Mr. Justice Shops
delivered the opinion of the Court:
Without pausing to consider the ground of objection that the bill is multifarious, we are of opinion that the demurrer thereto was, on other grounds, properly sustained, and complainants electing to stand by their bill, it was properly dismissed.
It is insisted that the bill may be maintained upon either of two grounds: First, as a bill to dissolve the corporation, wind up its affairs, and distribute its assets; and second, as a bill for an accounting between this corporation and the Pullman Palace Car Company and other creditors.
In the absence of statutory authority, courts of chancery had no jurisdiction to decree a dissolution of a corporation by declaring a forfeiture of its franchise, either at the suit of an individual or of the State. Verplanck v. Merchants' Ins. Co. 1 Edw. Ch. 84; Doyle v. Peerless Petroleum Co. 44 Barb. 239; Folger v. Columbian Ins. Co. 99 Mass. 274; Attorney General v. Bank of Niagara, 1 Hopk. 354; Denike v. New York, etc. 80 N. Y. 605. The mode of enforcing a forfeiture of the charter at common law was by scire facias or quo warranto in courts of law only, and at the suit, only, of the sovereign. The judgment in such cases, at law, relates solely to the right to exercise the corporate franchise, and operates to extinguish corporate existence. In respect of trade corporations, independently of statutory provision, and notwithstanding the dissolution of the corporation, its assets belong to those who contributed to its capital and for whom it stood as representative in the business in which it was engaged, and are treated in equity as a trust fund, to be administered for the benefit of the bona fide holders of stock, subject to the just claims of creditors of the corporation. Morawetz on Corporations, 1032, and cases cited.
The necessity for invoking the aid of a court of equity after judgment of forfeiture at law, that court alone being competent to reach and administer the fund, has led to statutory enactments vesting courts of equity with jurisdiction to decree a dissolution of the corporation and to wind up its affairs, in given cases, at the suit of an individual beneficiary of the fund. The power to confer such jurisdiction by statute, as one of the powers over corporations reserved by the State, has been uniformly recognized, and nowhere more clearly than in this State, (Ward v. Farwell et al. 97 Ill. 593 ; Chicago Mutual Life Indemnity Ass. v. Hunt, 127 id. 257,) and whenever the power of the court of chancery has been properly invoked the jurisdiction has been sustained. Life Ass.of America v. Fassett, 102 Ill. 315; Chicago Life Ins. Co. v. The Auditor, 101 id. 82; Mining Co. v. Mining Co. 116 id. 170, and cases supra.
By the 25th section of the statute for the incorporation of companies for pecuniary profit, being the only section applicable here, it is provided: “If any corporation, or its authorized agents, shall do or refrain from doing any act which .shall subject it to a forfeiture of its charter or corporate powers, or shall allow any execution or decree of any court of record for the payment of money, after demand made by the officer, to be returned, ‘no property found,’ or to remain unsatisfied not less than ten days after such demand, or shall dissolve or cease doing business, leaving debts unpaid, suits in equity may be brought against all persons who were stockholders at the time, or in any way liable for the debts of the corporation, by joining the corporation in such suits,” etc. And after providing for pro rata liability of stockholders upon unpaid subscriptions, etc., and for enforcing the same, proceeds : “And courts of equity shall have full power, on good cause shown, to dissolve or close up the business of any corporation, to appoint a receiver therefor,” with authority to wind up its affairs.
