Bulkley v. Big Muddy Iron Co.

• Decision Date: 31 October 1882
• Citation: 77 Mo. 105
• Parties: BULKLEY v. THE BIG MUDDY IRON COMPANY et al., Appellants.
• Court: Missouri Supreme Court

77 Mo. 105

BULKLEY

v.THE BIG MUDDY IRON COMPANY et al., Appellants.

Supreme Court of Missouri.

October Term, 1882.

Appeal from St. Louis Court of Appeals.

AFFIRMED.

George A. Castleman, H. I. D'Arcy and George A. Madill for appellants.

S. M. Smith and P. C. Bulkley for respondents.

HOUGH, C. J.

The only question raised in this court and not raised in the circuit court, which can be considered by us, is whether the petition in this case states facts sufficient to constitute a cause of action. The suit is brought by a stockholder for an account and recovery of the value of his stock, alleged to have been rendered worthless by a fraudulent breach of trust on the part of the directors of the Big Muddy Iron Company in which he had stock. It is contended for the appellants, that inasmuch as it is not alleged in the petition, that the corporation has refused to sue, or that the parties to be sued are in control of the corporation, thereby excusing a request to the corporation and a refusal by it to sue, the petition fails to state a cause of action.

It is well settled that the right to sue for breaches of trust by the directors of a corporation, resulting in injury or loss to the stockholders, is primarily in the corporation, and it should appear from the facts stated in a petition filed by a stockholder, that a right to maintain an action for the wrong and injury set forth in his petition, has accrued to him either by reason of the refusal of the corporation to sue, or because the parties to be sued are in control of the corporation. Brewer v. Boston Theatre, 104 Mass. 378; Heath v. Erie R'y Co., 8 Blatchf. 347. But it may well be doubted whether the absence of allegations showing the right of the plaintiff to sue, can be taken advantage of for the first time in this court. The petition, of course, must set forth the facts showing a liability on the part of defendants to an action, but if it fails to set forth all the facts showing that the plaintiff is the proper party to maintain such action, it would seem that under the provisions of our practice act, an objection to the petition based upon such failure should be taken either by demurrer or answer, and if not so taken, it will be deemed to have been waived by defendants. Our statute provides that the defendant may demur to the petition when it shall appear on the face thereof, “that the plaintiff has not legal capacity to sue.” R. S., § 3515. And if such fact does not appear upon the face of the petition, such objection may be taken by answer, and if no such objection be taken either by demurrer or answer, the defendant shall be deemed to have waived the same. The decisions as to the meaning of the phrase “legal capacity to sue,” have not been uniform in the various states having codes containing the provision above quoted. Legal incapacity to sue, may arise, it is said, from some personal disability of the plaintiff, or from the fact that he has no title to the character in which he sues. Bliss on Code Plead., § 407. An example of the latter class is to be found in Fuggle v. Hobbs, 42 Mo. 537, where the plaintiff failed to aver the facts showing his right to sue in a representative capacity, and this court held that as no objection was made either by demurrer or answer, the objection was waived. In some states it is held that the phrase quoted relates only to a legal incapacity, such as infancy, coverture, lunacy and the like. 31 Ind. 315; 11 Kas. 147. But the better opinion would seem to be, that it applies to all cases where the plaintiff, though having an interest in the subject of the suit and the relief demanded, does not show a right to appear in court and demand such relief in his own name. Bliss Code Plead., § 408; State to use Saline Co. v. Sappington, 68 Mo. 454. Under this view of the statute the petition is sufficient after judgment, and it is unnecessary for us to examine the facts stated in the petition to see whether they are sufficient to excuse the absence of an allegation that the corporation had refused to sue.

As to the merits of the controversy, we are of opinion, after an extended examination of the record and briefs of counsel, in connection with the opinion of ...