Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/706

 § 690.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XII. Directors of a national bank are liable to shareholders for losses sustained by it through their gross negligence and inattention to duty. If the receiver of the bank when insol- vent, himself one of the guilty directors, refuses to sue, a shareholder may, on behalf of himself and all other share- holders, sue the directors for damages, making the receiver and the bank parties. The complaint need not allege a direc- tion to sue from the comptroller of the currency, or a refusal on his part to direct the receiver to sue ; and the action may be brought in a state court. 1 In such an action the statute of limitations affecting equitable actions generally applies. 2 § 690. In all cases where shareholders bring suit against directors and other officers, either to restrain them from improper and unauthorized acts, or to compel them to account for illegal profits which they have made, or when the suit is simply to recover damages for injuries accruing to the corporate property through their wrongful or negligent acts, it is essen- tial that the corporation be made a party defendant. 3 Unless all the shareholders join as plaintiffs, the action should be brought on behalf of all ; or, at least, of all who are willing Corporation a necessary party; ac- tion should be brought on behalf of all the share- holders. 1 Brinckerhoff v. Bostwick, 88 N. Y. 52; reversing S. 0., 23 Hun, 237. See, also, Merchants and Planters' Line v. Waganer, 71 Ala, 581; Kelsey v. Sargent, 40 Hun (N. Y.), 150. 2 Brinckerhoff ». Bostwick, 99 N. Y. 185. s Greaves v. Gouge, 69 N. Y. 154; Cunningham v. Pell, 5 Paige (N. Y. ), 607; Charleston Ins., etc., Co. v. Sebring, 5 Rich. Eq. (S. C.) 342; Sears v. Hotchkiss, 25 Conn. 171; Black v. Huggins, 2 Tenn. Ch. 780; Robinson v. Smith, 3 Paige (N. Y. ), 222; Davenport v. Dows, 18 Wall. 626; Bruschke v. Schuetzer Verein, 145 111. 433. Where shareholders pass a resolu- tion to cease to do business, and place all the assets of the corpora- tion in the hands of one of its offi- cers, to be converted into money for 686 distribution among the shareholders after paying the corporate debts, the corporation is still a necessary party to a bill filed by a shareholder against the officer for an account and set- tlement of the shareholder's interest. Young v. Moses, 53 Ga. 328. So when the corporation is in the hands of a receiver, he as well as it is a necessary party defendant. Brinck- erhoff v. Bostwick, 88 N. Y. 52. And a Federal court will not enter- tain a suit by shareholders against officers for fraudulent misappropria- tion of corporate property, when the receiver appointed by a state court is not made a party to the suit, al- though the state court has denied a petition of the receiver to bring the suit, and an application of present plaintiffs for leave to make him a party; for when a court has ap-