VIII. Acquiescence and Laches.

a. Participation in Wrong by Complaining Stockholder.-The acquiescence of a stockholder in the fraud of corporate officers to aid one corporation at the expense of another will not prevent recovery in an action brought by him on behalf of the corporation, in a proper ease, the stockholder being only nominally the plaintiff, the action being really between the two corporations: Fitzgerald v. Fitzgerald etc. Co., 41 Neb. 374, 59 N. W. 838. So it makes no difference that the complaining stockholders participated in the wrongful dividend, and they may sue without returning their share of the illegal dividend: Appleton v. American Malting Co. (N. J.), 54 Atl. 454. Where the officers of a corporation wrongfully sell some of its property, the purchaser thereof may be joined as a defendant without any offer of return of the purchase price being made, such party being alleged to be a co-conspirator of the directors: Gray v. New York etc. S. S. Co., 3 Hun, 383, 5 Thomp. & C. 224, the court saying: "It is undoubtedly a general rule, that he who seeks to repudiate a contract with another upon the ground of fraud, must restore that which he has received. How this doctrine, however, can be made applicable in favor of this defendant, is not perceived. The complaint charges that the Old Dominion Steamship Company is coconspirator with the other defendants to defraud the plaintiffs and those whom they represent, for its own benefit and that of its of ficers, as well as for the gain of the other defendants. Why should the plaintiffs be compelled to restore to it property which they do not control, and which such defendant, for the purpose of defrauding them placed in other hands? The victims of a conspiracy (and such the plaintiffs are, according to the complaint, which the demurrer admits) surely ought not to be called upon to make good to one of the conspirators that which has been parted with for the express and only purpose of working a wrong to such victim': See, also, Edwards v. Mercantile Trust Co., 124 Fed. 381.

It is no objection to an action by a corporation against its directors for a breach of trust, that the corporation itself, by the use of its name, was a party to their fraud: Metropolitan El. Ry. Co. v. Manhattan El. Ry. Co., 14 Abb. N. C. 103, 11 Daly, 373.

b. Laches.-Laches may be for a good defense to an action by a stockholder on behalf of a corporation, and if he sleeps on his rights, he will be barred from asserting them: Alexander v. Searcy, 81 Ga. 536, 12 Am. St. Rep. 337, 8 S. E. 630; Cicotte v. Anciaux, 53 Mich. 227, 18 N. W. 793; Hoyt v. Quicksilver Min. Co., 17 Hun, 169; Hart v. Ogdensburg etc. R. Co., 89 Hun, 316, 35 N. Y. Supp. 566; Appeal of Watts, 78 Pa. St. 370; Taylor v. South etc. R. Co., 13 Fed. 152. No distinction can be made, in considering the question of notice, between the corporation and its officers and stockholders; and it cannot be said that the officers and stockholders knew of the wrong complained of, but the corporation did not: Pacific R. R. v. Missouri Pac. Ry. Co., 12 Fed. 641.

Am. St. Rep., Vol. 97-4

So stockholders cannot maintain a bill to redeem property from a mortgage, because the directors did not do so, twenty years afterward: Roberts v. New York etc. R. Co., 31 N. Y. Supp. 577; nor can they wait thirty years before bringing a suit to correct an error in a deed: Taylor v. Holmes, 127 U. S. 489, Sup. Ct. Rep. 1192. For other cases in which laches was held to bar the right of action, see Wolf v. Pennsylvania R. Co., 195 Pa. St. 91, 45 Atl. 936; Latimer v. Richmond etc. R. Co., 39 S. C. 44, 17 S. E. 358; Edwards v. Mercantile Trust Co., 124 Fed. 581.

It is not laches where minority stockholders wait until the day preceding the time set for the ratification of an illegal act by a majority, before suing out an injunction to prevent it: Forrester v. Boston etc. Min. Co., 21 Mont. 544, 55 Pac. 229, $53. In Metropolitan El. Ry. Co. v. Manhattan El. Ry. Co., 14 Abb. N. C. 103, 11 Daly, 373, the court quotes with approval from the case of Boardman v. Lake Shore etc. R. R. Co., 84 N. Y. 157, where it is said: "It is not required that each particular stockholder should sue for his share of the dividends. to preclude the defendant from claiming an acquiescence and estoppel; and it is quite sufficient that they were advised of the character of the claim of the respective stockholders. The plaintiffs and other stockholders were entirely justified in awaiting the result of suits pending, without incurring the hazard of losing their rights on account of the lateness of their demands.''

