Michelson v. Pierce

Bakdeen, J. This appears tobe an action to wind up and settle the affairs of the Home Building & Loan Association, which has become insolvent and has ceased to be a going concern. The officers and directors of the association have been made defendants, under allegations charging them with gross mismanagement of the affairs of the company and gross violations of duty, by reason of which its funds and property have been lost and embezzled to a very large amount. ' The first point made under the defendants’ demurrer is that it appears that the plaintiffs “ are prosecuting this action as stockholders.” No doubt, there are allegations in the complaint from which it may be inferred that the plaintiffs are stockholders in the corporation; but this fact is no bar to their maintaining an action to wind up and settle its affairs, when it fairly appears that the relation of debtor and creditor exists. The complaint alleges that at the time the corporation became insolvent it was indebted to each of the plaintiffs in the several sums stated, and the necessary inference is that they sustained the relation of creditors to it at that time. In actions to dissolve corporations, the rule as stated in Strong v. McCagg, 55 Wis. 624, and Hinckley v. Pfister, 83 Wis. 64, is thaf a stockholder cannot maintain an action for that purpose; but, if the stockholder was at the same time a creditor, no reason is perceived why he may not enforce his rights as such, independent of his relation as [87] a stockholder.- "Whatever may be considered to. be the purpose oí this action, the objection mentioned is not available to the defendants, because the complaint shows the relation of debtor and creditor to exist, and does not show that it results from the mere fact that the plaintiffs were stockholders. Nor does the fact that a receiver has been appointed in the action render the complaint demurrable. It does not seem necessary that the receiver should commence an independent action to enforce the liability of the officers and directors, and thus increase, the expense of the litigation, when the same results may be reached in the action pending. The fruits of the litigation would go to the receiver for distribution under direction of the court, and the end of the law'be accomplished without circuity. It is further contended that the acts and omissions for which it is sought to hold the defendants liable were performed gratuitously, and that under the rule of North Hudson M. B. & L. Asso. v. Childs, 82 Wis. 460, they cannot be held. That case was decided upon the facts found after a trial. In this case there are allegations of misfeasance and nonfeasance which carry it beyond the facts there found, and are deemed sufficient, if proven, to render the defendants liable. There are also allegations of misrepresentation, voting and receiving unlawful dividends, and the like, which serve to distinguish the cases, and, if proven-, would afford ground for a judgment requiring them to respond for the benefit of the corporation. No useful purpose will be served by any lengthy discussion of the grounds upon which the liability of officers and directors of a corporation will be sustained. Such liability can be best considered with reference to the actual facts of the case, found after trial. Upon the grounds • stated, we think the demurrer was properly overruled. By the Court.— The order appealed from is affirmed.