stating *127 that a corporation stands in the shoes of a trustee to its shareholders
How later courts described this case
- stating *127 that a corporation stands in the shoes of a trustee to its shareholders
Written by the judges who cited it.
The opinion
On Rehearing.
The original opinion in this case' states that the failure of plaintiffs’ petition to allege that any effort was made to induce stockholders to remedy the matters complained of rendered his petition insufficient as a basis for the appointment of the receiver. On rehearing, our attention is called to the-following allegation of the petition, viz., “that the defendants being the owners of a majority' of the stock of the corporation, plaintiffs are powerless by their votes as stockholders to prevent the dissipation of the assets of said corporation”; plaintiffs insisting that, in view of the situation thus described, it is apparent that any appeal to defendants for the correction of the alleged abuses would have proven unavailing.
The full force of the allegation just quoted was not appreciated at the time the original opinion was written.' We adopt the view of plaintiffs, that, under the facts alleged, an appeal to defendants for relief would have proven useless and futile; however, notwithstanding this, we see no reason to change our decision. A receivership is the most radical remedy known to our jurisprudence; it discredits, cripples, and, in a majority of instances, puts an end to any business or enterprise, and, in our opinion, should never be applied where abuses may be corrected and prevented by the application of milder remedies.
As shown in the original opinion, the suit is based, in part, on a cause of action for damages for the alleged breach of a contract of employment. Under the authorities cited, it is clear that the court was not authorized to appoint a receiver in an action of that nature. The only other specific relief sought was the establishment, by decree, of the ownership of certain stock' in the corporation claimed by plaintiffs. It is not shown that plaintiffs’ ownership of stock in the corporation was challenged; simply that certain of their rights and privileges as stockholders had been denied, and that plaintiff Morris had been irregularly and wrongfully removed as president and director of the company. These abuses (accomplished or threatened), in our opinion, could have been corrected or prevented by remedial writs (mandamus arid injunction), less radical and destructive than a receivership.
We therefore overrule the motion for rehearing. ■