Holmes v. Crane

Corporations — directors — action by minority stockholders on behalf of corporation against directors — when directors not liable for ultra vires acts of corporation.

Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered May 25, 1920, affirming a judgment in favor of defendants entered upon a decision of the court on trial at Special Term. The action was by minority stockholders of the St. Joseph Lead Company, a domestic corporation, in the right of the corporation, against two of its directors, and the executors of a deceased director, for an accounting for property and funds of the corporation used ultra vires through their alleged neglect and failure to perform their duties as directors and through alleged violations of law by them as officers and "directors of the company. The trial court found that certain acts of the board of directors involving the appropriation of property and funds of the corporation were ultra vires the corporation but failed to find that the defendants were responsible therefor or entered into a conspiracy or were actuated by fraudulent motives as charged; and found affirmatively that the defendants did not dominate or control the corporation or its board of directors and did not cause the ultra vires acts and acted in all respects in good faith and in what they believed to be for the best interests of the company and derived no private or secret advantage from any of the acts complained of; that the company sustained no damages thereby and that the plaintiffs acquiesced in and ratified the ultra vires facts.