¶11. Equity (§ 148*)—Bill—Multifariousness.
¶2A hill in equity which states a cause of action in behalf of individual complainants based on the fraudulent conduct of majority stockholders toward the minority, and which asserts the right of stockholders to follow corporate property conveyed in fraud, and which states a cause of action in favor of a corporation, as complainant, for breach of contract by defendant corporation and individual defendants for the purchase of articles, is multifarious for misjoinder of causes of action.
¶3[Ed. Note.—For other cases, see Equity, Cent. Dig. §§ 341-367; Dec. Dig. § 148.*]
¶42. Corporations (§ 320*)—Fraudulent Acts op Majority Stockholders— Rights op Minority Stockholders.
¶5Where majority stockholders secretly plan to turn over, without consideration, ail the assets of the corporation to another corporation owned by them, in which the minority stockholders have no interest, and the plan is carried out, the minority stockholders may sue in equity for relief on the theory of a breach of trust, and that they have no adequate remedy at law, though a court of equity may, in view of the circumstances, make a money decree, instead of a decree distinctly equitable in form.
¶6[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 1426-1439; Dec. Dig. § 320.*]
¶73. Corporations (§ 320*)—Fraudulent Acts op Majority Stockholders— Actions by Minority Stockholders—Laches.
¶8Minority stockholders suing in equity for relief based on the fraudulent act of the majority stockholders turning over, without consideration, all the assets of the corporation to another corporation owned by them, in which the minority stockholders have no interest, are not barred by laches where the delay in suing was due to their ignorance of the fraudulent acts; 'and the fact that innocent persons have become stockholders during the delay will not defeat equitable relief, since the court may protect them.
¶9[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 1426-1439; Dee. Dig. § 320.*]
¶104. Equity (§ 269*)—Pleadings—Amendments.
¶11Where a bill by a corporation and individual complainants was demurrable for muitifariousness for misjoinder of causes of action, the individuals having a right to sue in equity and asking for leave to amend should he permitted to amend their bill, omitting therefrom the corporation as a party complainant and its cause of action.
¶12[Ed. Note.—For other cases, see Equity, Cent. Dig. §§ 552-556; Dec. Dig. § 269.*]
¶13Appeal from the Circuit Court of the United States for the District of Connecticut.
¶14Suit by Newton D. Backus and others against George D- Brooks and others. From a decree of the Circuit Court (189 Fed. 922) sustaining demurrers to the bill of complaint and dismissing the. bill, complainants appeal.
¶15Modified and affirmed, with leave of individual complainants to amend.
¶16Appeal from a decree sustaining demurrers filed by different defendants to a bill of complaint and dismissing such bill.
¶17*453In the opinion following the demurrers will be considered—in accordance with the defendants’ contention as stated in their brief—as being based upon three contentions:
¶18(1) . “That the bill is bad for multifariousness.”
¶19(2) . “That no cause of action in equity has been stated against either defendant for the reason that upon some of the branches of the case no liability has been shown, and upon the others the remedy is adequate at law.”
¶20(3) . “That if the complainants, or any of them, shall be found by the court to have had at one time ground for equitable relief, the right has been lost by their Inches.’’
¶21. Albert McClatchey, for appellants.
¶22Philip W. Russell, for appellees.
¶23Before LACOMBE, WARD, and NOYES, Circuit Judges.
¶26(after stating the facts as above). [1] Is the bill bad for multifariousness?
¶27The cause of action stated in behalf of the individual complainants is based upon the fraudulent conduct of majority stockholders toward the minority. Rights of stockholders to follow corporate property conveyed in fraud are asserted. The cause of action stated in favor of the corporation plaintiff is the breach of a contract to purchase certain articles, for which the remedy must be damages. The rights of the different plaintiffs are independent. The individuals assert rights as stockholders and the corporation has no stock. The corporation alleges a breach of contract, and the individuals have no direct interest in the contract. The trial court properly sustained the demurrers upon the ground of multifariousness.1 Whether it should then have permitted the complainants to amend or properly dismissed the bill can best be determined when we have ascertained whether, with the corporation’s cause of action out of the bill, a cause remains in favor of the individual complainants.
¶28[2] Thus we come to the second inquiry: Does the bill show liability in equity? .
