Court Opinion

ID: 6120840
Source: CourtListenerOpinion
Date Created: 2022-02-04 18:44:43.373167+00
Date Added: 2024-06-11T08:23:14.973784
License: Public Domain

GILBERT, J.:
We think the demurrers were properly overruled. The general rule no doubt is, that an action of this kind must be brought by the corporation; but where the complaint shows that the corporation is still under the control of those who must be defendants in the suit, the stockholders, who are the real parties in interest, may *64bring the suit in their own names, making the corporation a party defendant; for a court of equity never permits a wrong to go unre-dressed merely for the sake of form. The individual defendants are in law, as well as in name, trustees, and the stockholders are the cestuis que trust, and have a joint interest in all the property and effects of the corporation. Upon general principles of equity, therefore, stockholders have a right to maintain an action against the trustees of the corporation for a fraudulent breach of trust, when it is apparent that the corporation itself will not sue for their benefit. And where the corporation is still controlled by the same trustees who are accused of the fraud, or where such accused persons are a majority of the trustees, that is sufficient evidence that the corporation will not prosecute, and that an application to the trustees to direct a suit to be brought against themselves, or the derelict majority of their members would be useless. The law never requires the performance of a supererogatory act. (Ang. & Ames on Corp. [10th ed.], § 312, and cases cited.) The action is brought in behalf of the plaintiff and all other stockholders, con-formably to section 119 of the Code. It is averred in the complaint that there are only five trustees; three of them, being the persons charged with having committed the fraud, are made defendants, and it is alleged that they are still trustees. The case, we think, is within the rule stated.
It is enough that the plaintiff was a stockholder when the action was brought. If he purchased his stock after the alleged fraud was committed, that did not condone the fraud. The plaintiff acquired all the rights of the person of whom he purchased. (Ramsey v. Gould, 57 Barb., 398.)
It is hardly necessary to discuss the other points, namely: that there is a misjoinder of causes of action, and that the court has no jurisdiction. The complaint sets forth only one cause of action, and the court clearly has jurisdiction.
The order must be affirmed, with costs, with leave to the defendants to amend in twenty days on payment of costs.
BaeNaed, P. J., concurred. DyxmaN, J., not sitting.
Order overruling demurrers affirmed, with costs, with leave to defendants to amend in twenty days on payment of costs.