in the property, legal or equitable, which they can enforce in their own right and for their own special benefit. Nor is there any trust relation which enables a stockholder to sue in such a case. "The relation of trustee and cestui que trust, or of debtor and creditor or of partnership, does not exist between the stockholders of an incorporated company and the corporation itself. But the corporation and the individual shareholder may deal with each other at arm's length, the same as two strangers may, and a shareholder may contract with his corporation, and sue and be sued on his contracts." 1 Thomp. Corp., § 1076.

If a right of action exists, because of the alleged fraudulent acts and dealings in relation to the property in controversy, it exists in favor of the corporation, and of necessity the action must be brought in the right of the corporation, and for its benefit. If the defendants must account to any one for the property in litigation, the accounting must be to the corporation, and not to the plaintiffs or any other stockholders. The prayer of this complaint, in effect, asks the court to adjudge that the defendants have obtained for themselves, through fraudulent acts and dealings, the property of the corporation, and, instead of asking that the property so obtained, or its proceeds, be returned to the rightful owner, demands that the plaintiffs, for their own benefit, be decreed a portion of the fruits of the fraud. In other words, according to their prayer, they seek to obtain a portion of the property and assets of a third party, which they say was obtained from such third party by fraud. That a stockholder of a corporation can not recover corporate property, fraudulently or otherwise disposed of by the officers or agents of the corporation, by suing in his own right and for his own benefit, is settled by the authorities. It is true, where the property or assets of a corporation have been sequestered and dissipated by fraud or otherwise, a stockholder may, if the board of directors will not act, and a suit clearly ought to be brought, sue in the right of the corporation to have its property restored to it, or to obtain for it such other relief as the circumstances may demand, but in no such case can he sue for himself in his own right. This right of a stockholder to sue, in cases of fraud, for the benefit of the corporation, when it will not sue, is an exception to the general rule "that actions to redress wrongs done to a corporation must be brought by the corporation itself, and that such actions can not be brought by its stockholders." 4 Thomp., Corp., section 4488.

(The learned judge proceeded to discuss the authorities.)

There are instances, however, where a stockholder may apply to a court of equity for a preventive remedy by injunction to restrain those who are administering the affairs of the corporation from doing acts which are ultra vires, or to prevent a misapplication of the corporate funds which might result injuriously to the stockholders, where the acts intended to be performed would amount to a breach of trust. In such and like cases a preventive remedy may

be applied at the instance of a stockholder, but such cases are wholly different from those like the one at bar.

Mr. Thompson, in his Commentaries on the Law of Corporations, vol. 4, § 4491, states the distinction thus: "Where an action is brought by one or more stockholders to enjoin the performance of ultra vires, fraudulent, for oppressive acts on the part of the directors, the remedy is preventive; consisting of an injunction against the performance of such acts, to which may be superadded, in appropriate cases, other forms of equitable relief. Where, on the other hand, the action is brought to undo frauds and breaches. of trust already committed, and to restore to the corporation assets thereby wasted, the action does not, as in the former case, proceed in right of the stockholder, but it proceeds in right of the corporation, and consequently whatever is restored accrues to the corporation."

Where, then, as in this case, the acts complained of have been fully consummated, and the title to the property has passed into the hands of third parties, a stockholder has no remedy to recover, in his own right, any specific or proportionate part of the property for his own benefit. And where the corporate property of such a corporation, in whole or in part, has been sold or disposed of in good faith, under the powers of its charter, and not as a result of fraudulent purposes, the minority stockholder has no cause for complaint, for, as we have seen, a corporation of this character may, in the absence of restraint by the law of its creation, lease. sell, or dispose of any or all of its property, the same as an individual may do respecting his property. This may be done by a majority of the members. The principle that the majority must rule in the management of the affairs of a corporation "is rigidly upheld in equity, in the absence of fraud, oppression, and ultra vires acts." 4 Thomp., Corp., § 4533; 2 Kent Com., 280-282; Weyeth H. & M. Co. v. James-Spencer-Bateman Co., 15 Utah 110, 47 Pac. 604; Ardesco Oil Co. v. N. A. Min. & Oil Co., 66 Pa. 375; Treadwell v. Salisbury Mfg. Co., 7 Gray 393, 66 Am. Dec. 490; Central Transp. Co. v. Pullman's Car Co., 139 U. S. 24, 50, 11 Sup. Ct. 478, 35 L. ed. 55; Twin-Lick Oil Co. v. Marbury, 91 U. S. 587, 23 L. ed. 328.

