McHenry v. New York, P. & O.R. Co.

• Decision Date: 18 October 1884
• Citation: 22 F. 130
• Parties: McHENRY and others v. NEW YORK, P. & O.R. CO. and another.
• Court: U.S. District Court — Northern District of Ohio

22 F. 130

McHENRY and others v. NEW YORK, P. & O.R. CO. and another.

United States Circuit Court, N.D. Ohio, Eastern Division.

October 18, 1884

Estep Dickey & Squire and W. W. Boynton, for complainants, and Dunning, Edsall, Hart & Fowler, of counsel.

R. P Ranney and Adams & Russell, for defendants, and W. W MacFarland and Benj. H. Bristow, of counsel.

BAXTER J.

The original bill in this case was filed by Albert Thomas Pettifer, James A. Riley, and John Corby. It was demurred to. The complainants, submitting to the demurrer, asked for and obtained leave to amend and make new parties. Pettifer and Riley thereupon voluntarily withdrew from the case, and James McHenry and Andrew Agen were substituted complainants in their stead, and united with their co-complainant, John Corby, in the exhibition of an amended bill. This amended bill has also been demurred to by one of the defendants, for that, among other causes, the complaints has not, by their averments, brought their case within the requirements of the ninety-fourth rule recently promulgated by the supreme court. This rule was prescribed to enforce the principle enunciated in the cases of Hawes v. Oakland, 104 U.S. 450, and Huntington v. Palmer, Id. 482, to-wit, 'that before a shareholder is permitted, in his own name, to institute and conduct a litigation which usually belongs to a corporation, he should show to the satisfaction of the court that he has exhausted all the means within his reach to obtain, within the corporation itself, the redress of his grievances, or action in conformity with his wishes. ' The rule requires that 'every bill brought by one or more stockholders in a corporation against a corporation and other parties, founded on a right which may be asserted by the corporation, must set forth with particularity the efforts of the plaintiff to secure such action as he desires on the part of the managing directors and trustees, and, if necessary, of the shareholders, and the cause of his failure to obtain such action.'

The complainants sue as stockholders of the New York Pennsylvania & Ohio Railroad Company, for themselves and other stockholders, to set aside a lease made by said company of its road and other property to its co-defendants, and aver 'that, before filing their bill, they applied to and requested said New York, Pennsylvania & Ohio Railroad Company to take such action against said Erie Company as would lead to the annulling of said lease, and gave to said former company, as the grounds of said action, substantially the grounds herein stated, especially alleging the invalidity of said lease for the want of the approval of the shareholders of either company, and they were advised by the proper officers of said company that no action could be taken in the premises with a view to such result, and that said company wholly refused and neglected to take action for such purpose, or to recognize said complainants as having any right to interfere in the matter of said leasing, or to call upon said company to take any action in relation thereto. ' These are the only allegations relating to the questions raised by the demurrer. They are substantially like those which the supreme court, in the cases of Hawes v. Oakland and Huntington v. Palmer, hereinbefore referred to, and the case of Detroit v. Dean, 106 U.S. 537, S.C. 1 S.Ct. 560, held to be insufficient for the purpose mentioned. These adjudications are conclusive upon us, and we cannot do otherwise than sustain defendants' demurrer, and...