Nash v. Hall Signal Co.

In case A. and B., directors in a corporation, waste its funds during one year, and B. and C., directors, by some act not connected with the first, devastavit in another year, the three cannot be joined in an equitable action brought by or in behalf of the corporation to compel them to account for and pay the damages sustained by these independent, wrongful acts. Wasting the property of a corporation by its directors is a tort. A. is not liable for the acts of B. and C., and C. is not liable for the acts of A. and B., and these independent, tortious acts constitute distinct causes of action, which cannot be united in one complaint. The interlocutory judgment should be affirmed, with costs, on the opinion of LAWRENCE, J., at special term.

VAN BRUNT, P. J., concurs.

(dissenting). Upon the authority of Brinckerhoff v. Bostwick, 88 N. Y. 52,1 think the action is maintainable. The suit is one brought by a stockholder, who, on behalf of the corporation, demands an accounting for property which has been taken or allowed to be taken from the corporation. The acts complained of, although happening at different periods of time, are but cumulative, and constitute a single cause of action. It is true that certain of these defendants were not directors, but were transferees of the assets of the corporation; but their being made parties does not change the nature of the action, nor make what was one cause of action multifarious. The purpose sought is td enable a court of equity to reach out and recover diverted assets. Although different relief may be accorded as against the different defendants, this does not effect a severance or multiplication of the cause of action. I do not think the demurrer upon this ground is good, and, as it was sustained in the court below, the judgment sustaining it . should be reversed.