Gary v. Matthews, (No. 12537.)

CourtUnited States State Supreme Court of South Carolina
Writing for the CourtCOTHRAN
Citation145 S.E. 702
PartiesGARY et al. v. MATTHEWS et al.
Decision Date04 December 1928
Docket Number(No. 12537.)

145 S.E. 702

GARY et al.
v.
MATTHEWS et al.

(No. 12537.)

Supreme Court of South Carolina.

Dec. 4, 1928.


[145 S.E. 702]

[Ed. Note.—For other definitions, see Words and Phrases, First, Second and Third Series, Assets.]

Appeal from Common Pleas Circuit Court of Richland County; W. H. Townsend, Judge.

Creditors' bill by T. A. Gary and others against J. Pope Matthews and others. From an order overruling certain demurrers of the defendants to the complaint, defendants appeal. Reversed, and complaint dismissed.

Nelson & Mullins, Herbert & Dial, Weston & Aycock, C. N. Sapp, J. L. Nettles, J. J. Earle, and T. H. Moffatt, all of Columbia, Steve C. Griffith, of Newberry, Dial & Todd, of Laurens, Butler & Hall, of Gaffney, Lide & McCandlish, of Marion, and Wyatt Aiken, of Greenville, for appellants.

R. T. Jaynes, of Walhalla, L. D. Jennings, of Columbia, and S. B. Craig, of Pickens, for respondents.

COTHRAN, J. This is an appeal from an order of his honor, Judge Townsend, overruling certain demurrers of the defendants The action is in the nature of a creditors' bill, brought by the plaintiffs as stockholders of the defunct American Bank & Trust Company, on behalf of themselves and all such other stockholders of the bank as may come in and contribute to the expenses of the action.

The complaint states two separate and distinct causes of action:

1. An action against the directors of the bank for damages on account of loss and damage suffered by the plaintiffs as stockholders, by reason of the alleged mismanagement and negligence of the defendant directors, which they seek to recover, not in the right and on behalf of the corporation or its representative, the receiver, for the benefit of general creditors, depositors, and stockholders, but solely for the benefit of themselves as stockholders.

2. An action against certain managing officers, also directors, of the bank for damages on account of loss and damage suffered by the plaintiffs, as stockholders, by reason of the willful appropriation by said officers of certain assets of the bank, and against the American Surety Company, indemnitors of the bank against loss from the dishonest acts of its employes, which damages also they seek to recover, not in the right and on behalf of the corporation or its representative, the receiver, for the benefit of general creditors, depositors, and stockholders, but, as in the other cause of action, solely for the benefit of themselves as stockholders.

The complaint alleges that on June 25, 1926, the bank was taken over by the state bank examiner, as being insolvent, and that on July 19, 1926, James E. Peurifoy was appointed and duly qualified as receiver of the bank. It is also alleged that by reason of the charges against the directors it would have been useless to apply to them for redress, and that an application to the receiver to institute an action against them had been refused.

The complaint states, therefore, sufficient grounds to sustain an action by the stockholders, in the right of the corporation, or its representative, the receiver, to redress the wrongs alleged to have been done to the corporation.

The concrete question at issue is: Can several stockholders in a corporation which is in the hands of a receiver maintain an action in the nature of a creditors' bill to recover assets belonging to the corporation, where recovery is sought solely for the benefit of the stockholders instead of for the benefit of all persons entitled to share in the distribution of the assets of the corporation?

The defendants interposed demurrers to the complaint raising this question. The defendant American Surety Company interposed a separate demurrer raising this ques-

[145 S.E. 703]

tion and also the question of misjoinder of causes of action. In the view which the court takes of the matter, it is necessary to consider only the question above indicated.

The demurrers were overruled in an order by his honor, Judge Townsend, dated October 14, 1027, as follows:

"On considering demurrers to the amended complaint in the above entitled action, I am of the opinion that the complaint states facts sufficient to constitute a cause of action against the defendants, directors of the American Bank & Trust Company of Columbia, and also against the American Surety Company of New York, primarily in favor of said American Bank & Trust Company, Adams v. Haselden, 112 S. O. 32, 99 S. E. 762; Fletcher, Cyc. Corporations, § 4051, p. 6852. It also alleges that the American Bank & Trust Company is insolvent and has been placed by this Court in the hands of a receiver, who is administering its affairs, and that the plaintiffs have applied to the receiver to bring an action against the...

