the like. This, too, fails of proof and constitutes no ground for a receiver if true; and, moreover, the complainant swears that he would not have believed such disclosures if they had been made, and that he so informed the directors.

It is made to appear in the case that practically the only business of this corporation was the collection of a large judgment it had recovered for the taking of coals out of its lands, the settling of titles to its lands, the prosecution of an action for the recovery of certain parcels of it held by a trespasser, and the sale of its lands. The directors in office are not only fully competent to carry on all this business, but they are prosecuting it diligently and properly so far as it appears. If any difficulty should arise in the sale of the lands, it can only come from Shackelford's own unwarranted and capricious objection as a stockholder under the by-law adopted at his instance and to which we have referred above; and surely he cannot invoke the action of a court of equity to meet a necessity thus produced by his own wrong.

As to the action prosecuted by the corporation for the recovery of parcels of its lands, and which is now pending in this court on appeal from a judgment in its favor, it transpires that the Ivy Coal and Coke Company is the defendant in that action, and Shackelford is the president 233 of that company. In respect of the money judgment in favor of this corporation and which it was endeavoring to collect when this bill was filed, it is to be noted that said Ivy company of which Shackelford is president is the defendant therein, and that Shackelford himself is personally liable thereon as the company's surety on supersedeas bond for appeal to this court where the judgment was affirmed. As to these matters it would obviously not be the most appropriate thing imaginable for him to exert a controlling influence in the conduct of the corporation, although he owns one-half of its capital stock. He sought a negatively controlling power by insisting that the number of directors should be increased from three to four, and that he and an agent of his should be given two of the places. This might well have produced or resulted in a deadlock and the paralysis of the corporate business; and there is indeed room for suspicion that the motive of this proposal was to thus throw the corporation into convulsions and then call in a receiver to doctor the convulsions. However that may be, in view of the antagonistic attitude of Shackelford to the corporation in respect of said action of ejectment and said money judgment, in connection with the further

fact that he bought into the company pending those actions and from a third party who appears to have been in harmony with the directory, it is not surprising that the holders of the other half of the stock, who are the directors now in office, should have declined this proposition of Shackelford; and there is no room to say that in so doing they were not faithfully representing the interests of the corporation. Their counter-proposition to make him one of the three directors was all that fairness could require from them.

On the case submitted to the chancellor and now again submitted to us, we find no necessity for the appointment of the receiver. The order appointing him must be reversed, and an order will be here entered denying and dismissing the application for the appointment.

Reversed and rendered.

Grounds for the Appointment of a Receiver for a corporation are discussed in the monographic notes to Cameron v. Groveland Imp. Co., 72 Am. St. Rep. 48-60; Cortelyou v. Hathaway, 64 Am. Dec. 485, 486; and the subsequent cases of Sheridan Brick Works v. Marian Trust Co., 157 Ind. 292, 87 Am. St. Rep. 207, 61 N. E. 666; International Trust Co. v. United Coal Co., 27 Colo. 246, 83 Am. St. Rep. 59, 60 Pac. 621; Ball v. Maysville etc. R. R. Co., 102 Ky. 486, 80 Am. St. Rep. 362, 43 S. W. 731.

JOHNS v. McLESTER.

[137 Ala. 285, 34 South. 174.]

CORPORATIONS-Right of Stockholder to Maintain Suit.Before a minority stockholder in a corporation can maintain suit in his own name to redress supposed corporate wrongs, he must allege that he has made demand upon the managing officers or governing board of the corporation to correct the wrongs complained of, by legal proceedings or otherwise, and that, meeting with failure or refusal, he has sought redress through the stockholders as a body, or he must allege facts showing that such demand would have been useless. (p. 28.)

F. S. White & Sons, for the appellant.

R. H. Thach, for the appellees.

289 TYSON, J. It cannot be doubted that the alleged wrongs complained of in the bill in this cause, if cognizable at all, are such as could have been righted upon the complaint of the corporation, in which the complainants are stockholders.

In other words, the purpose of this bill is to redress certain alleged injuries done the corporation, which are charged to be damaging to the rights of the complainants as stockholders.

290 It is thoroughly well settled in this state that before a minority stockholder, or any number of them, can maintain a bill of this sort, he or they must make demand upon the managing officers or governing board of the corporation to correct the wrongs complained of, by legal proceedings or otherwise, and meeting with failure or refusal, he or they must next seek redress through the stockholders as a body. And such demand or request must be clearly averred in the bill. Of course, this demand is not required when it is made clearly to appear that it would be refused, or that the litigation following would necessarily be under the control of persons opposed to its success, or when the persons constituting the governing board or a majority of them are the wrongdoers or under their control, and any effort to obtain redress through the stockholders would be unavailing for want of time or other cause. Of course, the excuse for not making the demand upon the governing board or if made upon that body, then the excuse for not seeking redress through the stockholders must be clearly and distinctly averred in the bill: Montgomery Light Co. v. Lahey, 121 Ala. 131, 25 South. 1006, and authorities there cited.

