Davenport v. Dows

Decision Date01 October 1873
Citation85 U.S. 626,21 L.Ed. 938,18 Wall. 626
PartiesDAVENPORT v. DOWS
CourtU.S. Supreme Court

APPEAL from the Circuit Court for the District of Iowa.

Dows, a citizen of New York, in behalf of himself and all other non-resident citizens of Iowa, who were stockholders in the Chicago, Rock Island, and Pacific Railroad Company, filed a bill in the court below against the city of Davenport, and its marshal, to arrest the collection of a tax, alleged to be illegal, levied by the said city for general revenue purposes, on the property of the company within its limits. The bill assigned as a reason for its being filed by Dows, a stockholder in the company, instead of by the company itself, that the company neglected and refused to take action on the subject. A demurrer was interposed to the bill, which was overruled, and on the defendants refusing to answer over, the Circuit Court ordered that the collection of the tax be perpetually enjoined. From this, its action, the defendants appealed, insisting that the Circuit Court erred in overruling the demurrer, for three reasons:

First. Because the railroad company was not made a party to the bill.

Second. Because the complainant had a complete remedy at law; and,

Third. Because the tax in question was a proper charge against the property of the corporation.

Mr. J. N. Rogers, for the appellants; Mr. T. F. Witherow, contra.

Mr. Justice DAVIS delivered the opinion of the court.

It is unnecessary to notice the last two reason assigned, why the demurrer should not have been overruled, as the first is well taken. Indeed, it would be improper to pass on the merits of the controversy until the proper parties to be affected by the decision are before the court.

That a stockholder may bring a suit when a corporation refuses is settled in Dodge v. Woolsey,* but such a suit can only be maintained on the ground that the rights of the corporation are involved. These rights the individual shareholder is allowed to assert in behalf of himself and associates, because the directors of the corporation decline to take the proper steps to assert them. Manifestly the proceedings for this purpose should be so conducted that any decree which shall be made on the merits shall conclude the corporation. This can only be done by making the corporation a party defendant. The relief asked is on behalf of the corporation, not the individual shareholder, and if it be granted the complainant derives only an incidental benefit from it. It would be...

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114 cases
  • Smith v. Sperling
    • United States
    • U.S. District Court — Southern District of California
    • December 16, 1953
    ...330 U.S. 518, 67 S.Ct. 828, 91 L.Ed. 1067; Meyer v. Fleming, 1946, 327 U.S. 161, 66 S.Ct. 382, 90 L.Ed. 595; City of Davenport v. Dows, 1873, 18 Wall. 626, 85 U.S. 626, 21 L.Ed. 938; also Lee v. Lehigh Valley Coal Co., 1925, 267 U.S. 542, 45 S.Ct. 385, 69 L.Ed. 782; Hamer v. N. Y. Rys, Co.,......
  • Wilhelm v. Consolidated Oil Corporation
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • June 30, 1936
    ...of the property remaining, upon the termination or dissolution of the corporation, after payment of its debts." 19 Davenport v. Dows, 85 U.S. (18 Wall.) 626, 627, 21 L.Ed. 938; Hutchinson Box Board & P. Company v. Van Horn (C.C.A. 8) 299 F. 424, 428; Boatright v. Steinite Radio Corp. (C.C.A......
  • Larabee v. Dolley
    • United States
    • U.S. District Court — District of Kansas
    • December 23, 1909
    ... ... by the suit, and not the burden which will be by the law laid ... on his shares. In Davenport v. Dows, 18 Wall. 626, ... 21 L.Ed. 938, Mr. Justice Davis, delivering the opinion of ... the court, said: ... 'That ... a stockholder ... ...
  • Pepper v. Litton
    • United States
    • U.S. Supreme Court
    • December 4, 1939
    ...morality, and freedom from motives of selfishness.' 15 Converse v. United Shoe Machinery Co., 209 Mass. 539, 95 N.E. 929. Davenport v. Dows, 18 Wall. 626, 21 L.Ed. 938. It is also clear that breach of that fiduciary duty may also give rise to direct actions by stockholders in their own righ......
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