Way v. Morehead City Sea Food Co.

WaleeR, J. It appears in tbe complaint tbat tbe plaintiff bas demanded tbe relief to wbicb be alleges tbat be is entitled from both defendants, and tbat they have refused tbe same. Tbe defendant, tbe ice company, contends tbat tbe plaintiff bas no right to sue it, but tbat it must seek its remedy through the sea food company, of wbicb be is a stockholder, and tbat, at least, be cannot sue tbis defendant until tbat remedy bas first been exhausted, citing as authority for tbis position Merrimon v. Paving Co., 142 N. C., 539; Staton v. R. R., 147 N. C., 436; Victor v. Mills, 148 N. C., 110; Lasley v. Mercantile Co., 179 N. C., 577. It was said in tbe ease last cited: “It is insisted tbat plaintiff, a stockholder, cannot maintain tbe present suit because be bas not shown or alleged tbat be first made application to tbe directors or management to take action in tbe matter, citing Merrimon v. Paving Co., *174 142 N. C., 539, and other cases. The principle approved in these decisions is recognized as to suits concerning corporation management, to collect corporate claims, or, in some way, to enforce or regulate corporate action, but has no application to a suit to dissolve a corporation for nonuser of the powers where, as in this instance, the right to proceed is conferred on the individual stockholder by express provision of the statute, and without regard to the amount of his holdings.” And it is similarly said in 10 Cyc., at p. 965 : “The distinction between the right of a shareholder to sue or defend for the corporation and his right to sue for the redress of injuries which are personal to himself, whether committed by the corporation or through the malfeasance of its agents, is total and clear. The rule which restrains a shareholder from suing to redress injuries to the corporation does not operate to impose any restraint upon him from suing to redress injuries which are personal to himself or to restrain wrongful acts which are not only wrongs against the corporation, but also violations of duties arising from contracts or otherwise, and owing directly to the injured shareholders.” And again, at pp. 965-966: “If the directors are guilty of a breach of trust, injuries to the corporate property or to the rights of the shareholders, or a portion of them, and if the corporation refuses to- institute the proper proceedings to restrain or redress such injury, one or more of the shareholders may do it in their individual names. This rule is founded in part upon the consideration that the directors are trustees for the shareholders, and that in any action to redress breaches of trust on the part of the directors as toward the shareholders, the shareholders are the real parties in interest.” It is said in Heggie v. B. & L. Assn., 107 N. C., at p. 590: “The corporation represents the share-owners in defending an action involving the rights and obligations of the corporation, and, in the absence of fraud or collusion, binds them, and individual stockholders cannot assert or defend the rights of the corporation,” citing Moore v. Mining Co., 104 N. C., 534; Cook on Stock and Stockholders, sec. 678; Foundry Co. v. Killian, 99 N. C., 501. So that the principle, upon which reliance is placed to defeat this action by the plaintiff, has no real application to the case, but the peculiar facts of this case make the position more clearly untenable, for here the right to have cash paid to him, for his stock in the Way Food Company is plainly and unequivocally given to the plaintiff by the very terms of the contract between the two companies, concurred in unanimously by the stockholders. The fair interpretation of that contract is that each stockholder of the Way Food Company may elect to take either cash or stock in the ice company for the stock held by him in the sea food company. It seems from the allegations of the complaint, *175 admitted in law by the demurrer, that before this action was brought the plaintiff notified the defendants that he would elect to take cash for his stock, and demanded payment of it, the other stockholders, except one E. C. Way, having elected to take stock in the ice company in exchange for the stock held and owned by them in the sea food company. It appears further that the latter company has sold qr disposed of all its property, and has further been taken over and absorbed by the ice company. The terms of the agreement between the two companies and their stockholders makes the cash, which each stockholder of the sea food company elects to take for his stock in that company, directly payable to him and not to his company, and this clearly gives him the right to sue for the same if it is not paid to him on proper demand for the same. There is here not only an express promise by the ice company to pay the money for the stock at par value, that is, so many dollars for each share, but the ice company has received the property and assets of the sea food company as a consideration for the promise so made by it. It cannot hold the property and repudiate its promise, but the law will exact full performance of the same. The case, in principle if not in form, is not unlike that of Friedenwald v. Tobacco Works, 117 N. C., 544, the facts of the two cases being substantially alike. The court erred in sustaining the demurrer of the ice company, which will be overruled, and both defendants will be allowed to answer over. It may be that when the answers come in the facts may appear differently, and require different consideration and treatment, but we cannot now anticipate how this will be. Error.