There is not an averment in this bill, which can by any possible construction afford the remotest inference, that the stockholders of the corporation have ever been applied to by these complainants to redress the grievances complained of, nor is there even an inference, from the facts averred, that any good reason exists for not making the application to them. Indeed, we think it can be said that no proper demand is shown to have been made upon the directors. All that is shown in this respect is that one J. A. Van Hoose, who was a stockholder, on the seventeenth day of October, 1899, addressed a letter to "Members of the Board of Directors of Woodlawn Cemetery Co.," requesting them to immediately call a meeting of the board of directors and of the stockholders of the corporation for the purpose of redeeming the property of said company from the respondent, before the expiration of the time of redemption, 291 and demanding that they take such immediate steps as are necessary in order to make such redemption. It is obvious from the language employed that the board of directors were not in session when this letter was written, nor is there one word in it calling their attention to the facts upon which the relief is

predicated. And whether the stockholders, constituting the board of directors when this letter was written, were the same persons composing that body when Van Hoose appeared before them and informed them of his agreement with the respondent with reference to postponing the foreclosure sale is not shown. It may be, and we have the right to assume, that the board was composed of entirely different stockholders, who knew absolutely nothing of the agreement between Van Hoose and the respondent and of the other facts alleged. But be this as it may, it is not shown that any governing body of the company were ever informed of the conspiracy alleged between the respondent and the president of the company. It is true that. there is an exhibit to the bill ("H"), an unsigned letter of date January 20, 1900, purporting to have been addressed to "Director Woodlawn Cemetery Co.," demanding that a bill be filed, etc.. also saying that "the chancery court has practically held that L. W. Johns and E. Erswell were guilty of such fraud in the sale. . . . as to invalidate the same, and it is absolutely necessary that this bill be filed in order to protect the interests of the company," but it is nowhere averred that this letter ever reached the director or the board of directors. This being true, it is not necessary to here decide its sufficiency or insufficiency as a demand. The grounds of the demurrer challenging the averments of the bill in these respects should have been sustained.

Reversed and remanded.

ACTIONS BY STOCKHOLDERS ON BEHALF OF CORPORATIONS. I.

Corporation Must Sue Generally.

II. When Stockholder may Sue.

a. Must Exhaust Corporate Remedies.

b. Demand on and Refusal to Act by Corporation Must

C.

be Alleged.

On Whom It Should be Made.

d. Where a Receiver is in Charge.

e. Excuses for Failure to Request Corporate Action.

4.

Where the Corporation has Abandoned Business
-No Managing Body.

5. Relationship as Giving Rise to Presumption of

Refusal.

6. Miscellaneous Instances.

7.

Presumption as to the Continuance in Office of the Same Directors.

III. Suits in the Federal Courts.

a. Importance of Equity Rule 94.

b. Conflict as to Whether Demand may be Dispensed With.

c. Effect in State Courts.

IV. What Wrong Must be Inflicted on the Corporation.

e.

f.

Acts Involving the Use of Discretion.
Specific Performance of Contracts.
Good Faith in Bringing Suit Necessary.
VI. Parties.

V.

a. Corporation a Necessary Party.

b.

C.

Stockholders and Directors as Parties.
Plaintiff's Authority to Sue Must Appear.

VII. Misjoinder of Corporate and Individual Causes of Action.
VIII. Acquiescence and Laches.

a. Participation in Wrong by Complaining Stockholder. b. Laches.

IX. If Corporation is Barred, Stockholder is also.

X. Who is a Stockholder for Purposes of Suit.

c. Importance of Time of Becoming Stockholder.

d. Insignificant Stockholder.

I. Corporation Must Sue Generally.

It is an elementary proposition of law, needing the citation of no authority to support it, that a corporation is an entity distinct and apart from the members who compose it, and that, generally speaking, all duties and obligations owing it can be enforced only by suits brought in its own name. So the right of action for a wrongful conversion of corporate property cannot be brought by stockholders in their individual names, but is in the corporation: Steele Lumber Co. v. Laurens Lumber Co., 98 Ga. 329, 24 S. E. 755; Tomlinson v. Bricklayers' Union, 87 Ind. 308. Nor can they sue for goods sold by the corporation, although they are the sole stockholders: Cutshaw v. Fargo, 8 Ind. App. 691, 54 N. E. 376, 36 N. E. 650. In such a case, the sole stockholder's succession to its interest must be averred and proved, so as to show that the defendant had promised the plaintiff, understanding that he had succeeded to all the interests of the corporation: Randall v. Dudley, 111 Mich. 437, 69 N. W. 729. A stockholder cannot sue to restrain slander of title of property belonging to the corporation: Langdon v. Hillside Coal etc. Co., 41 Fed. 609. Where an action was brought against an officer for unlawfully withholding corporate funds, they should be accounted for to the corporation, and a decree ordering payment of the amount to the complaining stockholders in proportion to their stock is erroneous: Chicago etc. Mfg. Co. v. Boggiano, 202 Ill. 312, 67 N. E. 17, modify. ing Boggiano v. Chicago Macaroni Mfg. Co., 99 Ill. App. 509.