their individual interests.1 On the other hand, a shareholder in one corporation having a cause of action against those of another, growing out of corporate interests of shareholders in the latter, should proceed against such other corporation as the trustee and holder of the legal title of such interests.

§ 608. Actions for contribution.-The right to contribution among shareholders for indebtedness of the corporation, paid by one or a part, is one of equitable cognizance independent of statutory provisions. But various provisions on the subject are found in the statutes of most of the states. Sometimes a summary judgment is authorized to be entered in the same action in which the judgment is taken against the shareholder on his corporate liability; and a mutual adjustment of all the equities between the shareholders is always proper where the affairs of a corporation are wound up by a receiver or in insolvency proceedings. But an action will generally lie where no such provision is made.1

1 King v. Barnes, 109 N. Y. 267; 16 N. E. 332, where the action was as to the -ownership of certain shares of stock. Silver Val. Min. Co. v. Baltimore, etc., Co., 99 N. C. 445; 6 S. E. 735.

2 Silver Val. Min. Co. v. Baltimore, etc., Co., 99 N. C. 445; 6 S. E. 735. 3 Infra, § 996.

Sayles v. Bates, 15 R. I. 342; 5 A. 497, holding also that under Pub. Stat. R. I., chap. 155, sec. 26, trustees holding stock in trust are liable to contribute from the trust property in their hands to the payment of a corporate debt for which the stockholders are jointly and severally liable.

A bill by stockholders who have been compelled as such to pay corporate debts under the laws of the state where they are domiciled, and under which the corporation organized, against a foreign stockholder for contribution, is not multifarious, for though the claim of each orator is distinct from that of the others, the grounds of the suit are the same. Allen v. Fairbanks, 45 F. 445.

CHAPTER XXIV.

ACTIONS BETWEEN MEMBERS AND CORPORATE AGENTS.

§ 609.

The corporation in its own right.

610. Character of actions explained.

611. The remedy in equity.

612. Suit by shareholder without previous demand that the corporation shall sue.

613. True basis of jurisdiction.

614. Where plaintiff owns shares in two corporations.

615. Injunction and specific performance, cancellation, etc.

616. Directors may be enjoined.

617. Actions to set aside fraudulent transactions by agents. Where the adverse character is representative.

618.

619. An officer may sue.

620. Test of agent's liability.

621. Court will not interfere with internal management.

622. Motives for bringing the suit generally immaterial.

623. The exercise of discretionary powers cannot be interfered with.

624. Further limitations of the right.

625. Cases in which there should be no delay.

626. Sale of essential property will be enjoined.

627. No delay where remedy would be thereby lost.

628. The right to defend for the corporation.

629. When election will be set aside.

630. Parties defendant.

632. Summary of principles governing the suit of shareholder. 633. Defences-Acquiescence by the corporation.

634. Ratification must not have been induced by fraud.

635. Protection from anterior acts of promoters.

636. Acquiescence of complaining shareholder.

637. Not barred by acquiescence in other acts of wrong-doing.

638. The immediate plaintiff must not be personally disqualified. 639.

Amount of interest immaterial.

640. The rule in federal courts.

641. The character of the tribunal does not alter that of the action. 642.

Practice-Trial.

643. Expense of suit.

644. Liability for inducing subscriptions through false publications. 645. Presumptions in case of false publications.

646. Of the fraudulent intent.

647. Remedy by mandamus.

§ 648. The remedy in cases of amotion.

649. Origin of the remedy.

650. Jurisdiction of voluntary associations will not be invadea. 651. Remedy at law inadequate.

652.

653.

654.

Mere restriction no ground for interference.

To compel production of corporate books and records.

To compel surrender or delivery.

655. Inspection by stockholders.

659. Does not generally lie to compel transfer of shares.

§ 609. The corporation in its own right.-There is nothing peculiar in the relations, rights and resulting remedies between a corporation in the hands of its harmonious and non-derelict board of managers and subordinate agents and third parties. Having defined and fully considered these in another place,1 it remains only to be said, that the ordinary remedies, legal and equitable, are available as in the case of other principals and agents. It is, of course, impracticable and irrelevant to here enter into a discussion of the principles of remedial justice except so far as they apply to the cases growing out of the inability or refusal of the constituted corporate government to subserve and protect constituent corporate interests.

§ 610. Character of actions explained.-The difference between an action by members against the corporation and against corporate agents is not very clear and requires explanation. There is great similarity and but slight difference. Since the corporation is generally in the hands of the wrong-doing agents, who have power to prevent the bringing of the action by the corporation, it must be brought by the members, joining the corporation as a nominal defendant.

1 Supra, Ch. IX.

But where the connection of the defaulting agent has become severed, if the corporation should then refuse to proceed, a member would still have a right of action. The corporation would necessarily be made a defendant; but still only nominally such. In this respect the action differs from that for the enforcement of a right against the corporation, as a real party defendant. In the latter case though the agents were necessary, they would be only nominal parties defendant.

§ 611. The remedy in equity.-A corporation cannot sue in equity except as the representative of the stockholders, and if they are without equity, they cannot through the corporate organization, or in its name, obtain relief either for their individual or for the collective interest.1

In protecting and shielding by preventive remedies against contemplated and threatened wrong, and by compulsory accounting by corporate agents for past wrongs to collective rights and interests, courts of equity find the most frequent occasion for the exercise of jurisdiction. The real incentive to, and jurisdictional fact in, resorting to a court of equity in these cases usually is the private interest of the party suing. True, the immediate plaintiff represents not only his individual interest, but he represents or may represent the individual interests of all other members who see fit to join him. Sometimes it has been said that he represents the aggregate interest; but this view is erroneous. In a court of equity the aggregate membership interest is identified with that of the corporate entity. Yet why must the corporation be made a party as is uniformly held? Why may a single member sue all others in this form to prevent ultra vires acts? Clearly,

1 Arkansas Riv. L. T. & Co. v. F. L. & T. Co., 13 Col. 587; 22 P. 954.

because the interest he represents is an individual interest, or an aggregation of individual interests, which is a different thing from the unified collective interest. If it were the latter, then every member must join him to give him a standing in court.

When the proposition that the plaintiff represents the corporation is advanced, it is based on the requirement that he must show the corporation is unable or unwilling to proceed; and the answer is that in this form of equitable action the corporation itself does not represent but is the aggregate body, whose duty it is to protect individual interests and whose right it is to protect itself.

§ 612. Suit by shareholder without previous demand that the corporation shall sue. It is plain that while the corporation is a trustee for the members, it is only technically so. Being a soulless entity without will or conscience, it can never act or exercise a discretion except through and by its representatives.

It necessarily follows that all abuses of its trust or violations of the rights of members imply a dereliction of duty by its agents, and no action will lie by a shareholder in a representative capacity unless there has been an injury, or one is threatened to the collective corporate interest by and through the negligence or wrong of the agents. This observation will apply to actions based on unwarranted acts of a majority seeking to benefit themselves at the expense of the minority or to do that which is illegal, oppressive, fraudulent or ultra vires; for the majority acts only as a collective or superior agent from which all other agents of a corporation derive their authority. Therefore, when it is said, in any such instance, that before an individual shareholder may sue he must first demand that suit be brought by the corporation or prove its refusal to sue,