Carper v. Frost Oil Co.

• Decision Date: 04 December 1922
• Docket Number: 10279.
• Citation: 72 Colo. 345,211 P. 370
• Parties: CARPER et al. v. FROST OIL CO. et al.
• Court: Colorado Supreme Court

211 P. 370

72 Colo. 345

CARPER et al. v. FROST OIL CO. et al.

No. 10279.

Supreme Court of Colorado

December 4, 1922

Department 1.

Error to District Court, City and County of Denver; Chas. C Butler, Judge.

Suit by J. I. Carper and others against the Frost Oil Company and others. Judgment for defendants, and plaintiffs bring error.

Affirmed.

A. M. Stevenson, Warwick M. Downing, and Frederick Sass, all of Denver, for plaintiffs in error.

Walter M. Appel and Henry McAllister, Jr., both of Denver, for defendants in error.

ALLEN J.

This is a suit in equity to establish a constructive trust and for an accounting. It was brought by two stockholders of the Western Oil Fields Corporation, suing individually and as stockholders of the corporation on behalf of themselves and others similarly situated. The cause of action, if any alleged in the complaint is one existing in favor of the corporation. The defendants are, or were, certain directors of the corporation, and others. Judgment was for defendants and plaintiffs bring the cause here for review.

The trial court held, from the evidence, that no cause of action existed in favor of the corporation. If that conclusion must be sustained upon this review, all other questions raised become immaterial, and the judgment must be affirmed. This results from the rule that, where a corporation itself has no cause of action, it necessarily follows that a stockholder cannot sue in its behalf. 14 C.J. 929. And it follows further, that plaintiffs cannot maintain this suit on their individual behalf unless they can maintain it on behalf of the corporation where, as here, the alleged wrongs complained of are as much against the corporation as against themselves individually. Therefore the only question necessary to be determined here is whether any cause of action exists in favor of the corporation, provided this question must be answered in the negative. If it is so answered, it becomes immaterial what plaintiffs' status as stockholders was, or whether they were entitled to sue as stockholders.

On review, the testimony must be viewed in the light most favorable to the party successful in the trial court, and this court will, as it must under the rules relating to appeal and error, draw every inference fairly deducible from the evidence in favor of the judgment. 4 C.J. 786; Haines v. Marshall, 67 Colo. 28, 185 P. 651.

The alleged cause of actions is based on the fact that the defendant W. H. Malone was an attorney, director, and general manager of the corporation, and while such officer acquired property of that class which the corporation was buying. If, under all the circumstances, the above-stated fact did not constitute a wrong committed by W. H. Malone, giving rise to a cause of action in favor of the corporation, then no wrongful act was committed by the other defendants, since they are made defendants because of their connection with the transaction above mentioned. In other words, if no cause of action exists against W. H. Malone, none exists against the defendant R. H. Malone, since he did not originate or carry out the transaction, but only became a vendee of the property jointly with W. H. Malone. The Frost Oil Company is made a defendant because it subsequently acquired the property. All that is necessary, therefore, to determine the ultimate question in this case is to ascertain whether the evidence is such that there is and was no cause of action against the defendant W. H. Malone.

The evidence is voluminous. To recite the material part thereof would consume more space than its usefulness...