Beckett v. Planters' Compress & Bonded Warehouse Co.

Smith, C. J., delivered the opinion of the court. Appellant, complainant in the court below, is a stockholder in the Planters’ Compress & Bonded Warehouse Company; and appellees, defendants in the court below, are the corporation, its directors, and the Bank of West Point. The bill alleged that during the year 1905 the directors of the Compress Company, without the knowledge or consent of complainant, abandoned the compress and warehouse business and invested the capital stock of the company in the erection of an ice and cold storage [313] plant, which plant was operated with the funds of the company for several years; that directors borrowed from the Bank of West Point the sum of forty-four thousand dollars, the bank knowing the purpose for which the money was to be used, and also that under its charter the company had no power to own and operate an ice and cold storag’e plant; that in order to liquidate this indebtedness it finally became necessary for the.company to dispose of all of its property, there remaining, after the settlement of its debts, nothing to be distributed to the stockholders — and prayed that these directors and the Bank of West Point be held to account for this misuse of the company’s funds. A demurrer was interposed to this bill, and sustained. In so far as the Bank of West Point is concerned, no cause of action is stated by this bill. No fraud is charged against the bank, and, in the absence thereof, any knowl-edg’e it may have had of what disposition the company or its directors intended to make of the money borrowed from it is immaterial. The grounds upon which it is sought to sustain the demurrer, in so far as the directors of the Compress Company are concerned, are: “It does not appear from said bill that suit would not have been instituted in the name of the corporation, had proper application been made to the stockholders. “It does not appear from said bill that complainant ever sought to have alleged wrongs redressed by the corporation or board of directors.” • It is true that ordinarily, before a stockholder can maintain a suit of this character, he must exhaust all reasonable means within his reach to obtain redress within the corporation itself; and should the directors, when requested, decline to institute the suit, an appeal, if practicable, should be made to the stockholders themselves to take such action as they may deem proper and have the power to do. Prom the allegations of this bill, [314] however, it appears that the offending directors themselves either own or control the majority of the stock of the corporation, so that an appeal either to the directors or to the stockholders for redress was not necessary, for it is not to be expected that under such circumstances any redress would have been granted, and the law never imposes upon any one the doing of a vain and fruitless thing. Reversed and remanded.