MILLE& V. ONT.
((Jtrcuit Uourt, S. D. New York. April 10,1883.)
EQUITY-REUEF-REMEDY AT LAW.
Where moneys were deposited with defendants, to be held subject to the order of the complainants, and were by the defendants misappropriated and used for their own purposes, there is an adequate remedy at law, and a bill for relief in equity will not lie without showing that the moneys were misappropriated in violation of some active trust between the parties, involvingcontidence on the one side and discretion on the other, or that there were mutual accounts between the parties, 01' an account on one side of a nature to justify a bill of discovery.
Henry J. Bennett, for complainants. L. A. Gould, for defendants.
WALLACE, J. This bill is demurred to for want 'of equity. The bill alleges that the defendants withhold five distinct sums of money deposited with them as commission merchants by the complainants, and which defendants were to hold subject to the order of the complainants, and that "defendants have used said moneys for their own purposes, and have profited thereby." There is no prayer for discovery. If the moneys were misappropriated in violation of some active trust between the parties, involving confidence on the one side and discretion on the other, or if there were mutual accounts between the parties, or even an account on one side of a nature to justify a bill of discovery, there might be a case of equitable cognizance. Upon the facts alleged,the complainants have a plain, adequate, and coni· plate remedy at law. . There are pressiolls of opinion in some of the more recent E:ng:' lish cases to the effect that a principal mayalwaY8 resort to equity-to compel an accounting by his agent; but in all the cases where- the bill was sustained, the accounts were complicated and a discovery was essential. Mackenzie v. Johnston, 4 Mad. 373; Phillips v. Phillips, 9 Hare, 471; Shepard v. Brown, 9 Jur. (N. S.) 195; Hemin!Js V. Pugh,Id. 1124; Makepiece v. Rogers, 11 Jur. (N. S.) 314. The cases are not authority for relaxing the rule that a bill, in general, will not lie unless some special ground is laid; as the inability tdget'proof, unless by discovery, (Dinwiddie v. Bailey, 6 Ves. 136; Lewis, 12 Price, 388;) or where, independently of discovery, intricate and perplexing accounts exist which cannot be convenientlyinvesti. ' gated at law. Btory, Eq. Jnr. § 462. The demurrer is sustained. .,
BILL tI. WESTERN UN:ION TEL. CO.
(Oircuit Court, S.D. Net/) York. March 26,1883.)
CORPOR.l'l'IONS'-LBA8lIl BY BOARD OIl' DIRJIIOTORS- VALIDITY-l!.uORITY OlP BoARD Ol!' LESSOR DIRECTORS OIl" LEBSEE.
As the directors of a corporation are its agents, and represent stockholders, who are often practically voiceless in behalf of their own interests, they are held to the exercise of the utmost good faith in theadministratiop. of their trust; and where a statute authorizes a telegraph company to lease or sell its franchises and property to any other telegraph company, provided the lease or transfer be approved by a three-fifths vote of its board of directors, and also by the consent in writing, or by a vote at a general meeting, of three-fifths in interest of the stockholders, a lease of the property and franchises of a telegraph company is voidable at the election of the lessor, if at the time the lease was made a majority of the board of the directors of the lessor were directors of the lessee also, and the lessee owned nearly two-fifths of the stock of the lessor.
8AJl:m--8UIT BY STOCKHOLDER, WHO MAINTAINABLlL
An individual stockholder can maintain an action to set aside mch a lease only when it is made to appear to the court that he has exhausted all the meaus to obtain, within the corporation itself, the redress of his grievances, or action in conformity with his wishes, and that he has made proper to induce action on the of the other stockholdera.
Oharle, M. Da Oosta !Lnd Luke A.. Lockwood, for complltinant. wSwayne, for defendants. WALLAOE, J.. The complainant, 'J. stockholder of the Gold & Stock Telegraph Company, has filed a bill to set aside a lease of the property and franchises of that company to the Western Union Telegraph Company for the term of 91} years, and now moves for an injunction pendente lite to restrain the lessee from disposing of the property acquired under lease. The lessor and lessee are both corporations of ,this state, and by the act of May 2, 1870, authority is conferred upon any telegraph company organized under the laws of this state ,to lease or sell its franchises and property to any other telegraph complltiyorganized under the laws of the state, provided the lease or transfer be approved by a three-fifths vote of its, board of directors, and also by the consent in writing, or by a vote at a general meeting. of in of the stockholders. The theory of the complainant's bill is that the lease was ultra vires, because the necessary .cop-sent of the and stockholders has not been given, and that" it was made for an inadequate consideration, and in breach of trust by the directors, and in the interest of the lessee. Both theDiUon