Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/584

 § 559.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. IX. Corporate affairs must be man- aged in in- terests of the share- holders as such. § 558. It is the duty of the corporate management to con- duct the affairs of the corporation in the interests of the shareholders as such ; l and the management is not justified in promoting the outside interests of a majority of shareholders in disregard of the interests in the corporate enterprise of a minority. A court will interfere at the suit of a minority when the ma- jority seek to appropriate the assets of the company, or to obtain for themselves advantages not shared by the minority. 2 § 559. In the case of Goodin v. Cincinnati, etc., Canal Co., 3 a railroad company, having purchased a majority of the stock of a canal company, elected for the latter a board of directors in their own interest ; and then with the assent of such board appropriated the entire property, including the canal, of the tually fouud in the charter, when the charter authorizes the directors to make by-laws, not contrary to the law of the land, for the general ad- ministration of the corporate affairs. Union Bank v. Guice, 2 La. Ann. 249. 1 Compare Baltimore and Ohio R. R. Co. v. Wheeling, 13 Gratt. (Va.) 40. 2 Menier v. Hooper's Telegraph Works, L. R. 9 Ch. 350. See Jones v. Morrison, 31 Minn. 140; Ervin v. Oregon R'y, etc., Co., 23 Blatchf. 517; Gamble v. Water Co., 122 N. Y. 91, 99; Memphis, etc., R. R. Co. v. Woods, 88 Ala. 630; Mack o. Coal Co., 90 Ala. 396; Port Royal, etc., Ry. Co. v. Branch, 78 Ga. 113. A complaint alleged that the officers of a corporation were members of one family, owned a majority of the stock, had combined to appropriate the profits of the corporation in the shape of salaries, and, through a contract with a firm in which some of the officers were partners, had obliged the corporation to take all its contracts in the firm's name; that the plaintiff did not know the terms of this contract, and was ex- cluded from inspecting the corporate 564 books, and that, though the profits were large, the dividends were small. The complaint was held to have stated a sufficient ground for equita- ble relief. Sellers v. Phoenix Iron Co., 13 Fed. Rep. 20. See, also, Jones v. Morrison, 31 Minn. 140, and §§608, 609. Compare Metropolitan Elevated R. R. Co. v. Manhattan Elevated R. R. Co., 11 Daly (N. Y.), 373, 516. In dealing with the relations be- tween the corporation and its officers on the one hand, and shareholders on the other, courts of equity will look beyond the mere observance of the forms of law. At the instance of shareholders they will restrain acts even within the scope of corpo- rate powers, if such acts, when done, would, under the particular circum- stances, amount to a breach of the very trust upon which the authority was conferred. And a court will relieve an injured shareholder even after the act is done, unless the su- perior equities of innocent persons have, in the meanwhile, attached. Wright v. Oroville M'g Co., 40 Cal. 20. 3 18 O. St. 169.