Ward v. Griffin, 1112
| Decision Date | 16 February 1988 |
| Docket Number | No. 1112,1112 |
| Court | South Carolina Court of Appeals |
| Parties | Leroy WARD, Administrator of the Estate of Sarah W. Ward, Deceased, Appellant, v. Gerald W. GRIFFIN, Respondent. . Heard |
J. Allen Lewis, Jr., of Yarborough, Lewis, Weaver & Stewart, Florence, for appellant.
Marvin P. Jackson, Jr., Florence, for respondent.
Appellant Leroy Ward, as administrator of the estate of Sarah W. Ward, deceased, sued respondent Gerald W. Griffin alleging Mr. Griffin had been the president of a corporation in which Mrs. Ward had owned stock and seeking, among other things, damages resulting from waste, mismanagement and improper control of the corporation by Mr. Griffin. The jury returned a verdict against Mr. Griffin for actual damages. The Circuit Court ruled the suit was a derivative action, and therefore, the damages should be divided among all the stockholders in the corporation. Mr. Ward appeals. We affirm.
Mr. Ward argues his suit was brought "directly and not as a derivative action." His complaint alleges: "[T]he Defendant has failed to manage, operate and control the corporation in a proper manner, thus suffering great loss to the estate of Sarah W. Ward." He further alleges: "[T]he Defendant, upon information and belief has wasted the corporate assets and allowed the real estate to fall into a state of disrepair in that the corporate assets are diminished and lessened all to the detriment of the Plaintiff."
If misconduct by the management of a corporation has caused a particular loss to an individual stockholder, the liability for the mismanagement is an asset of the individual stockholder. Of course, a suit based on the misconduct can be brought by the individual stockholder. If, on the other hand, the misconduct has caused a loss to the corporation, and not to any particular stockholder, the liability is an asset of the corporation, ordinarily remediable by a suit in the name of the corporation. Under certain circumstances, a suit based on the misconduct can be brought by an individual stockholder, but the recovery remains an asset of the corporation, not of the individual stockholder. These well-settled principles are best stated in Stewart v. Ficken, 151 S.C. 424, 149 S.E. 164 (1929); see Bradley v. Hullander, 272 S.C. 6, 41, 249 S.E.2d 486, 503 (1978) (); Johnson v. Baldwin, 221 S.C. 141, 149, 69 S.E.2d 585, 588 (1952) ().
The editors of American Jurisprudence state the same principles in slightly different words: "A stockholder may individually sue corporate directors, officers, or other persons when he has sustained a loss separate and distinct from that of other stockholders generally." 19 Am.Jur.2d Corporations § 2245, at 147 (1986...
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