215 Mass. 120 | Mass. | 1913
The plaintiff holds some of the bonds secured by a mortgage given by the defendant corporation to the defendants Simpson and Whittemore as trustees for the bondholders. The suit is brought to enforce the alleged right of the bondholders to the money received by the corporation or its officers under certain agreements made by it first with Suessdorf and then with Nuland as lessees and intending purchasers of its mine.
It is settled that such a suit ought ordinarily to be brought by the trustees, who represent all the bondholders, for whom they are trustees. But the cestuis que trust are not without remedy if the trustees will not do their duty. They may sue in their own names or any one of them may so sue in behalf of all, if this is necessary to avoid a failure of justice. O’Beirne v. Allegheny & Kinzua Railroad, 151 N. Y. 372. Weetjan v. St. Paul & Pacific Railroad, 4 Hun, 529, 539. Accordingly the plaintiff must show that a demand has been made upon the trustees to take action themselves, and that they have refused or neglected to do so, or else that the circumstances make it plain that such a demand would be useless. Falmouth National Bank v. Cape
Even if this objection could have been got over, it would have been difficult upon the facts found to hold the directors and treasurer of the corporation personally liable. They stood in a fiduciary relation to the corporation. But their duties and their accountability were primarily to it, and not to its bondholders or other creditors. Lyman v. Bonney, 118 Mass. 222. Frost Manuf. Co. v. Foster, 76 Iowa, 535. Penney v. Bryant,
Moreover, so far as the plaintiff’s case rests upon the claim that the directors allowed Suessdorf and Nuland to strip and exhaust the mine unreasonably, the master has not found this fact. He was unable to determine whether the operation of the mine had been reasonable and proper or not. But both the corporation and its lessees had the right to work the mine reasonably and properly, and if this resulted in its exhaustion, that must be the misfortune of those who have chosen to invest their money upon uncertain and wasting security. Searle v. Sawyer, 127 Mass. 491, 493. Capner v. Flemington Mining Co. 2 Green Ch. 467. Vervalen v. Older, 4 Halst. 98. Ward v. Carp River Iron Co. 47 Mich. 65, and 50 Mich. 522. The rights of a mortgagee against the mortgagor correspond to those of the landlord against his tenant or of a reversioner against the tenant for life; Rugg, J., in Delano v. Smith, 206 Mass. 365, 370; and the rule which we have stated has been applied where those or similar relations existed. Billings v. Taylor, 10 Pick. 460. Gaines v. Green Pond Iron Mining Co. 6 Stew. 603. Irwin v. Covode, 24 Penn. St. 162, 166, 167. Eley’s appeal, 103 Penn. St. 300, 307. Clavering v. Clavering, 2 P. Wms. 388. Stoughton v. Leigh, 1 Taunt. 402.
The trustees Simpson and Whittemore have not appealed from the decree. As to them it must stand. As to the other defendants, the decree must be reversed.
So ordered.