It is not pretended that the facts alleged bring the bill within the provisions of the clause of the statute first quoted. It is not alleged, nor are facts set forth showing, that any of the causes exist for which bills in equity are by this statute authorized to be filed. The bill invokes, not the power conferred by the statute, but the general chancery powers of the court. But’ it is said, in effect, that as the second clause of the statute quoted gives courts of equity power to decree the dissolution of a corporation “on good cause shown,” it may exercise that jurisdiction whenever the interests of the stockholders, or any of them, in equity and good conscience demand it. We do not think the statute capable of that construction. It is clear that the purpose of the provision was to enable the court, in all cases in which the jurisdiction of the court was properly invoked under the statute, to afford complete relief. By the first clause a remedy is provided by which the assets of the \Corporation, in the eases enumerated in the statute, may be applied in payment of its liabilities, and if insufficient therefor, that subscribers for and holders of unpaid stock of the corporation may be compelled to contribute to the payment of any balance of corporate indebtedness after the application of the corporate effects, without first procuring a judgment of forfeiture at law. No judgment forfeiting the charter of the corporation is necessary to authorize the court to afford this relief, but by the later provision the court may, in cases where cause of forfeiture exists, declare the same, and by its decree dissolve the corporation, and through its receiver administer and distribute the corporate estate, thus making the remedy in equity, in such cases, complete. (St. Louis, etc. Mining Co. v. Mining Co. 116 Ill. 170; Alling v. Wenzel, 133 id. 264.) As said by this court, in construing this provision of the statute, in Chicago Mutual Life Ins. Co. v. Hunt, 127 Ill. 274: “Courts of equity are given full power, on good cause shown, as a portion of the relief provided for by that section, to dissolve or close up the business of the corporation and to appoint a receiver of its effects.” We are of opinion that it is only “as a portion of the relief provided for by that section” that the power to dissolve the corporation can be invoked. Moreover, “good cause” for dissolving the corporation would necessarily be a legal cause,—a cause for which the sovereign authority might by law, resume the franchise granted. It can not be presumed that the legislature intended, by the use of the language here employed, to authorize a decree forfeiting the corporate franchise for causes for which the State might not procure judgment of forfeiture at law. The bill is not maintainable upon this ground.
Nor do we think the bill can be maintained upon the second ground. It seems well settled that if the agents of the corporation, in whom the authority to control its affairs is vested, are themselves guilty of wrong against the corporation, either by personal conversion of its funds, or being interested in another corporation or business, fraudulently manage- the affairs of the corporation to its detriment and for the benefit of such other corporation or concern, a court of equity will, upon proper bill filed, interfere, at the suit of a stockholder, to protect his interest in the corporation, without requiring him to first request or demand that the guilty agents proceed, virtually, against themselves. 1 Morawetz on Corporations, sec. 242; Harden v. Newton, 4 Blatch. 379; Heath v. Erie Ry. Co. 8 id. 347; Peabody v. Flint, 88 Mass. 52; Dodge v. Woolsey, 18 How. 341; Rogers v. LaFayette Agricultural Works, 52 Ind. 297; Railroad Co. v. Elliott, 57 N. H. 398.
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Mr. Justice Shops
delivered the opinion of the Court:
Without pausing to consider the ground of objection that the bill is multifarious, we are of opinion that the demurrer thereto was, on other grounds, properly sustained, and complainants electing to stand by their bill, it was properly dismissed.
It is insisted that the bill may be maintained upon either of two grounds: First, as a bill to dissolve the corporation, wind up its affairs, and distribute its assets; and second, as a bill for an accounting between this corporation and the Pullman Palace Car Company and other creditors.
In the absence of statutory authority, courts of chancery had no jurisdiction to decree a dissolution of a corporation by declaring a forfeiture of its franchise, either at the suit of an individual or of the State. Verplanck v. Merchants' Ins. Co. 1 Edw. Ch. 84; Doyle v. Peerless Petroleum Co. 44 Barb. 239; Folger v. Columbian Ins. Co. 99 Mass. 274; Attorney General v. Bank of Niagara, 1 Hopk. 354; Denike v. New York, etc. 80 N. Y. 605. The mode of enforcing a forfeiture of the charter at common law was by scire facias or quo warranto in courts of law only, and at the suit, only, of the sovereign. The judgment in such cases, at law, relates solely to the right to exercise the corporate franchise, and operates to extinguish corporate existence. In respect of trade corporations, independently of statutory provision, and notwithstanding the dissolution of the corporation, its assets belong to those who contributed to its capital and for whom it stood as representative in the business in which it was engaged, and are treated in equity as a trust fund, to be administered for the benefit of the bona fide holders of stock, subject to the just claims of creditors of the corporation. Morawetz on Corporations, 1032, and cases cited.
