Rogers v. Guaranty Trust Co.

Mr. Justice Cardozo,

dissenting.

Viewing the suit as one to reclaim the shares received by the directors in breach of their fiduciary duties to the corporation and the shareholders, I find no adequate reason. for the refusal to exercise jurisdiction, and this though a different conclusion might be thought to be necessary if relief were to be given upon grounds affecting the validity of the issue as a whole.

In the circumstances of this case, the certificates allotted to the directors may be charged with a constructive trust, and surrendered, to the corporation to be held in its treasury, without. impeaching a single certificate other than their own.

There is no need to consider whether the plan ” as proposed is insufficient on its face, with the result that the innocent employees as well as the culpable directors will be deprived of its benefits. If it be taken as sufficient, the shareholdérs who voted for it are not chargeable with notice that fiduciary powers would later be perverted by the award to the fiduciary of extraordinary benefits. Consent will not protect if reason and moderation are not made to mark the boundaries of what is done under its shelter.

I leave the question open whether in other circumstances or with other consequences there may be a cancellation of the shares of a foreign corporation in the absence of. an adjudication by the courts of the domicile. Here the or*151ganic structure of the corporation, if affected by the decree at all, will not be changed in such a way as to work substantial detriment to any stranger to the suit, but the fruits of an unjust enrichment will be put back into the treasury. I think .we are at liberty to do so much, if nothing more, without waiting upon the judgment of any other court.

The doctrine of forum non conveniens is an instrument of justice. Courts must be slow to apply it at the instance of directors charged as personal wrongdoers, when justice will be delayed, even though not thwarted altogether, if jurisdiction is refused. At least that must be so when the wrong is clearly proved. The overmastering necessity of rebuking fraud or breach of trust will outweigh competing policies and shift the balance of convenience. Equity, it is said, will not be over-nice in balancing the efficacy of one remedy against the efficacy of . another when action will baffle, and inaction may confirm, the purpose of the wrongdoer. Falk v. Hoffman, 233 N. Y. 199, 203; 135 N. E. 243. Of the shares allotted to directors as contrasted with those allotted to other employees, most are owned by the defendants sued. Whatever shares belong to others will be untouched by the decree. With all the' procedural complexities possible hereafter if jurisdiction be declined, the hazard of inconsistent judgments affecting the directors inter se~ will not avail without more to halt the processes Qf justice and the award of such relief as the court is competent to give against those subject to its power.

I agree with Mr. Justice Stone for the reasons stated in his opinion that a breach of the fiduciary duties of the directors is a legitimate inference from thé allegations of the bill, and agree with his conclusion that the cause should be remanded to the District Court for a determination* of the merits.