Glenn v. Kittanning Brewing Co.

Citations

• 259 Pa. 510
• 103 A. 340
• 1918 Pa. LEXIS 442

Syllabus

<p>Corporations — Directors—Fight for control — Issuance of stock— Purchase by directors present at meeting — Bight of stockholders to participate in issue — Setting aside of issue — Trust—Fraud— Remedy at law — Equity—Jurisdiction—Bill in equity by stockholder — Injunction.</p> <p>1. While the general rule is that a stockholder is not warranted in proceeding as an individual to redress a wrong done to the corporation, without a formal demand and refusal of the corporation to bring proper action, yet stockholders are not required, either in law or in equity, to do a vain or foolish thing-, and where the wrongdoers are the majority of the board of directors, who committed the wrong complained of, it is not reasonable to suppose that a demand upon them to bring corporate action would produce results, and under such circumstances stockholders are justified in instituting proceedings in their own name, without first demanding action on the part of the corporate officers.</p> <p>2. Where the question of the control of a corporation is involved, the remedy at law for damages for the improper sale of stock is inadequate, and where an averment of fraud on the part of those having management of the company appears, as against the rights or the interest of the stockholders, a court of equity has jurisdiction to inquire into the transaction and make such decree as the circumstances may warrant.</p> <p>3. The directors of a corporation stand in the position of trustees for the entire body of stockholders, and while stock owned by a director is his individual property, to be dealt with as he sees fit, yet when he acts in his official position he is acting not merely as an individual but as representative of others and is prohibited from taking advantage of his position for his personal profit or benefit to the detriment of the stockholders whom he represents.</p> <p>4. The directors of a corporation are bound to give stockholders notice of a new issue of stock and an opportunity