Business suit

“ The first comprehends two propositions, namely; that courts of equity have no jurisdiction over corporations, as such, at the suit of a stockholder for violations of charters, and none for the errors of judgment of those who manage their business ordinarily. ”

“ It is also suggested that the court proceeded in the suit instituted by the furnace company upon the theory that it was maintainable under the provisions of the Illinois statute giving courts of equity 'full power, on good cause shown, to dissolve or close up the business of any corporation, to appoint a receiver therefor who shall have authority, by the name of the receiver of such corporation, to sue in all courts and do all things necessary to closing up its affairs, as commanded by the decree of such court.' 1 Starr & C. Ann. ”

“ A corporation sues and defends suits by attorney. He is the natural person by whom the personal acts of suing and defending are done, yet nobody ever imagined that he is the party to the suit. The official members are concerned in the suit in their corporate character as well as the private members, and it is as much confounding the distinction between the natural and corporate character, to call the official members parties to the suit, as it is to call the private members parties. ”

“ It is settled by the decisions of the courts of the United States and by the decision of many of the State courts that one who contracts with an acting corporation cannot defend himself against a claim on such contract, in a suit by the corporation, by alleging the irregularity of its organization. ”

“ To require the corporation in such circumstances to defend the suit away from its home or other jurisdiction where it carries on more substantial activities has been thought to lay too great and unreasonable a burden on the corporation to comport with due process. ”

“ My learned friend says, indeed, that suing and making a contract are different things. True; but this argument, so far as it has any force, makes against his cause; for it is a much more distinct exercise of corporate power to bring a suit, than by an agent to make a purchase. What does the law take to be true, when it says that a corporation of one state may sue in another? Why, that the corporation is there, in Court, ready to submit to the Court's decree, a party on its record. But in the case of the purchase of the bill of exchange, such as is the subject of this suit, what is assumed? ”

“ The remedy made available in equity was the derivative suit, viewed in this country as a suit to enforce a corporate cause of action against officers, directors, and third parties. As elaborated in the cases, one precondition for the suit was a valid claim on which the corporation could have sued ”

“ They also provide, in the chapter regulating proceedings by and against corporations, that 'suits against corporations may be commenced by original writ of summons, or by declaration, in the same manner that personal actions may be commenced against individuals, and such writ, or a copy of such declaration, in any suit against a corporation, may be served on the presiding officer, the cashier, the secretary, or the treasurer thereof ”

“ Section 44: 'If any corporation, created under this or any general statute of this state, except railway or charitable or religious corporations, be dissolved, leaving debts unpaid, suits may be brought against any person or persons who were stockholders at the time of such dissolution, without joining the corporation in such suit ”

“ And in order that the Federal courts may have jurisdiction, the suit, if the interpretation of the Constitution is to be consistent with the interpretation already and repeatedly given to the Judiciary Act, must be between citizens of one State, and no one else, on the one side, and citizens of other States, and no one else, on the other side.
We have not a separated controversy with any of the three defendants; no more than in a suit against a corporation we should have a controversy with each one of the corporators. ”

“ If any gentleman be entitled to stock in the bank, which he is kept out of possession of by others, let him assert his right in the Supreme Court, and let him or his antagonist, whichever may be found in the wrong, pay the costs of suit. ”

“ So, too, it has been held that a person may purchase stock in a corporation for the very purpose of bringing a stockholder's suit, and that the law will not inquire into the motive which actuated his purchase. ”

“ During all this period the shares of the corporation seem to have been of no value, so that the defendants may have bought them in the market for a very inconsiderable sum and may now be prosecuting a suit for relief which, if sustainable at all, ought to inure to the benefit of other parties. ”

“ We think, then, that this case is no authority for the power claimed by the proprietors of ticket No. 1,037; and we think, upon general principles, they had no right to institute this suit without the consent of the corporation.
But, we think also, that the corporation itself must be considered as the real plaintiff, and that its right to prosecute the suit cannot be affected by the allegation that it is brought for the benefit of others. ”