But suppose this suit were regarded and treated as brought, not in right of the plaintiffs nor for their own benefit, but in right of all the stockholders, and hence for the corporation, and for its benefit; then could the plaintiffs recover? We think not, because, reviewing this suit in that light, they are met at the very threshold with the judgment in the case of Rogers v. Ferry et al., where the Putman Mining Company was a defendant, and which forms the special plea in the answer herein. The plaintiffs, by their demurrer to that plea, have admitted, for the purpose of this case, all the averments properly pleaded therein to be true. Among such averments, it appears that that suit was brought and tried in a district. court of this state-a court of competent jurisdiction; that the plaintiffs therein sued in right of the corporation, the Putnam Min

ing Company; that the Putnam Mining Company and the Quincy Mining Company were there, same as here, parties defendant; that the identical cause of action and the identical matters which are herein charged as fraudulent were therein pleaded and tried: that court adjudged and determined that all the transactions and dealings complained of were lawful and made in good faith, and were without any fraud done or intended; and that neither the Putnam Mining Company, nor the plaintiff therein, was entitled to any accounting in respect of the matters charged in that complaint; and that such judgment is of record, and is still in full force and effect. Thus it clearly appears that the Rogers suit was brought and intended for. the purpose of undoing the very transactions complained of in this action as being a fraud on the Putnam Mining Company and its stockholders, and the judgment was that neither the plaintiff nor the corporation was entitled to an accounting. As that suit was brought in the right of the corporation, that judgment is binding upon the corporation, and, by the rule of representation, all the stockholders are equally bound by it. It follows that, since the transactions and dealings complained of in that suit are exactly the same transactions and dealings complained of in this action, that judgment, being in full force and effect, is conclusive against the right of the plaintiffs to recover herein; they being stockholders in the corporation. The court having decided that there was no fraud in the transactions in controversy, and that the corporation has no right of recovery, no stockholder can make the same transactions the basis for complaint.

In Hawkins v. Glenn, 131 U. S. 319, 9 Sup. Ct. 739, 33 L. ed. 184, where the plaintiff in error, who was a stockholder, claimed that a certain order or decree which was binding upon the corporation was void, as against him, because he was not a party to the suit in which the order was made, the Supreme Court of the United States held that, "in the absence of fraud, stockholders are bound by a decree against the corporation in respect to corporate matters, and such a decree is not open to collateral attack." Mr. Chief Justice Fuller, delivering the opinion of the court, said: "Sued after such an order of court, the defendant does not deny the existence of any one of the facts upon which the order was made, but contends that there has been no call, as to him, because he was not a party to the cause between creditor and corporation. We understand the rule to be otherwise, and that the stockholder is bound by a decree of a court of equity against the corporation in enforcement of a corporate duty, although not a party as an individual, but only through representation by the company. A stockholder is so far an integral part of the corporation that, in the view of the law, he is privy to the proceedings touching the body of which he is a member." Freeman on Judgments, §§ 176, 178: Glenn v. Williams, 60 Md. 93; Kessler v. Ensley Co. (C. C.), 123 Fed. 546.

The fact that this suit was brought by different parties plaintiff is immaterial, since these plaintiffs, as stockholders, were privy to

the proceedings in the former suit, and since both suits were identical as to cause of action, subject-matter, purpose, and object, quality of persons for or against whom claim is made, and as to the thing adjudged. These legal identities existing, and the same questions involved herein having been judicially settled and determined in the Rogers suit, the judgment in that case is an effectual bar to this action. Freeman on Judgments, §§ 252, 253, et seq.: New Orleans v. Citizens' Bank, 167 U. S. 371, 17 Sup. Ct. 905, 42 L. ed. 202; Cromwell v. County of Sac, 94 U. S. 351, 24 L. ed. 681; Lyon v. Perin & Goff Manufacturing Co., 125 U. S. 698, 8 Sup. Ct. 1024, 31 L. ed. 839.

