Majors v. Taussig

Hayt, C. J.

(dissenting). The right to appear and defend-against this action being primarily in the corporation, we are to inquire whether the allegations of this petition are sufficient to justify a departure from fhe usual course by permitting the defense to be made by .certain stockholders. *50Before this can be permitted it should affirmatively appear that relief cannot be had either through the board of directors or through the stockholders.

Upon the allegations of this petition and answer the district court refused to allow the intervention, thereby in effect declaring that the stockholders had not shown such a right as would entitle them to defend the action. We'are not advised of the particular reasons given by the court below for its judgment. This is quite immaterial, however, as the question to be determined in this court is upon the correctness of the judgment of the court below without reference to the reasons inducing the conclusions there reached. I am of the opinion that the judgment of the court below in this case was right and that it ought to be affirmed, for the following reasons:

The petition contains no statement with regard to the number of directors composing the board. Under the statute the minimum number permitted is three and the maximum thirteen, but between these limits the corporation may designate any number, and such number shall constitute the board of directors, unless thereafter changed in some appropriate manner. The petition ought to show specifically and definitely that a majority of the board as constituted at the time of the filing of the intervention were conniving at the frauds complained of. This petition not only fails to state the number of the board of directors, but contains no allegation whatever with reference to the composition of the board of directors at the time of the institution of this suit in the district court. The allegation that certain parties, naming three persons, were directors for the past year, does not in my judgment meet either of the foregoing requisites.

To overrule the judgment of the court below denying the right to intervene, under these circumstances would, I fear, be setting a precedent that would lead to mischievous results in the future. Stockholders ought not to be allowed to interfere with the internal management of corporations upon slight or trifling causes, and before individual stockholders *51should be accorded a standing in court they should be required at least to show affirmatively by their pleading that otherwise there would be a failure of justice.

Again, the petition in this case is silent as to the number of shares of capital stock held by the petitioners; the time when such shares were acquired and whether acquired by purchase or by operation of law. If, as a matter of fact, these parties are the owners of the capital stock of the company and acquired such ownership after the time of the alleged fraudulent conduct complained of, they are not entitled to set up the defense outlined in their petition for and on behalf of the defendant company.

It has been suggested that the petition could be amended. A sufficient answer to this suggestion would seem to be that neither in the court below nor in this court have the petitioners intimated any*desire to amend their petition. Under the circumstances the presumption is that they have stated the case as favorably to themselves as it can be stated. The facts alleged in my judgment do not entitle the petitioners to intervene and make defense for and on behalf of the company, and the judgment of the district court should therefore be affirmed.