IX. If Corporation is Barred, Stockholder is Also.

A stockholder can sue to enforce a right of the corporation, only when such body itself might do so, and if the latter is for any reason barred, the former is also. So where a corporation could not institute an independent action to enjoin foreclosure proceedings, but was bound to make use of the facts alleged by answer or crosscomplaint to the action of foreclosure, a stockholder was held to have no better right: Waymire v. San Francisco etc. Ry. Co., 112 Cal. 646, 44 Pac. 1086. Nor can a stockholder sustain an action to set aside a case on a ground which the corporation itself could not maintain: Hart v. Ogdensburg etc. R. Co., 89 Hun, 316, 55 N. Y. Supp. 566. An action by a stockholder is also barred by a judgment against the corporation whose rights he desires to enforce, a stockholder having no independent right of action: Alexander v. Donohoe, 68 Hun, 131, 22 N. Y. Supp. 652.

a.

X. Who is a Stockholder for Purposes of Suit.

Must be so in Fact.-A stockholder, in a proper case, being entitled to vindicate corporate rights, it becomes necessary to determine who is a stockholder for that purpose. In the first place, he must be one in fact. So a party holding fictitious stock is not entitled to the rights of a stockholder: Arkansas etc. Canal Co. Farmers' etc. Trust Co., 13 Colo. 587, 22 Pac. 954, and see ln re Gardner, 86 Hun, 30, 33 N. Y. Supp. 326. And where a person is

v.

only the legal, and not the equitable owner, of stock, by reason of the certificate not being surrendered and an entry of transfer made on the books of the company, he has no standing in an action to enforce equitable rights appurtenant only to the beneficial ownership of the stock: Scanlan v. Snow, 2 App. D. C. 137. In Da Ponte v. Louisiana etc. Lottery Co., Fed. Cas. No. 3569, a purchaser of stock standing on the books of the corporation in the name of another, who held them to secure a debt due from the seller, was held unable to maintain a suit on behalf of the company, where he had no certificate, transfer, no evidence of title, and no shares set apart to him: See, also, McHenry v. New York etc. R. Co., 22 Fed. 130.

No presumption arises that a stockholder continues as such, where he alleges, but does not prove, that a transfer of his stock was obtained from him fraudulently or without consideration, and it is proved that he had signed a blank power of attorney on the back of the stock certificate, which had found its way back into the company's possession and had been canceled: Thompson v. Stanley, 75 Hun, 248, 25 N. Y. Supp. 890.

A transferee of stock may sue to compel a corporation to record the transfer on the books of the company and issue new stock in place of the old, and in the same action enjoin a proposed illegal issue of preferred stock, which would injure his stock. "No sound principle of procedure requires that, under such circumstances, the plaintiffs should first resort to an action in equity to compel a transfer of the stock before bringing an action to enjoin an illegal issue of stock which will materially depreciate the value of their stock. If such a rule were sanctioned the unauthorized issue of stock might and ordinarily would be consummated before the stockholder could be in a position to obtain an injunction and the remedy would be utterly inadequate for the full protection of his rights': Ernst v. Elmira etc. Imp. Co., 24 Misc. Rep. 583, 54 N. Y. Supp. 116.

b. Subscriber.-When a subscriber of stock has paid his subscription and received his certificate, he may prevent mismanagement and misapplication of corporate property, but the mere fact that the company to which he has subscribed is without authority leasing its property to another company, will not constitute a defense to the payment of the subscription, even though there be a loss in the company's earnings: Ottawa etc. R. R. v. Black, 79 Ill. 262, citing Hays v. Ottawa etc. R. R., 61 Ill. 422. Subscribers who, without any default on the part of the corporation, fail to comply with the terms of their subscription, have no such right or interest in the stock as to entitle them to an injunction: Busey v. Hooper, 35 Md. 15, 6 Am. Rep. 350.

c. Importance of Time of Becoming Stockholder.-As a general rule, a purchaser of stock cannot attack the acts of the corporate management prior to the acquisition of his stock. "Otherwise," says the court in United Electric Securities Co. v. Louisiana Elec. Light Co., 68 Fed. 673, "we might have a case where stock duly represented

in a corporation consented to and participated in bad management and waste, and, after reaping the benefits from such transactions, could be easily passed into the hands of a subsequent purchaser, who could make his harvest by appearing and contesting the very acts and conduct which his vendor had consented to': See, also, Da Ponte v. Louisiana etc. Lottery Co., Fed. Cas. No. 3569, and Clark v. American Coal Co., 86 Iowa, 436, 53 N. W. 291.

