockholder of a manufacturing corporation to obtain relief against the trustees upon the charge of mismanagement and bad faith is vigorously, and skilfully assailed by the counsel for the defendants, and the attack is, to some extent at least, sustained by opinions of learned courts in cases more or less akin to the one at bar.
Legislation and judicial writings have proceeded pari passu In the control of negligent or corrupt action by officers of corporation with two distinctive objects in view, wMch are so often antagonistic as to the results to be reached that seeming inconsistencies in the construction of statutory and unwritten law have many times occurred, as found in the reports of this and other states.
These two objects are:
First. To allow the trastees and officers of the corporation fair and untrammeled right of action in the -discretionary and often- times perplexing conduct of affairs; and.
Secondly. To protect the stockholders from improper waste of • the property in charge of fiduciary agents, which property in fact belongs to the owners of the stock.
It is, therefore; important, in applying the principles of leading cases as to the rights' of stockholders, to -bear in mind the limits within which the courts may intervene, and' also the necessity of affording relief in some peculiar cases to protect the owners of the-corporate property.
The courts will not dissolve a corporation except in the methods prescribed by statutory law, nor take its management out of the . hands of its properly chosen officers and put it in the hands of a receiver unless necessity compels. But they will, when necessary to the preservation of the rights of stockholders, interfere to prevent unlawful or corrupt action by the officers which is in direct antagonism to the interests of the corporation itself, if so substantially injurious in its character as to ultimately lead to a destruction of valuable pecuniary rights.
In the present case this court must assume,, on the issue raised by- the demurrer, that the allegations of the complaint are true, and all fair intendments and presumptions from such allegations. must be adopted as correct. Upon those facts ahd presumptions The Watkins & Turner Lumber Company appears to be wholly within the grasp of-the other defendants, and its" management conducted for the pecuniary profit and advantage of-those defendants to the destruction of the interests of the plaintiffs unless this court intervenes to protect them.
So concluding, a court will afford relief of some kind and to the extent necessary to protect the innocent stockholders, even though all of the relief demanded may not be grouted in the final jtidg ment. Sage v. Culver, 147 N. Y. 241.
• In bringing this action it was essential, as an accounting was prayed for, that all of the acts, of the trustees unlawfully done should be within the scope of the action. Whether those acts charge direct pecuniary benefit to some of the.trustees and a negligent sufferance of those acts by the others, does not affect the maintenance of the action, ' and in such an equitable action it is impracticable to review only such things as affect with equal force all of the trustees. The judgment should make a clean sweep of all 'things which come within the purview of the mismanagement of the corporation, so that other proceedings may be unnecessary.
There is also no doubt but that the plaintiff, Henry A. Watkins, while nominally only a party as administrator, being also a beneficiary of the estate he represents, will be concluded in his personal rights by the judgment in this action, and, therefore, in an equitable action the fact that he is not named personally as a party to the litigation does not prevent the inquiry sought by the scope of the complaint.
The demurrer, therefore, is overruled and judgment ordered for the plaintiffs with leave to the defendants to answer within twenty days upon payment of costs, upon the ground that in the present action, under the allegations of the- complaint, the plaintiffs are entitled to some relief, the extent of which can only be settled by the form of the final judgment.
Demurrer overruled and judgment ordered for plaintiffs, with leave to defendants to answer.