Wilson v. Brown

Citations

• 269 Pa. 225
• 112 A. 1
• 1920 Pa. LEXIS 791

Syllabus

<p>Corporations — Fraudulent issue of stock — Equity—Stockholder’s bill — Request to directors to bring suit — Effect of demurrer.</p> <p>1. The right of an individual stockholder to act for the corporation is exceptional and arises only on a clear showing of special circumstances, among which inability or unwillingness of the cor-' poration to proceed, demand on the regular corporate management and a refusal to act, are imperative requisites.</p> <p>2. Where it appears that fraudulent acts, prejudicial to the interests of the corporation, have been committed, so interwoven with the conduct of the corporate managers and of such nature that it may he presumed the officers would commit a breach of trust in refusing to proceed, a demand is not necessary, as it would be vain and useless.</p> <p>3. The refusal of the corporate management must appear affirmatively to he a disregard of duty and not an error of judgment — a nonperformance of a manifest official obligation amounting to a breach of trust.</p> <p>4. A stockholder’s bill against the majority of the directors of a corporation, in which the corporation is made a party defendant, to compel the cancellation ,of stock fraudulently issued, will he sustained, although no request was made to the directors to sue, where it is charged that the defendants controlled a majority of the stock of the company as well as the hoard of directors, and that it would be useless to ask them to proceed, and this inference is admitted on demurrer by defendants to be true.</p> <p>5. A demurrer admits all facts and inferences well pleaded.</p>