Dousman v. Wisconsin & Lake Superior Mining & Smelting Co.

Ryan, C. J. I. The injury which the respondent, as a shareholder of the appellant, sets up in his complaint, is one peculiar and personal to himself, not common to other shareholders, alleged to have been committed by the board of directors, as the governing body of the corporation; that is, by the corporation itself. Clearly his remedy is against the corporation. Probably he might have maintained an action at law against it. Gray v. Portland Bank, 3 Mass., 364. But the effect of such an action would be to convert part of his interest as a shareholder into a judgment for damages; in other words, to sell a portion of his stock to the corporation. That he is not obliged to do. He has a right to maintain his proportionate interest in the corporation, certainly as long as there is sufficient stock remaining undisposed of by the corporation. Trading corporations of the character of the appellant have been likened to partnerships, and the remedies of stockholders to those of partners, by very high authority. Gray v. [422] Portland Bank, supra; Robinson v. Smith, 3 Paige, 222; Adley v. Whitstable Co., 17 Vesey, 315. And equity has always afforded a remedy .to a stockholder, in such a case as this, by injunction, account, or other appropriate decree. Adley v. Whitstable Co., supra. This principle has been repeatedly recognized in this court, as in Putnam v. Sweet, 2 Pin., 302; Nazro v. Ins. Co., 14 Wis., 295. Such a case is clearly distinguishable from suits by stockholders, in the right of the corporation, founded on wrongs against the corporation. In that class of cases, as the authorities cited by the appellant show, the right of suit is primarily in the' corporation itself; and stockholders take the right, in lieu of the corporation, only upon refusal of the governing body of the corporation to sue. Here the wrong complained of is by the corporation, not against it. The right is against it, not against individual directors. The judgment, to be effectual, must be against the corporation itself; not against the directors personally, who may be changed from time to time. And even where a suit would lie by a corporation against its governing body, for wrongs done against it by the governing body, it is sufficiently manifest that a demand upon the governing body to bring the suit would be nugatory. II. If there are other shareholders in like condition as the respondent, their right and his are several; they may bring their separate suits, or they may submit to the wrong, at their sevez*al pleasure. The respondent has no right to represent them. The case is entirely distinguishable from a wrong done' by the governing body, common to all the stockholders. III. The complaint assumed that the new issue of full paid stock for half paid stock had been actually made; and therefore prayed for the corresponding issue to the respondent. It appears by the finding of the court below, that this had been done only to “a small amount.” And the judgment, instead of following the prayer of. the complaint, restrains the appellant [423] from issuing any more full paid for half paid stock, unless it issue a proportionate amount to the appellant. This is, in effect, an alternative judgment, of somewhat awkward form. There is no hill of exceptions; but we attribute the peculiar nature of the judgment to the embarrassment of the case by the small amount of full paid actually issued for half paid stock. Certainly, in the absence of objections to evidence on the trial, of which we know nothing, the respondent would not he limited to the very form of relief which he prayed, under a misapprehension of the facts. See. 29, ch. 132, E. S. And we cannot see that the peculiar form of the judgment does any injustice to the appellant. It leaves it in the discretion of the corporate body to recede from, or to carry out, the proposed new issue of stock. It is more favorable to it than a single and positive judgment, either way. The criticism made by the learned counsel of the appellant, upon the language of the judgment for the contingent issue of new stock to the respondent, was singularly acute and ingenious. But such hypercriticism cannot avail against a pleading or a judgment. Winans v. Ins. Co., 38 Wis., 342. The legal effect of the judgment is, either to carry out in full and towards all stockholders the proposed new issue of stock, or to refrain from it wholly and towards all the stockholders; and, in the former course, to issue the proper amount of full paid stock to the respondent, so as to make his stock hear the same proportion to the new stock that it did to the old. By the Oowrt. — The judgment of the court below is affirmed.