Converse v. United Shoe MaChinery Co.

• Decision Date: 06 September 1911
• Citation: 209 Mass. 539,95 N.E. 929
• Parties: CONVERSE et al. v. UNITED SHOE MACHINERY CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

209 Mass. 539

95 N.E. 929

CONVERSE et al. v. UNITED SHOE MACHINERY CO. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

September 6, 1911

COUNSEL

Whipple, Sears &amp Ogden, for plaintiffs.

Coolidge & Hight, for defendants.

OPINION

MORTON J.

This is a bill in equity to compel the Shoe Machinery Company and the individual defendants to account for alleged wrongdoing as stockholders in and officers and directors of the Goddu Sons Metal Fastening Company, in the management and conduct of the business and property of said company. The Goddu Company is made a party defendant. The defendants severally demurred, and the case was thereupon reserved for the full court; if the demurrers are sustained the bill is to be dismissed; if overruled the case is to be remanded to the superior court and the defendants are to answer and such other proceedings are to be had as equity may require.

Without reciting the allegations of the bill it is plain, we think that the bill sets out a willful breach of duty on the part of the individual defendants as directors and officers of the Goddu Company, and an intentional violation and disregard by them of the obligations resting upon them as such officers and directors, and a sacrifice by them in combination with the Shoe Machinery Company of the interests of the Goddu Company to promote those of the Shoe Machinery Company. The bill alleges that the plaintiffs have protested to the defendants against their acts and conduct as stockholders officers and directors of the Goddu Company without avail, that the defendants own a large majority of the stock, and that any further application to them would be futile.

At or about the time that the bill in this suit was filed, an action at law was brought against these defendants based on substantially the same allegations. The defendants demurred and the demurrer was sustained by the full court. The case is reported in 185 Mass. 422, 70 N.E. 444.

The bill in the present case is not brought and does not purport to be brought, as we construe it, in behalf of the plaintiffs and such other stockholders as may join, or on behalf of the corporation, but is brought by the plaintiffs to enforce individual rights assumed to belong to them as stockholders and this constitutes, it seems to us, as the case stands, a fatal defect and renders it necessary to sustain the demurrers. The wrong, if any, was done not to the plaintiffs as individual stockholders but to the corporation, and the remedy must be sought by or on behalf of the corporation. As was...