The demurrer to the amended complaint should have been sustained on several grounds.
It is quite clear that no proper showing is made for the appointment of a receiver as prayed. It is asserted that the present liabilities of the company are not over $100,000, and that the real value of defendant’s property is at least as great as that shown by its books, and that amount is alleged to be over $1,600,000 on a capital stock of $519,000.
It is alleged the company has paid about $56,000 as a cash dividend in 1919 and no' other dividends during the five years preceding the commencement of the action. One of the principal if not the principal purpose of the action is based upon the theory that the corporation, now having ample resources, is in such a prosperous financial condition that the court should compel the payment of„ present and *550future dividends. The allegations to the effect that the company is in position to and should be compelled to pay present and future dividends is a negation of one of the most controlling considerations, namely, insolvency, upon which a court undertakes to assume control of the management and affairs of a corporation.
There are no allegations here of fraudulent mismanagement or diversion to their own use of its funds or property by the directors or officers, as in Goodwin v. von Cotzhausen, 171 Wis. 351, 177 N. W. 618. That the ¿usiness policy of the majority is contrary to the judgment or wishes of the minority is not sufficient warrant for the appointment of a receiver. We are of the opinion, therefore, as was the trial court, that the complaint does not state facts sufficient to require the appointment of a receiver.
Giving the complaint the liberal construction in its favor that we are required to do, we are nevertheless of the opinion that not sufficient facts are alleged from which a court of equity can properly say that there is such an abuse of discretion by those responsible for the management of the company as to now compel the payment of dividends.
The complaint shows a corporation which, in the twenty years or more of its existence, has apparently increased the book value of its property .threefold; whose holdings now and for a number of years have been all substantially real estate or interests therein arising out of the disposition of such property; and that such real estate is practically all unimproved and mostly all cut-over lands in the northern part of this state. It also shows that the control and management of the corporation by those having or representing the large majority of the stock, contrary to the wishes and judgment of the minority, has embarked upon a policy of slow rather than rapid disposition of its assets.
The distinction must be noted at the outset between the situation here disclosed of a corporation apparently organized for that purpose, and certainly for the period concern*551ing which complaint is made, engaged in the rather static process of the ownership of real estate, and that presented by a manufacturing or mercantile corporation; the very nature of the business and purpose of existence of such latter requiring an incessant change of capital, material, and labor into cash and back again, as in manufacturing concerns such as were involved in cases like Dodge v. Ford Motor Co. 204 Mich. 459, 170 N, W. 668, 3 A. L. R. 413; Seitz v. Union B. & M. M. Co. 152 Minn. 460, 189 N. W. 586, 27 A. L. R. 293; Rockwell v. Rockwell Mfg. Co., E. Dist. of Wis., quoted from in respondents’ brief.
No wrongful investment by defendant is charged as to the original purcháse of the lands now held or those heretofore sold. It is apparent that the assets have been increased to over three times the capital stock originally invested by reason of the wisdom of such original purchases, or the management of the same, or both. A policy so resulting cannot well be claimed to have violated any substantial rights of the stockholders; but it is contended on plaintiff’s behalf, as a minority stockholder, that there must now be a change from a policy of holding its real estate to one of immediate sale and disposition of them or the securities held.
The practical and substantial difference between a corporation existing for the purpose of constantly turning over its capital assets for the profits accruing thereby, even though it trades in real estate, and one whose purpose is to hold, improve, and finally dispose of real estate, is discussed in Miller v. Payne, 150 Wis. 354, 378, 379, 136 N. W. 811, where it is pointed out that mere enhancement in value of such assets may be considered principal rather, than income.
Reading the history of the corporation from the allegations of the complaint, it is manifest that the purpose of the corporation has been of the holding rather than the trading kind. Especially is this so in view of the allegations that it now has but $30,000 cash on hand with a large *552number of contracts for sale of its real estate, which are constantly being dropped because of the inability of purchasers to carry on with them; that much of said land is sub-agricultural and cannot be developed into farming lands except in large tracts and with large expenditures of capital. From the situation here disclosed we cannot and ought not to .say that there must be a change of policy because a minority stockholder wishes an immediate distribution of that which may be considered, within the field of reasonable discretion, assets, rather than net profits.
There is here presented, then, but a question of policy, as to which the voice of the majority must be respected, we being unable to say from the complaint as a whole that there is shown bad faith or wilful abuse of management discretion and there being no positive fraud alleged. Its present course is a lawful one, pursued by lawful means and within its corporate powers, even though it may not be the best policy or wisest course. The courts refuse to interfere in such situations. Figge v. Bergenthal, 130 Wis. 594, 624, 109 N. W. 581, 110 N. W. 798; Estate of Wells, 156 Wis. 294, 313, 144 N. W. 174.
The same rule is held elsewhere. Fernald v. Frank Ridlon Co. 246 Mass. 64, 140 N. E. 421; Mobile T. & W. Co. v. Hartwell, 208 Ala. 420, 95 South. 191; Richter & Co. v. Light, 97 Conn. 364, 116 Atl. 600.
