Hagood v. Smith

| Ala. | Jun 30, 1909

DENSON, J.

This was a bill filed by Bufus H. Hagood, as the owner of stock in a private corporation, against the corporation and Thomas H. Smith, who is alleged to be the secretary and. treasurer of the corporation, to compel an accounting by Smith of certain moneys alleged to have, been received by him from the sale of certain lands owned by the corporation, and which the corporation authorized him to sell. Upon the final submission of the cause on bill and answer, motion to dismiss the bill for the want of equity ivas made, and upon the proof the chancellor decreed that the complainant was not entitled to relief and dismissed the bill.

Ordinarily actions must be brought in the name of the corporation for the redress of wrongs committed against it, or for money due to it by its officers or by other persons; or, to pnt the proposition differently, before a stockholder can maintain a suit in his own name against the corporation of which he is a member aud an officer of such corporation for money belonging to the corporation and which has been converted to the officer’s use, he must show that he has done all in his power to obtain, within the corporation itself, redress of the wrongs complained of, that he has made an honest effort to get the governing body of the corporation to remedy the wrong, and, failing with them, that he then applied to the stockholders as a body to take action towards redressing the grievances complained of, without avail.— Montgomery, etc., Co. v. Lahey, 121 Ala. 131" court="Ala." date_filed="1898-11-15" href="https://app.midpage.ai/document/montgomery-light-co-v-lahey-6517928?utm_source=webapp" opinion_id="6517928">121 Ala. 131, 25 South. 1006; Montgomery Traction Co. v. Harmon, 140 Ala. 505" court="Ala." date_filed="1903-11-15" href="https://app.midpage.ai/document/montgomery-traction-co-v-harmon-6520402?utm_source=webapp" opinion_id="6520402">140 Ala. 505, 37 South. 371; Tillis v. Brown, 154 Ala. 403" court="Ala." date_filed="1908-01-22" href="https://app.midpage.ai/document/tillis-v-brown-7363257?utm_source=webapp" opinion_id="7363257">154 Ala. 403, 45 South. 589, and cases there cited.

The bill explicitly avers an application by the complainant to the directory of the corporation, and a refusal by that board to act, and it may be conceded that the proof supports these allegations. The bill then undertakes to aver an excuse for not applying to the stockholders; but the court is of the opinion that the averments in this respect would be subject to the criticism (if it had been made) that they are merely a statement of the opinion of the pleader — even conceding that the matter referred to in the averments, if properly pleaded, could be made the predicate for an excuse for not applying to the stockholders. But the bill was not demurred to. — L. & N. R. R. v. Neal, 128 Ala. 149" court="Ala." date_filed="1900-11-15" href="https://app.midpage.ai/document/louisville--nashville-railroad-v-neal-6518804?utm_source=webapp" opinion_id="6518804">128 Ala. 149, 29 South. 865. Nevertheless, proof, unless the excuse be admitted in the answer (which is not the case here), to make out a case entitled the complainant to relief, is as essential as the averment of excuse; and the extent of the proof in this respect, shown by the record, is complainant’s wife and respondent Smith’s wife are’sisters, and they and some of their nephetvs and heices are owners of the stock of the corporation. We do not think that this can he said to sustain the averment that an application to the stockholders to bring the suit in the name of the corporation Avould have resulted in failure or have been in vain. At any rate, the chancellor was warranted in holding that it cannot, and his decree denying relief to the complainant should be affirmed.

Other reasons might be given in support of the decree, but the considerations adverted to are deemed sufficient.

Affirmed.

Simpson, Anderson, and Mayfield., JJ., concur.