Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/703

 CHAP. XII.] SHAREHOLDERS AND OFFICERS. [§ 688. are sought to be restrained are improper, fraudu- T A ° ,,. ,, . . r. .' Fraudulent lent, or ultra vires acts, which the majority cannot or ultra ratify, and which every shareholder has the right to restrain. That such acts should not be done is as much the right of a single shareholder as of a majority of shareholders. Nevertheless, the proper plaintiff in a suit to restrain directors from doing unauthorized acts, or in a suit against them for damages suffered by the corporation, or to compel them to account for illegal profits which they have made, is still the corporation ; 1 and a complaint in any such suit, where the corporation is not the complainant, is demurrable unless it set forth sufficient reasons why the action is not brought by the corporation. 2 § 688. Accordingly, in a suit brought by shareholders to restrain directors or other officers from committing unauthorized acts, the complaint should show — and ersYnconi-" circumstantially — either that the corporation had j^"* t0 been requested to and had refused or failed to take action ... against action, or that the corporation is impotent to act for officers the reason that the guilty officers constitute or con- hasten 1 "! 1 Brown v. Vandyke, 8 N. J. Eq. 795; Booth v. Robinson, 55 Md. 419; Hedges v. Paquett, 3 Oreg. 77; State v. Bank of Louisiana, 6 La. 745; Fishery. Parr, 91 Md. 245; Decatur Mineral Land Co. v. Palm, 113 Ala. 531; Macdougall v. Gardiner, 45 L. J. Chan. 27. 2 Doud v. Wisconsin, etc., R. Co., 65 Wis. 108. See Black v. Huggins, 2 Tenn. Ch. 780. Shareholders cannot maintain a bill for the removal of the treasurer of a corporation unless they have previously applied to the board of directors for relief. Tuscaloosa M'f'g Co. v. Cox, 68 Ala. 71 ; Decatur Mineral Land Co. et al. v. Palm, 113 Ala. 531 ; Jefferson County Sav. Bank v. Francis, 115 Ala. 317; John- son v. National B. & L. Ass'n,125 Ala. 465; Stahn v. Catawba Mills, 53 S. C. 519. Cf. Matthews v. Bank, 60 S. C. 183. In Woodrooff v. Howes, 88 Cal. 184, the court sustained the suit of a shareholder for the specific perform- ance of a contract made hy the de- fendants — who were also a majority of the corporation's directors — with the corporation. In Jasper Land Co. u. Wallis et al., 123 Ala. 652, a suit by minority stockholders was sustained without application to the directors, when two sets of men claimed to be directors and a receiver was appointed. In Reynolds v. Bri- denthal, 57 Neb. 280, an injunction was sustained to prevent directors improperly elected from acting. Where the complaint alleges that de- fendants are not directors, a demand is not necessary. Whitehead v. Sweet, 126 Cal. 67. See, also, Shivley v. Eureka Mining Co., 129 Cal. 293. 683