Case Name: Ida B. Converse vs. United Shoe Machinery Company & others
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1904-04-01
Citations: 185 Mass. 422
Docket Number: 
Parties: Ida B. Converse vs. United Shoe Machinery Company & others.
Judges: 
Reporter: Massachusetts Reports
Volume: 185
Pages: 422–423

Head Matter:
Ida B. Converse vs. United Shoe Machinery Company & others.
Suffolk.
March 7, 1904.
April 1, 1904.
Present: Knowlton, C. J., Morton, Lathrop, Loring, & Braley, JJ.
Corporation, Remedy of stockholder. Conspiracy.
A stockholder in a corporation cannot maintain an action at law for an injury done to the corporation by conspiracy or otherwise. His remedy is through an action by the corporation, or, if unable to induce action of the corporation or its officers for the benefit of the stockholders, then by a suit in equity.

Opinion:
Knowlton, C. J.
This is an action at law brought against the defendant corporation and three other defendants sued personally, for conspiring to injure and ruin another corporation, the Goddu Sons Metal Fastening Company, in which the plaintiff is a stockholder.
The averments of the declaration are, in substance, that the three personal defendants " conceived the plan of acquiring, by purchase or otherwise, the control of said Goddu Sons Metal Fastening Company and of absorbing its rights, patents and other property into the said United Shoe Machinery Company, of which they were officers and directors," and that afterwards, combining and conspiring with the defendant corporation to injure the property of the other corporation, they acquired a majority of the stock of this other corporation and elected themselves directors and officers thereof, and as such officers and directors were guilty of various misfeasances in the control and management of the corporation, greatly to the injury and damage thereof and of the plaintiff's share and interest therein.
Each of the defendants demurred to the declaration, and the case is before us on the plaintiff's appeal from a judgment for the defendant, founded on an order sustaining the demurrer. Numerous grounds of demurrer are stated, several of which we need not consider.
The defendants contend that the declaration is vague and indefinite, and that it does not set forth with sufficient certainty the cause of action relied on. We will not stop to consider this part of the demurrer, for if it is overruled, there are other particulars in which the case stated fails to show a ground of recovery. All the wrongs done or intended, set out in the declaration, are wrongs against the corporation in which the plaintiff is a stockholder, and except through the corporation, they have no relation to the plaintiff. She was not affected by the defendants' conduct, except as every other stockholder was affected. Against her as an individual there was no conspiracy, and against her as an individual, no wrong was done directly. There is no direct legal privity between her individually or as a stockholder and these defendants. She has an interest in the corporation, and in the conduct of its officers affecting its property, but this interest in the transactions of the officers is not legal but equitable, and it cannot be made the foundation of an action at law against the officers.
H. W. Ogden, for the plaintiff.
O. A. Hight, for the defendant.
That an action at law cannot be maintained in a case of this kind was clearly shown by Chief Justice Shaw in Smith v. Hurd, 12 Met. 371. The plaintiff must find her remedy for such a wrong through a suit by the corporation or through a bill in equity, if she is unable to induce action of the corporation or its officers for the benefit of stockholders. Peabody v. Flint, 6 Allen, 52. Brewer v. Boston Theatre, 104 Mass. 378. Dunphy v. Traveller Newspaper Association, 146 Mass. 495. Richardson v. Clinton Wall Trunk Manuf. Co. 181 Mass. 580. Allen v. Curtis, 26 Conn. 456. Conway v. Halsey, 15 Vroom, 462. Ritchie v. McMullen, 79 Fed. Rep. 522.
The averment of conspiracy adds nothing in legal effect to the other averments of the declaration. Parker v. Huntington, 2 Gray, 124,127. May v. Wood, 172 Mass. 11.
Judgment affirmed.