¶29Turning to the bill we find a mass of relevant and irrelevant allegations thrown together. Trivial matters are set forth with great particularity, and many important matters are stated in general and obscure terms. Still, leaving out the verbiage and regarding only the allegations which are certain, it seems clear that a cause of action is shown where majority stockholders have frozen out minority inter1*454ests. The defendants, by demurring, admit that they were majority stockholders in a corporation in which the complainants held minority shares. They admit that they formed a plan to turn over, without consideration, all the assets of this company to another corporation owned by them, in which the complainants should have no interest. They admit that they carried out their purpose, and left the complainants with stock in a corporation without property or business. They admit that they kept the complainants in ignorance of the scheme, and lead them to believe that the original company was doing business as usual. They admit that, by various consolidations and transfers, the property in which the complainants had been interested passed to new corporations, and ultimately to the defendant company, without the complainants having any interest therein, and without having had any opportunity to participate in the different transactions.
¶30There is liability in equity for such acts as the bill states upon the part of the individual defendants. Courts of equity have no more valuable function than to protect minority stockholders from the frauds of the majority. When majority stockholders dispose of the property of the corporation which they control in such a manner as to deprive the minority of their just rights in it, there is a breach of trust, and a court of equity is the tribune, and the only tribune, to provide an effective remedy. As said by the Circuit Court of Appeals for the Eighth Circuit in Jones v. Missouri-Edison Electric Co., 144 Fed. 765, 771, 75 C. C. A. 631, 637:
“Any sale of the corporate property to themselves, aiiy disposition by them of the corporation or of its property to deprive the minority holders of their just share of it, or to get gain for themselves at the expense of the holders of the minority of the stock, becomes a breach of duty and of trust which invokes plenary relief from a court of chancery.”
¶31See, also, Ervin v. Oregon Ry., etc., Co. (C. C.) 20 Fed. 577; Id. (C. C.) 27 Fed. 625; Meeker v. Winthrop Iron Co. (C. C.) 17 Fed. 48; Goodin v. Cincinnati, etc., Canal Co., 18 Ohio St. 169, 98 Am. Dec. 95; Pondir v. New York, etc., Ry. Co., 72 Hun, 384, 25 N. Y. Supp. 560; Hinds v. Fishkill, etc., Gas Co., 96 App. Div. 14, 88 N. Y. Supp. 954 (Menier v. Hooper’s Telegraph Works, 9 Ch. App. Cas. 350, is the leading English case).
¶32The next inquiry is whether the complainants have an adequate remedy at law?
¶33As we have just seen, the rights of minority stockholders are those which it is peculiarly the duty of a court of equity to protect. In this case it may be that the situation disclosed by the proofs will be such that,'instead of obtaining specific property, a decree will be entered for the value of the interest to which the complainant would be entitled in the defendant corporation. Or it may be that a money decree in some other form will be entered. The fact, however, that a court of equity, in view of the circumstances disclosed in a case, may make a money decree, instead of those forms of relief distinctively equitable, is no ground for contending that a bill setting up such circumstances is demurrable upon the ground of adequate remedy at law.
¶34*455The last inquiry is whether the individual plaintiffs should be denied relief because they have been guilty of laches.2
¶35[3] Laches may be established when the proof is offered, but it does not appear upon the face of the bill that the complainants have been guilty of any unreasonable delay.
¶36Kven if delay did appear, the bill avers that the defendants kept the complainants in ignorance of their fraudulent acts. They cannot be charged with sleeping on their rights if they did not know that which had been done and the defendants induced their ignorance.
¶37The further contention that especial regard should be paid to the claim of laches upon the ground that a decree in favor of the complainants would work harm to many innocent stockholders of the defendant corporation, cannot be regarded as well founded. We do not find it averred that innocent parties have become stockholders in such corporation and, if they have, the court can so frame the decree as to protect them.
¶38For these reasons, we think that the individual complainants state a cause of action entitling them to some measure of equitable relief.
¶39[4] We return now to the inquiry whether the court below should have permitted an amendment striking out the corporation complainant and eliminating the statement of its cause of action. It is not disputed that the complainant asked leave to amend in case the demurrers should be sustained upon the ground of multifariousness and we think that an appropriate amendment could readily have been prepared.
¶40We hesitate to disturb the action of the court below in not permitting an amendment. An examination of the judge’s opinion, however, leads us to think that if the question of multifariousness had been the only one in the case, he would have permitted the amendment, and that his doubts as to the other grounds of demurrer, especially that of laches, influenced his action; indeed, the demurrers are sustained generally. As we do not entertain the same doubts, and as we think it preferable that the complainants should have an opportunity to present their cause upon amended pleadings rather than be required to commence a new suit, we have concluded to modify the decree and remand the cause for further proceedings.
¶41The decree is so modified as only to sustain the demurrers upon the ground of multifariousness, with the right to amend in the manner indicated within such time as may be prescribed by the court below. We think that no costs should be alio-wed upon this appeal, nor required as a condition to amending.