We are therefore compelled to say, contrary the view of the trial court, that the demurrer should have been sustained on the ground that no sufficient showing has been made to require the present or future payment of dividends.
Assuming that the complaint had been held sufficient to establish the propriety of compelling payment of dividends, still the demurrer should have been sustained because the directors were not made defendants.
In Wood v. Union Gospel C. B. Asso. 63 Wis. 9, 22 N. W. 756, an action to procure the cancellation of stock alleged to have been issued by the board of directors with*553out lawful authority, it. was said, citing the following case, that the directors, though proper, were not necessary parties. Dousman v. Wis. & L. S. M. & S. Co. 40 Wis. 418, was an action to compel the giving to plaintiff of his proportion of a new issue of stock already provided for by the directors. It was there said that the action was against the corporation and not against the directors personally, who may be changed from time to time. Wells v. Green Bay & M. C. Co. 90 Wis. 442, 454, 64 N. W. 69, held that in an action to.compel delivery of a certificate of stock, after the directors had acted, they were proper though not necessary parties to obtain a discovery under sec. 4096, Stats.
But in Morey v. Fish Bros. W. Co. 108 Wis. 520, 84 N. W. 862, an action in part to have a dividend declared, it was said (p. 529) that the question whether the directors were necessary parties to obtain such relief may be an important one, but that it did not there arise on the record.
None of the three earlier, cases siipra, involving as they did questions as to corporate stock, and rights accruing after the directors had acted upon the matter of the issuing of the stock and after the rights of the parties had become fixed, are controlling here.
That the primary managing power and duty as to the stock, property, affairs, and business of a stock corporation, such as is the defendant, is vested in the directors and not the stockholders, is declared by statute. Sec. 180.13. That such statutory declaration controls rather than any expression to the contrary by the stockholders was determined in State ex rel. Badger Tel. Co. v. Rosenow, 174 Wis. 9, 182 N. W. 324, holding that the officers must be chosen by the directors and cannot be by the stockholders though so provided by the articles and by-laws.
Furthermore, this precise power of declaring dividends is very carefully provided for by the legislature. Sec. 182.19, Stats. This legislative provision, among other things, expressly prohibits the payment of dividends until *554the capital stock has been fully paid in and that thereafter none shall be declared or paid by -the directors except out of the “net profits properly applicable thereto,” and which shall not in any way impair or diminish the capital; and it further provides that if the directors of any corporation shall pay any such dividend when the corporation is insolvent or in danger of insolvency, not having reason to believe that they were complying with such provisions, they shall be jointly and severally liable to the creditors. It also provides that any corporation which has invested or may invest its own earnings or income or any part thereof in any permanent additions to its property, or when the property shall have increased in value, may lawfully declare a dividend upon- its capital either in money or in stock to the extent of such investment or such increase. The liability of the individual directors under this statute has been considered in Williams v. Brewster, 117 Wis. 370, 93 N. W. 479.
That there must be an exercise of the good-faith discretion of the directors in declaring a dividend before there can be such a segregation of the corporate funds that the stockholder becomes entitled to his proportionate share of such segregation as against the corporation itself, and that then, and not until then, his right against the corporation arises, has long been the rule. New York, L. E. & W. R. Co. v. Nickals, 119 U. S. 296, 304, 307, 7 Sup. Ct. 209; Gibbons v. Mahon, 136 U. S. 549, 558, 10 Sup. Ct. 1057; Southern Pac. Co. v. Lowe, 247 U. S. 330, 338, 38 Sup. Ct. 540; Thatcher v. Chicago Rys. Co. 297 Fed. 466; Knight v. Alamo Mfg. Co. 190 Mich. 223, 157 N. W. 24, 6 A. L. R. 789; Spear v. Rockland-Rockport L. Co. 113 Me. 285, 93 Atl. 754, 6 A. L. R. 793; Burden v. Burden, 159 N. Y. 287, 308, 54 N. E. 17.
It is quite significant also that in these cases, in which just such relief was asked as here, viz. to compel the declaration of dividends, the directors or officers were made defendants so that the question of their being necessary par*555ties was not questioned. It was so in the following cases: Dodge v. Ford Motor Co. 204 Mich. 459, 170 N. W. 668; Seitz v. Union B. & M. M. Co. 152 Minn. 460, 189 N. W. 586; Fernald v. Frank Ridlon Co. 246 Mass. 64, 140 N. E. 421; Spear v. Rockland-Rockport L. Co. 113 Me. 285, 93 Atl. 754.
In view, therefore, of the situation in which the directors of a corporation are placed by statute and decisions both as to the corporation itself and as to stockholders or others interested and their individual liability for any violation of the statute controlling the payment of dividends, we are of the opinion that in an action brought to compel the • payment of a dividend, it appearing that the directors have not acted or have refused to act in that regard, the directors themselves are necessary parties and entitled to be heard.
This disposition of the matter, renders it unnecessary to discuss other questions presented and argued.
By the Court. — Order reversed, and cause remanded with directions to sustain the demurrer.