Magale v. Fomby
Supreme Court of Arkansas
Appeal from Columbia Chancery Court; James M. Barker, Chancellor; 1. The directors were liable for mismanagement and neglect. 129 Ark. 416; 168 N. Y. 157, 110 Ark. 40; 92 Id. 327. 2. No demand on the president and board of directors to bring this suit was necessary, as they were the guilty parties. 96 Ark. 281; 126 Ark. 72; 2 Cook on Corp., § 701. 3. The suit was not barred by limitation.
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Appeal from Columbia Chancery Court; James M. Barker, Chancellor; 1. The directors were liable for mismanagement and neglect. 129 Ark. 416; 168 N. Y. 157, 110 Ark. 40; 92 Id. 327. 2. No demand on the president and board of directors to bring this suit was necessary, as they were the guilty parties. 96 Ark. 281; 126 Ark. 72; 2 Cook on Corp., § 701. 3. The suit was not barred by limitation. Plaintiffs had no knowledge of the loss. 71 Ark. 382; 196 S. W. 803; 39 L. R. A. (N. S.) 173; 97 N. E. Rep. 897. • 1. The demurrer was properly sustained. There was no gross negligence nor breach of trust.…
1Opinion of the Court
HART, J.,
(after stating the facts).
(1-2) The cause, of action set forth in the complaint is cognizable in a court of chancery. The liability of the directors of the bank for negligence in the discharge of their duties and the jurisdiction of courts of equity to afford redress to the corporation, and in proper cases to its shareholders, in cases of this sort-exists independently of any statute. Bank of Commerce v. Goolsby, 129 Ark. 416, 196 S. W. 803. Actions to recover such losses should in general be brought in the name of the corporation, but if it refuses to prosecute the action, the…
2Cases cited4 opinions
- Wallace v. Lincoln Savings BankTennessee Supreme Court · 1891
- Cooper v. HillCourt of Appeals for the Eighth Circuit · 1899
- Bank of Commerce v. GoolsbySupreme Court of Arkansas · 1917
- Baxter v. MosesSupreme Judicial Court of Maine · 1885
3Cited by9 opinions
- State Ex Rel. Weede v. BechtelSupreme Court of Iowa · 1952
- Morton v. Morton Realty Co.Idaho Supreme Court · 1925
- Resolution Trust Corp. v. KerrDistrict Court, W.D. Arkansas · 1992
- Resolution Trust Corp. v. ArmbrusterCourt of Appeals for the Eighth Circuit · 1995
- Jensen v. Republic Steel Corp.Cuyahoga County Common Pleas Court · 1940
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