“ Its object was to prove the existence of the corporation and the increase of the corporate stock. But the existence of the corporation was admitted by the defendant's plea of non assumpsit; and whether the corporate stock had been properly increased was a question the State only could raise. It is well settled, that, in a suit by a corporation, a plea of the general issue admits the competency of the plaintiff to sue as such. ”

“ Suit to recover such profit may be instituted at law or in equity in any court of competent jurisdiction by the issuer, or by the owner of any security of the issuer in the name and in behalf of the issuer if the issuer shall fail or refuse to bring such suit within sixty days after request or shall fail diligently to prosecute the same thereafter ”

“ Although named a defendant, it is the real party in interest, the stockholder being at best the nominal plaintiff. The proceeds of the action belong to the corporation and it is bound by the result of the suit. [11] The heart of the action is the corporate claim. If it presents a legal issue, one entitling the corporation to a jury trial under the Seventh Amendment, the right to a jury is not forfeited merely because the stockholder's right to sue must first be adjudicated as an equitable issue triable to the court. ”

“ Any money judgment in such a suit was to be enforceable only against the organization as an entity and against its assets and not against any individual member or his assets. The conference agreement follows these provisions of the House bill except that this subsection is made applicable to labor organizations which represent employees in an industry affecting commerce and to employers whose activities affect commerce, as later defined. It is further provided that both the employer and the labor organization are to be bound by the acts of their agents. ”

“ The present suit, therefore, not being a bill in equity, or an action upon a judgment against the corporation, which are the only forms of remedy authorized by these statutes, but being an independent action at law upon the original liability of the stockholder, cannot be maintained, and the circuit court rightly so held. ”

“ Stock in a corporation is continually changing hands, and to suppose that, at the end of a pending litigation, the holders will be the identical persons who held it at the beginning is too uncertain and fanciful to form a basis for a judicial action. As was well said by Mr. Justice Grier, in Marshall v. Railroad Co., 16 How. 327: 'The necessities and conveniences of trade and business require that such numerous associates and stockholders should act by representation, and have the faculty of contracting, suing, and being sued in a factitious or collective name. ”

“ If their interest is less than the whole, the employer is entitled to receive their share in the proceeds of recovery and, if necessary, by appropriate proceedings to compel the administrator to bring the suit and account for its proceeds. ”

“ United Surety Company v. American Fruit Product Company
Argued: May 12, 1915. --- Decided: June 14, 1915
This is a suit originally brought by the defendant in error against the Semmes-Kelly Company in the supreme court of the District to recover $10,596.45 for goods sold. ”

“ When the receiver or officer performing like functions is authorized by statute to assess the shareholders, the assessment is binding on them by reason of their membership in the corporation, and each shareholder then becomes liable in a suit at law for the amount of the assessment. ”

“ Nor shall they have the right to receive anything but food from any corporation or individual, or other person, who shall have been interested in a suit within a year previous, or who shall expect to be so interested, and the same as to their wives and children—under the penalty for forswearing, besides loss of office, being rendered incapable of holding any other office, and being required to pay double for what they have taken. They shall take great care not to converse much or be very familiar with advocates or attorneys who are pleading cases. ”

“ If a corporation desiring to bring suit could not come within the requirements of diversity jurisdiction, the only way its suit could be tried in the federal courts, prior to the vast enlargement of their jurisdiction by the Act of 1875, was by virtue of a suit brought on its behalf by a stockholder of the requisite citizenship. ”

“ The act of 1875 declares that no circuit or district court shall have 'cognizance of any suit founded on contract in favor of an assignee, unless a suit might have been prosecuted in such court to recover thereon if no assignment had been made, except in cases of promissory notes negotiable by the lawmerchant, and bills of exchange.' 18 St. ”

“ It is true that a single private member cannot sue, nor prevent a suit, nor could one only of the governing members, but the private members, acting together in their corporate capacity, might control the action of the official members, and cause a suit to be brought or defended. ”