Bowne v. Smith — 44 Misc. 575

Majority

p. 575

Curtis H. Bowne, Plaintiff, v. Charles E. W. Smith, Defendant.

(Supreme Court, New York Special Term,

August, 1904.)

Headnote

Corporation — Action by a stockholder to compel a director to account for his dealings in its stocks, etc.— A demand upon, and refusal of,, the directors that they sue must be alleged — The fact that a. director elects does not show that he controls the board.

- A stockholder of a corporation cannot maintain an action on. behalf of himself and of all other stockholders of the corporation-to compel a director of the corporation to render an accounting with respect to all his dealings in relation to the stocks, funds,, property and assets of the corporation, where he does not allege and prove a demand upon and a refusal by the directors of the corporation to bring the action, or that a majority of the directors of the corporation are themselves guilty of such fraud and misconduct as would make such a demand- unavailing.

It does not follow that the defendant director controls the conduct of the board of directors, even though such board was elected through his controlling vote.

Action for an accounting.

Hardy & Shellabarger, for plaintiff.

H. D. Luce (John J. Adams, of counsel), for defendant.

The plaintiff is a stockholder in the United Gold and Platinum Mines Company, and brings this

p. 576

action on behalf of himself and the other stockholders to secure from the defendant an accounting with respect to all his dealings in relation to the stock, funds, properties and assets of said corporation. In my opinion, in the case of United Gold and Platinum Mines Company v. Smith, ante, p. 567, I have discussed generally the facts and the law in relation to the defendant’s conduct as an officer and director of the company, and as trastee for the stockholders, and the disposal o-f the issues in that case likewise disposes of the issues here, so far as the plaintiff is entitled to relief as a stockholder. There is no evidence in this case to sustain the plaintiff’s alleged cause of action for an accounting. The defendant has not disposed of any of- the stpck which he holds as trustee for the stockholders, and there is, therefore, no need of any accounting with respect to it. Mor has the plaintiff alleged and proved a demand upon and refusal by the directors of the company to bring this action in his behalf, nor that the majority of the directors are themselves guilty of such fraud or misconduct as would make such a demand unavailing. Polhemus v. Polhemus, 43 Misc. Rep. 141 ; 88 N. Y. Supp. 273 . The company has itself an interest in the stock, funds, properties and assets of the company, which is paramount to -that of the plaintiff. It is a mere evasion to allege that the defendant is in control of the company. It does not follow that he controls the conduct of the board of directors even though it was elected through his controlling vote. Judgment for defendant dismissing the complaint, with costs.

Judgment for defendant dismissing complaint, with costs.

Cases cited

Polhemus v. Polhemus 43 Misc. Rep. 141 N.Y. Sup. Ct. p. 576