Wright v. Floyd
86 N.E. 971
Ind. Ct. App.
1909
Check Treatment
Hadley, J.

Appellants sued appellees to set aside a judgment against the United Brethren Publishing Establishment, a corporation, аnd in favor of the Local Endowment Board for the Central Church of the United Brethren in Christ of Rohrersville, Maryland, which, it is averred, wаs based upon a fraudulent claim and a fraudulent confession of judgment, all to the knowledge of all of the parties interested. It is averred that appellants, together with appellees Floyd, Barnaby, Tharp and Montgomery, cоnstitute the board of trustees of the appellee United Brethren Publishing Establishment, and have the management of its affairs; that said named appellees constitute the majority *547of the board of trustees of said corporation, and, оver the protests of appellants, did and performed the acts complained of, and appellants bring sаid suit for the use and benefit of said publishing establishment. It is nowhere averred that appellants are members either of the corporation or of the church, for whose benefit the printing ‍​‌‌​‌​‌‌​‌​​‌​‌​​‌​‌‌‌​​​‌‌‌​​‌​‌‌​‌‌‌​​​​​‌‌‌‌‌‍establishment was operated, or that they havе any interest whatever in the controversy either as shareholder, stockholder, member or beneficiary. Moreover, it is apparent from the averments of the complaint that appellants seek to bring the suit as minority trustees and in their trust capacity for the benefit of the corporation.

1. The question we are called upon to deсide is whether they thereby show sufficient interest to prosecute this suit. It cannot be said that the corporation is prosecuting the suit, since the corporation only acts by a majority of its board of trustees, or at least a majority оf a quorum present. Price v. Grand Rapids, etc., Co. (1859), 13 Ind. 58; 2 Cook, Corporations (5th ed.), §712. And it is well settled that one or more members and less ‍​‌‌​‌​‌‌​‌​​‌​‌​​‌​‌‌‌​​​‌‌‌​​‌​‌‌​‌‌‌​​​​​‌‌‌‌‌‍than such majority of a board cannot bind the corporation to any action. 2 Cook, Corporations, supra; Noblesville Gas, etc., Co. v. Loehr (1890), 124 Ind. 79; Allemong v. Simmons (1890), 124 Ind. 199. In 2 Cook, Corporations, supra, the learned author says: “All contracts of a corporation are to be made by or under the direction of its board of directors. The bоard of directors make corporate contracts by a regular vote of the board. * * * The board of directors have the widest of powers. All of the various acts and contracts which a corporation may enter intо are entered into by and through the board of directors. The board of directors make or authorize the making of thе notes, bills, mortgages, sales, deeds, liens, and contracts generally of the corporation. They appoint thе agents, direct the business, and govern the policy and plans of. the corporation. * * * They institute, prosecute, compromise, or appeal suits at *548law and in equity which the corporation brings or has brought against it. But there are limitations on their powers. If the board of directors attempt to do an act or make a contract which the corporate charter does not give the corporation the power to do or enter into, then any stоckholder may enjoin that act or contract. Moreover, the directors can contract and act ‍​‌‌​‌​‌‌​‌​​‌​‌​​‌​‌‌‌​​​‌‌‌​​‌​‌‌​‌‌‌​​​​​‌‌‌‌‌‍оnly as a board, duly notified and assembled. The members of the board cannot agree separately and outside оf the meeting and thereby bind the corporation. Nor can a minority of the board meet and bind the board. A majority must be present, and then a majority of that majority binds the corporation. A single director has no power to contract for the corporation. ’ ’

Neither can it be said that they are bringing the suit as interested members, since there is no avеrment of their being such. It does not appear that they have any personal interest in the controversy.

2. It is well settled that shareholders or stockholders in a corporation, or an interested member, may bring suit on behalf of the cоrporation to protect the interest of the corporation, and incidentally the interest of the members; but, in ‍​‌‌​‌​‌‌​‌​​‌​‌​​‌​‌‌‌​​​‌‌‌​​‌​‌‌​‌‌‌​​​​​‌‌‌‌‌‍dоing so, their interest must be shown, and it also must be shown that a demand has been made upon the corporation to protect such interest, and a refusal so to do, or such facts be exhibited as show that such demand would be unavailing. Carter v. Ford Plate Glass Co. (1882), 85 Ind. 180; Sheridan Brick Works v. Marion Trust Co. (1901), 157 Ind. 292, 87 Am. St. 207; Tevis v. Hammersmith (1903), 31 Ind. App. 281; Wayne Pike Co. v. Hammons (1891), 129 Ind. 368; 3 Cook, Corporations (5th ed.), §750.

3. But we havе made diligent search and have been unable to find any authority warranting a member of the board of trustees or direсtors to bring such a suit in his trust capacity, or in his personal capacity, solely by reason of his interest on accоunt of such member*549ship, since such membership gives him no personal interest. In the absence of a statute or rule of the corporation, a member of a board of ‍​‌‌​‌​‌‌​‌​​‌​‌​​‌​‌‌‌​​​‌‌‌​​‌​‌‌​‌‌‌​​​​​‌‌‌‌‌‍directors or trustees does not necessarily have to be a member or shareholder of such corporation. 1 Cook, Corporations (5th eel.), §11.

The complaint does not show under what statute the appellee printing establishment was organized; neither does it aver any rule requiring a trustee of such .corporation to be a member, and under such circumstances the mere averment of plaintiff that he is a member of the board of trustees is not sufficient to show such interest as to authorize the prosecution of suits of this сharacter.

4.' It is clear that where a suit is prosecuted, as this is prosecuted on behalf of the corporаtion by minority members of the board of trustees, a determination of such cause would not be an adjudication of the rights оf the corporation in the controversy, since the corporation does not prosecute the suit. Nor wоuld it be an adjudication of the*right of member or shareholder to prosecute such a suit in the name of the corрoration, since it does not appear that such member or shareholder has so prosecuted the same.

Judgment affirmed.