Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/581

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 555. § 554. Accordingly, a court will not ordinarily interfere with the corporate management in matters respect- ing the internal administration of the corporate not^ter^ 111 affairs : 1 nor examine into the affairs of a corpora- ieT. e a * the ' r suit of tion to determine the expediency of its action, or its share- holders motives, as long as the action itself is lawful. 2 And a shareholder cannot enjoin the corporation from doing what is in direct furtherance of the objects of its incorporation and beneficial to shareholders as such, because the contemplated action will injure him in another character. 3 § 555. To warrant the interference of a court, at the instance of a shareholder, to restrain an act intended by the Unless to body corporate or the corporate management, the acts which act should be beyond the corporate powers ; or, if ^res^m intended by the corporate management, a manifestly constitute J l ° J a breach of improper act which the body corporate is not in a trust. position to prevent, owing perhaps to the fact that the man- agement cannot be changed in time. 4 The reasons for this are thus stated in Foss v. Harbottle : 5 " Whilst the court may be declaring the acts complained of to be void at the suit of the present plaintiffs, w T ho in fact may be the only proprietors who disapprove of them, the governing body of proprietors may defeat the decree, by lawfully resolv- ing upon the confirmation of the very acts which are the sub- ject of the suit. ... In order then that the suit may be 1 Carlen v. Drury, 1 Ves. & B. 154; Foss v. Harbottle, 2 Hare, 461; Moz- ley v. Alston, 1 Phil. 790; Bailey v. Birkenhead, etc., R'y Co., 12 Beav. 433; Bach v. Pac. Mail S. S. Co., 12 Abb. Pr. N. S. (N. Y.) 373; Miller «. Murray, 17 Col. 408. See 2 Lind- ley on Part., 895-902; Hawes v. Oak- land, 104 U. S. 450. The power of a shareholder to sue on a right of action belonging to the corporation is discussed in §§ 138 et seq. 2 Oglesby v. Attrill, 105 U. S. 605; Shaw v. Davis, 78 Md. 308. See Mayor, etc., of Baltimore v. Balto. & O. R. R. Co., 21 Md. 50, 92; Cates ». Sparkraau, 73 Tex. 619; Lamar v. 36 Lanier House Co., 76 Ga. 641; Bur- den v. Burden, 159 N. Y. 287. 3 Baltimore and Ohio R. R. Co. v. Wheeling, 13 Gratt. (Va.) 40. See Thompson v. Erie Ry. Co., 11 Abb. Pr. N. S. (N. Y.) 188. 4 See Hersey v. Veazie, 24 Me. 9; Cogswell v. Bull, 39 Cal. 324; Leo v. Union Pac. R'y Co., 19 Fed. Rep. 283. A shareholder may restrain an act which, if done, would be a ground of forfeiture of the charter. Ren- dall v. Crystal Palace Co., 4 Kay and J. 326. See Ponca Mills Co. v. Mike- sell, 55 Neb. 98. 5 2 Hare, 493, 494. 561