From the foregoing considerations, and the authorities, the conclusion is inevitable that the court did not err in overruling the demurrer or denying the motion directed at the special plea, nor in rendering judgment in favor of the defendants on the merits.

We find no reversible error in the record. The judgment is affirmed, with costs.

BASKIN, C. J., and MCCARTY, J., concur.86

Section 11.-Transfer of Stock.

BARRETT v. KING.

1902. 181 Mass. 476, 63 N. E. 934.

TORT for the alleged conversion of twenty shares of the capital of the Continental Brewing Company against Charles A. King and that corporation. Writ dated July 3, 1899.

In the Superior Court, HOPKINS, J., ordered a verdict for the defendants; and the plaintiff alleged exceptions.

The face of the certificate for the shares in question contained the following: "This certifies that William A. Holmes, of Boston, Mass., is the owner of twenty (20) shares of the capital stock of the Continental Brewing Company, and said shares are transferable only in person, or by attorney duly constituted, on the books of the Company on the surrender of this certificate, duly executed, and are only transferable in accordance with the By-Laws of the company which are hereon endorsed, and with such other By-laws,

86 Willoughby v. Chicago Junction Railways &c. Co. (1892) 50 N. J. Eq. 656, 25 Atl. 277, the court saying, "If not so there can be no end of litigation, for the court is then open to suit by every stockholder, seriatim, presenting the questions over and over for consideration and decision." Dana v. Morgan (1916) 232 Fed. 85, accord, Montezuma Cattle Co. v. Dake (1901) 16 Colo. App. 139, 63 Pac. 1058. (Judgment is res adjudicata where there is an identity of parties in two actions). See also, City of Chicago v. Cameron (1887) 120 I11. 447, 11 N. E. 899 ("but when the second suit is upon a different cause of action, the inquiry must always be as to the point actually litigated in the original action").-Eds.

rules and regulations as the stockholders shall for such purpose ordain and publish."

On the back of the certificate were the following extracts from by-laws:

"Section 2. No transfer of any stock of this Corporation shall be of any effect as concerns the Corporation until the certificate therefor has been duly executed and surrendered for cancellation, and the transfer has been registered upon the books of the Company."

"Section 4. No stockholder shall sell or otherwise dispose of the whole or any part of his stock unless he shall, at least thirty days previous thereto, have offered in writing to sell the same to the Board of Directors upon the same terms and for the same price as he shall have been offered by his prospective purchaser, and such offer to said directors shall not have been accepted within that period.

"In case any stock so offered under this provision of this By-Law is accepted by the Board of Directors, said Board may sell said stock, either in whole or in part, for a price not less than the market value of said stock, to any stockholder, or to any person engaged in the business of bottling or of vending beer or ale or other malt beverage, or dealing in malt or malt extracts. If said offer to said directors shall not have been accepted within said period of thirty days, no sale by said stockholder at a less price than the price mentioned in his said offer to the directors shall be valid, and no transfer shall in such case be made by the Company."

HOLMES, C. J.-This is an action of tort for the conversion of twenty shares of stock in the Continental Brewing Company, by a refusal to transfer it to the plaintiff on the books of the company. It may be assumed for the purposes of decision that the stock was purchased on the plaintiff's behalf, but it stood in the name of one W. A. Holmes, who indorsed the certificate and handed it over to the plaintiff as soon as he got it. This certificate was expressed to be transferable only in accordance with the by-laws of the company printed upon it, and one of those by-laws forbade a disposition of the stock unless the stockholders, at least thirty days previous thereto, should have offered in writing to sell the same to the board of directors upon the same terms and the offer had not been accepted. There was no evidence that Holmes had made such an offer and the judge of the Superior Court ordered a verdict for the defendant, subject to the plaintiff's exception. If this course was right it is unnecessary to consider the various minor questions that were raised while the plaintiff's case was going on.

It is argued that the plaintiff is not within the by-law because she was an undisclosed principal and should be regarded as having had the legal title from the moment of the purchase with her money. But we might as well talk about an undisclosed principal in a deed of land. The corporation has nothing to do with undisclosed equities or undisclosed relations. The only person whom it can recognize as owner is the one who appears as such on its books. J.