Rothwell v. Robinson

• Decision Date: 18 June 1888
• Citation: 38 N.W. 772,39 Minn. 1
• Parties: ROTHWELL v ROBINSON ET AL.
• Court: Minnesota Supreme Court

39 Minn. 1

38 N.W. 772

ROTHWELLvROBINSON ET AL.

Supreme Court of Minnesota.

June 18, 1888.

(Syllabus by the Court.)

When the managers and majority of the stockholders of a corporation divert it and its assets and property from their legitimate purposes to the use and benefit of one of such majority, a minority stockholder may bring suit without applying to have suit brought in the name of the corporation.

Appeal from district court, Ramsey county; SIMONS, Judge.

Action for an accounting and the appointment of a receiver of the Union Iron-Works Company of St. Paul, a corporation composed of plaintiff, Joseph Rothwell, and the defendants, Robinson, Dunn, and Hemenway. Defendants demurred on the ground that the complaint did not state a cause of action. From an order overruling the demurrer defendants appeal.

Flandrau, Squires & Cutcheon, for appellants.

C. D. & Thos. D. O'Brien, for respondent.

GILFILLAN, C. J.

There are a good many allegations in the complaint that are no ground for a court to afford any relief to plaintiff; that amount indeed to no more than expressions of discontent on the part of a stockholder in a corporation at being excluded by the majority of the stock from the management of its business, and at the business being conducted in a manner not approved by him. But the allegations that the defendant Robinson (who, as is alleged, is therein aided by the defendants Hemenway and Dunn, the stock being all held by plaintiff and those three,) has employed the business of the corporation for the benefit of a partnership of which he was a member, exposing said business to great loss and detriment, and that he has used the machinery, employes, and material of the corporation in extensive private experiments of his own, and in making and experimenting with divers and sundry devices of different description, and different kinds of machinery, which he claims to have invented himself, but which are of no use to anybody, and has caused said work to be done and experiments to be made at the expense of the corporation, and without payment or remuneration therefor, and has thereby wasted and depreciated the assets of the corporation, show a diversion of the corporation and its assets and business from their legitimate purposes to the private use and benefit of one of the stockholders. It would be strange if the courts could afford no relief against such violations of the good faith which stockholders in a corporation owe to each...