Where, in his complaint, a stockholder alleges that he "was the owner of a large amount of said stock before any of the alleged or pretended sales or transfers of property herein. . . . complained of," it sufficiently sets forth that he acquired the stock before the transactions complained of: Tevis v. Hammersmith (Ind.), 67 N. E. 672, affirming 66 N. E. 79, 912.

d. Insignificant Stockholders.-Holders of insignificant amounts of stocks do not seem to be favored in their attempts to take the control of the corporation away from a large majority. So where an act is not ultra vires, a court will not interfere at the instance of a holder of one hundred shares out of three hundred and fifty thousand, unless a clear case is made out: Benedict v. Western Union Tel. Co., 9 Abb. N. C. 214. See, also, Gruen v. Schaeffer, 7 Mo. App. 587, and Albers v. Merchants' Exchange, 45 Mo. App. 206, in which latter case it was held that even though the act be ultra vires, a single minority stockholder must show that the loss sustained by him is of a substantial character; and the court quotes with approval from Dannmyer v. Coleman, 11 Fed. 97, where Judge Sawyer said: "It is always a suspicious circumstance where a single stockholder, among a large number of a corporation, rushes into a court of equity to vindicate, unaided and alone, the rights of the corporation and all other stockholders; and especially is this so, where the amount of stock owned by him is so very limited that in case of success his own share of the recovery will be so small as to make the maxim 'De minimis non curat lex' very properly applicable.”

JOHNSON v. WILSON.

[137 Ala. 468, 34 South. 392.]

TROVER-Essentials of.-To support an action of trover, the right of property, general or special, and possession, or an immediate right of possession, must concur in the plaintiff at the time of the conversion. (p. 53.)

TRESPASS-Essentials of.-In order to maintain trespass for the wrongful taking of personal property, the plaintiff must show that he had at the time of the taking the actual possession of the property or the right of immediate possession. (p. 53.)

TROVER Burden of Proof.-If by the terms of a chattel mortgage the right of the mortgagee to take possession of the property is postponed until the maturity of the note secured by the

mortgage, he cannot maintain an action for the conversion or taking of the mortgaged property until after the law day of the mortgage, and the burden of proof is on him to show that the conversion or taking occurred after his right to take possession accrued under the mortgage. (p. 53.)

MORTGAGES-Record as Notice. The record of a mortgage executed in the name of A. W. Dixon, is not notice to purchasers for value that J. W. Dixon executed it. (p. 54.)

TROVER Evidence. If in trover or trespass both parties derive title to the property from the same person by virtue of a mortgage executed by him, but the mortgage to the defendant was executed under an assumed name, his mortgage is not admissible in evidence, nor is the fact admissible that he sold the property included in the mortgage to the mortgagor. (p. 55.)

AGENCY FOR COLLECTION.-A mere collecting agent can relinquish no right of his principal, nor recognize any adverse claim so as to bind him without express authority. (p. 55.)

Kirk, Carmichael & Rather, for the appellant.

W. H. Key, for the appellee.

470 TYSON, J. The complaint contains four counts-two of them in trover and two in trespass. To support the counts in trover the right of property, general or special, and possession, or an immediate right of possession, must concur in the plaintiff at the time of the converson: Corbitt v. Reynolds, 68 Ala. 378; Elmore v. Simon, 67 Ala. 526; Booker v. Jones, 55 Ala. 266. So, too, in order to maintain trespass for the taking of personal property the plaintiff must show that he had at the time of the taking the actual possession of it or the right of immediate possession: Cook v. Thornton, 109 Ala. 523, 20 South. 14.

The mortgages upon which the plaintiffs relied as 471 the source of their title and upon which they predicate their right to the possession of the property, were made to secure the payment of two promissory notes, each payable on the first day of November, 1901. By their terms the right of the plaintiffs to take possession of the property was postponed until the maturity of the notes. This being true, the plaintiffs cannot maintain this action for the conversion or taking of property by defendant before the law day of the mortgage: Elmore v. Simon, 67 Ala. 426; Fields v. Copeland, 121 Ala. 644, 26 South. 491. And unquestionably the burden was upon the plaintiffs to show that the conversion or taking occurred after their right accrued to take possession under the mortgages. In other words, they must establish their right of possession of the property at the time it was converted or taken by defendant. This