Winsor v. Bailey , 55 N.H. 218 ( 1875 )

Equity — Multifariousness. 1. It appears, at least inferentially, from the bill that there are stockholders in the Hooksett Manufacturing Company who are not made parties, either plaintiff or defendant. The bill therefore seems to be defective in this particular: either the other stockholders should be joined, or it should be alleged that the proceeding is brought by the plaintiffs on behalf of themselves and others having a like interest. March v. Eastern Railroad Company, 40 N.H. 548. This defect may be cured by amendment.

2. The bill alleges that the plaintiffs are owners of stock, and sets out specifically the amount owned by each. It is contended for the defendants that the bill is defective in not showing that they were owners of stock at the time of the alleged wrongful payment to some or all of the defendants. No authority is referred to in support of this position, and I see no sound reason upon which it can be sustained. To hold so, would seem to involve the singular consequence that the transfer of stock in a corporation extinguishes the right to inquire into the previous fraudulent conduct of its officers, whereby its funds have been misappropriated.

3. I am of opinion that the first ground of multifariousness specified in the demurrer cannot be allowed. The right of the plaintiffs and the liability of each and all the defendants rest upon the same single fact, namely, the illegal vote of the directors, June 3, 1871, and the payments made in pursuance of that vote. When, according to the allegations of the bill, the plaintiffs establish their right, as against one of the defendants, to have the money thus paid restored to the corporation, they have established the same right as against all the defendants. Their case is the same against all the defendants, and there is nothing to show that either defendant has grounds of defence distinct or separate from that of the others. The subject of multifariousness is quite elaborately discussed by PERLEY, C. J., in Abbot v. Johnson, 32 N.H. 9; and this case seems to come entirely within the principles there laid down. Several of the cases referred to in the opinion in Abbot v. Johnson, p. 28, appear to be quite in point; e. g., Boyd v. Hoyt, 5 Paige 65; Varick v. Smith, 5 Paige 137; Halstead v. Shepherd, 23 Ala. 558; Martin v. Martin, 13 Mis. 36; Redsole v. Monroe, 5 Ired. Ch. 313; Murray v. Hay, 1 Barb. Ch. 59.

The second ground of multifariousness alleged seems to me well taken. The bill sets out (1) an illegal vote of the directors, and an illegal and fraudulent payment of money of the corporation to part only of the stockholders by way of dividend, praying that the defendants may be decreed to return the money thus received; (2) gross misconduct and maladministration on the part of the treasurer, Bailey, praying for an injunction to restrain him from further acting in that office. These two allegations and prayers appear to be entirely independent and distinct, and I think the demurrer must for that reason be sustained.

The plaintiffs may amend upon terms to be settled by the circuit court, if they desire to do so, by striking out of their bill one of these separate causes.

4. The fourth cause of demurrer is, in effect, that the bill calls for an answer to charges of fraud, etc., which amount to crime. I think this cannot be sustained. By our practice the answer need not be under oath, and when not sworn to is a mere pleading. The defendant may easily draw his answer in such way as to put the plaintiff to proof of such charges, without making admissions that may subject him to a criminal prosecution.