Williams v. Neville

Anderson, J., after stating the facts as above, delivered the opinion of the court. The appellants fail to state a case in their bill. Stockholders of an insolvent corporation, in order to maintain a bill against the directors for their ultra vires and fraudulent acts, must allege and prove a state of facts which will entitle them to a decree. They must sho'w an interest in the result. In 3 Cook on Corporations (5th Ed.), p. 1883, the principle involved here is stated in this language; “Another principle of law in [272] this connection, is that, where the corporation is insolvent, a stockholder cannot maintain a suit to hold the directors liable for fraud, unless he alleges that the relief asked for will be of some benefit to him; in other words, that there will be a surplus for the stockholders after the creditors are paid.” The assets of a corporation go first to the creditors, and the remainder, if any, to the stockholders. The bill fails to state facts which, if proven, would entitle appellants to a decree — facts which show there would be anything left after paying creditors. Affirmed.