Opinion · Supreme Court of the United States
Davenport v. Dows
Davenport v. Dows, 85 U.S. (18 Wall.) 626 (1874)
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1874-03-18
- Topic
- general
Mr. Justice DAVIS delivered the opinion of the court. It is unnecessary to notice the last two reasons assigned, why the demurrer should not have been overruled, as the first is well taken. Indeed, it would be improper to pass on the merits of the controversy until the proper parties to be affected by the decision are before the court. That a stockholder may'bring a suit when-a corporation refuses is settled in Dodge v.
Citator
UpLaw has not yet analyzed Davenport v. Dows. The absence of a flag is not a finding that it is good law.
- Cited by
- 114 opinions
Headnotes
- Civil Procedure — Joinder A stockholder may bring suit when a corporation refuses to act, but such a suit can be maintained only on the ground that the rights of the corporation are involved, because the individual shareholder is permitted to assert those rights on behalf of himself and his associates only when the directors decline to take the proper steps to assert them.
- Civil Procedure — Joinder Proceedings in a shareholder's suit asserting corporate rights must be so conducted that any decree made on the merits will conclude the corporation; this can be accomplished only by making the corporation a party defendant, since the relief sought belongs to the corporation and any benefit to the shareholder is merely incidental.
- Remedies — Jurisdiction — Necessary Parties To avoid subjecting a corporation to renewed litigation of the same subject matter in a later suit — particularly where the shareholder is unsuccessful — a court of equity will not take cognizance of a bill brought to settle a question in which the corporation is the essential party in interest unless the corporation is made a party to the litigation.
- Tax Law — Actions to Avoid Tax — Necessary Parties Where a tax assessed against a railroad company was the tax sought to be avoided in equity and the decree would discharge the company from payment of that tax, the corporation should have been made a party to the suit; because it was not, the demurrer should have been sustained.
delivered the opinion of the court.
It is unnecessary to notice the last two reasons assigned, why the demurrer should not have been overruled, as the first is well taken. Indeed, it would be improper to pass on the merits of the controversy until the proper parties to be affected by the decision are before the court.
That a stockholder may'bring a suit when-a corporation refuses is settled in Dodge v. Woolsey, * but such a suit can only be maintained on the ground that the rights of the corporation are involved. These rights the individual shareholder is allowed to assert in behalf of himself and. associates, because the directors of the corporation decline to take the proper steps to assert them. Manifestly the proceedings for this purpose should be so conducted that any decree which shall be made on the merits shall conclude the corporation. This can only be done by making the corporation a party defendant. The relief asked is on behalf of the corporation, not the individual shareholder, and if it be granted the complainant derives only an incidental benefit from it. It would be wrong, in case the' shareholder were unsuccessful, to allow the corporation to renew the litigation'in another suit, involving precisely the same subject-matter. To avoid such a result, a court of equity will not take cognizance of a bill brought to settle a- question in which the corporation is the esseutial party in interest, unless it is made a party to the litigation. †
*628 In this case the' tax sought to' be avoided was assessed against the Chicago, Rock Island, and Pacific Railroad Company, and the decree rendered discharges the company from the payment of this tax. The corporation, therefore, should have been made a party to the suit, and as .it was not, the demurrer should have been sustained.
Decree reversed, and the cause remanded for further proceedings,
In conformity with this opinion.
18 Howard, 340.
Robinson v. Smith, 3 Paige, 222, 233; Cunningham v. Pell, 5 Id. 607; Hersey v. Veazie, 24 Maine, 1; Charleston Insurance and Trust Co. v. Sebring, 5 Richardson, Equity, 342; Western Railroad Co. v. Nolan, 48 New York, 573; Bagshaw v. Eastern Union Railroad Co., 7 Hare, 114-131.