65 N.J. Eq. 372 | N.J. | 1903
The opinion of the court was delivered by
The bill of complaint in this case was filed by a stockholder of the Electric Vehicle Companjr in 'behalf of himself and of all other stockholders who might apply to' be admitted as parties to the suit against the company and certain individuals, who were its directors during the years 1899 and 1900, to compel the individual defendants to pajr back into the treasury of the corporation certain dividends illegally declared and paid by them
The right of a stockholder to prosecute a suit on behalf of the corporation can only be maintained by showing a refusal, either actual or presumptive, by the board of directors to do so. Willoughby v. Chicago Junction Railway Co., 5 Dick. Ch. Rep. 667. And where there has been no actual refusal, the burden is on the stockholder who brings the suit to show the existence of such a state of facts as justifies the conclusion that an application to the board to prosecute would be futile. Brewer v. Boston Theatre Co., 104 Mass. 387. The fact that a majority of the board of directors in office at the time of filing this bill had no part in the declaring or payment of the illegal dividends, is sufficient to defeat the complainant’s right to sue, unless the facts set out in the bill, with relation to two of that majority, afford sufficient grounds for concluding that one or the other of those two would, in willful disregard of the interests of the corporation, vote with the directors against whom relief is sought, and, by doing so, defeat an application to the board of directors to prosecute. But, in our judgment, these facts justify no such conclusion. On the contrary, the presumption is that, notwithstanding the relations existing between the two directors and two of the individual defendants, against whom relief is sought, the former would faithfully discharge the duty which
The complainant having failed to show in his bill any necessity for prosecuting this action in his own name, and this having been specified as a ground of demurrer, the decree appealed from should be affirmed.
For reversal — None.