Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/707

 CHAP. XII.] SHAREHOLDERS AND OFFICERS. [§ 692. to join in defraying its expenses. 1 And a court of equity is the appropriate tribunal. 2 As in such cases the injury wrought by the misfeasance of the officers is common to all shareholders, so in the interests of all should the suit be brought. And thus it has been held that a single shareholder cannot maintain a separate action at law against directors for damages sustained by reason of their negli- gence, which had rendered his shares worthless. His action should be brought in a form to protect the interests of the cor- poration as trustee for all its shareholders and creditors. 3 § 691. A distinction has been taken 4 which has not met with continuing approval ; namely, that while a shareholder may sue directors for damages arising to him through a breach of trust on their part, he may not bring a suit in which a judg- ment would in any way control the corporate action. The distinction seems badly taken, for if the corporation refuses or fails to act, it will often be that only through controlling the corporate action by the aid of a court of equity can a share- holder adequately protect his interests. § 692. Although it is to the body corporate that directors are immediately accountable, and actions can be sustained against them by a shareholder for abuse of their trust only under the conditions mentioned, none the less do directors and other corporate officers pointed a receiver, the court assumes administration of the property, the receiver is an officer of the court, and his possession is the possession of the court; and it is for the court appointing him to decide claims of or against the receiver, or permit them to be litigated elsewhere. Por- ter v. Sabin, 149 U. S. 473. Compare Schuyler's Steam Tow Boat Co., In re, 136 U. S. 169; Gilman v. Ketcham, 84 Wis. 60. 1 Greaves v. Gouge, 69 N. Y. 154; Bosworth v. Allen, 168 N. Y. 157; Brewer v. Boston Theatre, 104 Mass. 378; Robinson v. Smith, 3 Paige (1ST. Y. ), 222 ; Davenport v. Dows, 18 Wall. 626. See Rogers v. Lafayette Agri- cultural Works, 52 Ind. 296. Directors trustees for all share- holders. 2 Hodges v. New England Screw Co., 1 R. I. 312; S. C, 3 R. I. 9; see Smith v. Hurd, 12 Mete. 371; Allen v. Curtis, 26 Conn. 456. For the right of shareholders to sue on behalf of the corporation, see §§ 138-142; and for the right of a minority by suit to control corporate action, see §§ 553- 560. 3 Craig v. Gregg, 83 Pa. St. 19; Gardiner v. Pollard, 10 Bos. (N. Y.) 674. See, also, Evans v. Brandon, 53 Tex. 56. Compare Gaffney v. Colvill, 6 Hill, 567; Oliphant v. Woodburn, etc., Co., 63 Iowa, 332; Eaton v. Robinson, 19 R. I. 146. 4 Hodges v. New England Screw Co., 1 R. I. 312. 687