Johns v. McLester

TYSON, J. It cannot be doubted that the alleged wrongs complained of in the bill in this cause, if cognizable at all, are such as could have been righted upon the complaint of the corporation, in which the complainants are stockholders. Tn other words, the purpose of this bill is to redress certain alleged injuries done the corporation,' which are charged to be damaging to the rights of the complainants as stockholders. [290] It is thoroughly well settled in this State that before a minority stockholder, or any number of them, can maintain a bill of this sort, he or they must make demand upon the managing officers or governing board of the corporation to correct the wrongs complained of, by legal proceedings or otherwise, and meeting with failure or refusal, he or they must next seek redress through the stockholders as a body. And such demand or request must be clearly averred in the bill. Of course this demand is not required when it is made clearly to appear that it would be refused, or that the litigation following would necessarily be under the control of persons opposed to its success, or when the persons constituting the governing board or a majority of them are the wrongdoers or under their control, and any effort to obtain redress through the stockholders would be unavailing for want of time or other cause. Of course, the excuse for not making the demand upon the governing board or if made upon that body, then the excuse for not seeking redress through the stockholders must be clearly and distinctly averred in the bill. — Montgomery Light Co. v. Lahey, 121 Ala. 131, and authorities there cited. There is not an averment in this bill, which can by any possible construction afford the remotest inference, that the stockholders of the corporation have ever been applied to by these complainants to redress the grievances complained of, nor is there even an inference, from the facts averred, that any good reason exists for not making the application to them. Indeed, we think it can be said that no proper demand is shown to have been made upon the directors. All that is shown in this respect is that one J. A. VanHoose, who was a stockholder, on the 17th day of October, 1899, addressed a letter to “Members of the Board! of Directors of Woodlawn Cemetery Co.” requesting them to immediately call a meeting of the hoax'd of directors and of the stockholders of the corporation for the purpose of redeeming the px'opex'ty of said company from the respondent, before the expiration of the time of redemp [291] tion, and demanding that they take such immediate steps as are necessary in order to make such redemption. It is obvious from the language employed that the board of directors were not in session when this letter Avas Avritten, nor is there one Avord in it calling their attention to the facts upon which the relief is predicated. And Avhether the stockholder’s, constituting the board of directors, Avhen this letter was Avritten, Avere the same persons composing that body Avhen Van-I-Ioose appeared before them and informed them of his agreement with the respondent with reference to postponing the foreclosure sale is not shoAvn. It may be, and avc have the right to assume, that the Board was composed of entirely different stockholders who knew absolutely nothing of the agreement betAveen VanHoose and the respondent and of the other facts alleged. But be tills as it may, it is not shown that any governing body of the company were eAwr informed of the conspiracy alleged between the respondent and the president of the company. It is true that there is an exhibit to the bill (“H”), an unsigned letter of date January 20, 1900, purporting to have been addressed to “Director Woodlawn, Cemetery Co.” demanding that a bill be filed etc., also saying that “the chancery court has practically held that L. W. Johns and E. Érswell Avere guilty of such fraud in the sale * * as to in-Aralidate the same and it is absolutely necessary that this bill be filed in order to protect the interests of the company,” but it is noAvhere averred that this letter eArer reached the director or the board of directors. This being true, it is not necessary to here decide its sufficiency or insufficiency as a demand. 'The grounds of the demurrer challenging the averments of the bill in these respects' should have been sustained. IleA’ersed and remanded.