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12 practice notes
  • PCS Nitrogen, Inc. v. Ross Dev. Corp., Case No. 2:09–cv–03171–MBS.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • August 21, 2015
    ...South Carolina courts appear to permit derivative suits by shareholders of insolvent corporations.See Gary v. Matthews, 148 S.C. 125, 145 S.E. 702, 703 (1928) ("It is true that if the corporation, or its receiver, refuses to bring the action, one or more of the stockholders, depositors, or ......
  • Word v. Union Bank & Trust Co., No. 8065.
    • United States
    • Montana United States State Supreme Court of Montana
    • December 7, 1940
    ...the stockholders collectively.” See Niles v. New York Central & H. R. R. Co., 176 N.Y. 119, 68 N.E. 142;Gary v. Matthews, 148 S.C. 125, 145 S.E. 702;Converse v. United Shoe Machinery Co., 185 Mass. 422, 70 N.E. 444;Hayden v. Perfection Cooler Co., 227 Mass. 589, 116 N.E. 871;Seitz v. Michel......
  • Branchville Motor Co v. Adden, No. 12979.
    • United States
    • United States State Supreme Court of South Carolina
    • September 30, 1930
    ...E. 401; Ex parte Fant, 147 S. C. 167, 145 S. E. 34; State v. Bank of Clio, 129 S. C. 109, 123 S. E. 773; Gary v. Matthews, 148 S. C. 125, 145 S. E. 702. Thus stood the constitutional and statutory provisions, relating to the liability of stockholders in banking institutions, and the judicia......
  • Peeples v. Horn Ik, (No. 12773.)
    • United States
    • United States State Supreme Court of South Carolina
    • December 5, 1929
    ...directors for such negligence." See, also, the quotations from Browne v. Hammett, and other cases, in Gary v. Matthews, 148 S. C. 125, 145 S. E. 702. At this point we wish to point out, as we shall show below, that it is a mistake to suppose that a suit against an officer and agent for tort......
  • Request a trial to view additional results
12 cases
  • PCS Nitrogen, Inc. v. Ross Dev. Corp., Case No. 2:09–cv–03171–MBS.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • August 21, 2015
    ...South Carolina courts appear to permit derivative suits by shareholders of insolvent corporations.See Gary v. Matthews, 148 S.C. 125, 145 S.E. 702, 703 (1928) ("It is true that if the corporation, or its receiver, refuses to bring the action, one or more of the stockholders, depositors, or ......
  • Word v. Union Bank & Trust Co., No. 8065.
    • United States
    • Montana United States State Supreme Court of Montana
    • December 7, 1940
    ...the stockholders collectively.” See Niles v. New York Central & H. R. R. Co., 176 N.Y. 119, 68 N.E. 142;Gary v. Matthews, 148 S.C. 125, 145 S.E. 702;Converse v. United Shoe Machinery Co., 185 Mass. 422, 70 N.E. 444;Hayden v. Perfection Cooler Co., 227 Mass. 589, 116 N.E. 871;Seitz v. Michel......
  • Branchville Motor Co v. Adden, No. 12979.
    • United States
    • United States State Supreme Court of South Carolina
    • September 30, 1930
    ...E. 401; Ex parte Fant, 147 S. C. 167, 145 S. E. 34; State v. Bank of Clio, 129 S. C. 109, 123 S. E. 773; Gary v. Matthews, 148 S. C. 125, 145 S. E. 702. Thus stood the constitutional and statutory provisions, relating to the liability of stockholders in banking institutions, and the judicia......
  • Peeples v. Horn Ik, (No. 12773.)
    • United States
    • United States State Supreme Court of South Carolina
    • December 5, 1929
    ...directors for such negligence." See, also, the quotations from Browne v. Hammett, and other cases, in Gary v. Matthews, 148 S. C. 125, 145 S. E. 702. At this point we wish to point out, as we shall show below, that it is a mistake to suppose that a suit against an officer and agent for tort......
  • Request a trial to view additional results

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