Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/710

 § 697.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XII. Uncondi- tional right of share- holders to sue for direct in- juries. ble when one of the complainants is a director who participated in the alleged acts. 1 § 690. When an injury to a shareholder is not the result of a misapplication of the corporate funds by reason of which all shareholders suffer alike ; but is an injury done by corporate officers to the shareholder di- rectly, the shareholder may sue at once on his own behalf; for he is the only person injured, and in respect of such injuries he is not held to have confided the protection of his interests to the body corporate. 2 Accordingly, when a person is induced through the fraudulent misrepresentations of directors to purchase shares, he may sue them immediately for the damages arising from the wrong done him. 3 Likewise, Avhen directors make a fraudulent overissue of stock, any one purchasing such shares on the faith of their having been lawfully issued may recover from the directors the damages sustained by him. 4 § 697. If confidential agents of a company conspire to Bremond, 53 Tex. 96. See, also, Overend v. Gurney, L. R. 4 Ch. 701; S. C, sub nom. Overend & Gurney Co. v. Gibb, L. R. 5 H. L. 480. Com- pare Deaderick v. Wilson, 8 Bax. (Tenn.) 108. 1 Baird v. Midvale Steel Works, 12 Phila. (Pa.) 255. 2 The treasurer of a corporation who holds money to pay a dividend •which has been declared, and refuses to pay the dividend on certain shares, claiming to be the owner of them himself, is liable personally for the amount of the dividend, to the real owner in an action of assumpsit for money had and received. Williams v. Fullerton, 20 Vt. 3-16. When there are two classes of sharehold- ers, one whose dividends are to be deferred for a number of years, and directors pay to the other class div- idends out of the capital of the com- pany, the directors may be person- ally liable to make up the sum, in the interests of the deferred share- 690 holders. Salisbury v. Metropolitan R'y Co., 22 L. T. N. S. 839. Some directors attempted to pur- chase on behalf of their bank its own stock. This they had no power to do, and the bank repudiated the transaction. It was held that the vendor could not sue the directors, who had made no misrepresenta- tions and whose want of power was a matter of law, as open to the knowledge of the plaintiff as to themselves. Abelas v. Cochran, 22 Kan. 405. 8 Cole v. Cassidy, 138 Mass. 437; Davidson v. Tulloch, 3 Macq. 783; Paddock v. Fletcher, 42 Vt. 389; Cazeaux v. Mali, 25 Barb. 578; Mor- gan v. Skiddy, 62 N. Y. 319; Bale v. Cleland, 4 Foss. & Finn. 117. Com- pare Mabey v. Adams, 3 Bos. (N. Y. ) 346 ; Hubbard v. Weare, 79 Iowa, 678; Gerner v. Mosher, 58 Neb. 135. See Gerner v. Yates, 61 Neb. 100. 4 Bruff v. Mali, 36 N. Y. 200; Shot- well v. Mali, 38 Barb. 445.