The necessity for invoking the aid of a court of equity after judgment of forfeiture at law, that court alone being competent to reach and administer the fund, has led to statutory enactments vesting courts of equity with jurisdiction to decree a dissolution of the corporation and to wind up its affairs, in given cases, at the suit of an individual beneficiary of the fund. The power to confer such jurisdiction by statute, as one of the powers over corporations reserved by the State, has been uniformly recognized, and nowhere more clearly than in this State, (Ward v. Farwell et al. 97 Ill. 593 ; Chicago Mutual Life Indemnity Ass. v. Hunt, 127 id. 257,) and whenever the power of the court of chancery has been properly invoked the jurisdiction has been sustained. Life Ass.of America v. Fassett, 102 Ill. 315; Chicago Life Ins. Co. v. The Auditor, 101 id. 82; Mining Co. v. Mining Co. 116 id. 170, and cases supra.
By the 25th section of the statute for the incorporation of companies for pecuniary profit, being the only section applicable here, it is provided: “If any corporation, or its authorized agents, shall do or refrain from doing any act which .shall subject it to a forfeiture of its charter or corporate powers, or shall allow any execution or decree of any court of record for the payment of money, after demand made by the officer, to be returned, ‘no property found,’ or to remain unsatisfied not less than ten days after such demand, or shall dissolve or cease doing business, leaving debts unpaid, suits in equity may be brought against all persons who were stockholders at the time, or in any way liable for the debts of the corporation, by joining the corporation in such suits,” etc. And after providing for pro rata liability of stockholders upon unpaid subscriptions, etc., and for enforcing the same, proceeds : “And courts of equity shall have full power, on good cause shown, to dissolve or close up the business of any corporation, to appoint a receiver therefor,” with authority to wind up its affairs.
It is not pretended that the facts alleged bring the bill within the provisions of the clause of the statute first quoted. It is not alleged, nor are facts set forth showing, that any of the causes exist for which bills in equity are by this statute authorized to be filed. The bill invokes, not the power conferred by the statute, but the general chancery powers of the court. But’ it is said, in effect, that as the second clause of the statute quoted gives courts of equity power to decree the dissolution of a corporation “on good cause shown,” it may exercise that jurisdiction whenever the interests of the stockholders, or any of them, in equity and good conscience demand it. We do not think the statute capable of that construction. It is clear that the purpose of the provision was to enable the court, in all cases in which the jurisdiction of the court was properly invoked under the statute, to afford complete relief. By the first clause a remedy is provided by which the assets of the \Corporation, in the eases enumerated in the statute, may be applied in payment of its liabilities, and if insufficient therefor, that subscribers for and holders of unpaid stock of the corporation may be compelled to contribute to the payment of any balance of corporate indebtedness after the application of the corporate effects, without first procuring a judgment of forfeiture at law. No judgment forfeiting the charter of the corporation is necessary to authorize the court to afford this relief, but by the later provision the court may, in cases where cause of forfeiture exists, declare the same, and by its decree dissolve the corporation, and through its receiver administer and distribute the corporate estate, thus making the remedy in equity, in such cases, complete. (St. Louis, etc. Mining Co. v. Mining Co. 116 Ill. 170; Alling v. Wenzel, 133 id. 264.) As said by this court, in construing this provision of the statute, in Chicago Mutual Life Ins. Co. v. Hunt, 127 Ill. 274: “Courts of equity are given full power, on good cause shown, as a portion of the relief provided for by that section, to dissolve or close up the business of the corporation and to appoint a receiver of its effects.” We are of opinion that it is only “as a portion of the relief provided for by that section” that the power to dissolve the corporation can be invoked. Moreover, “good cause” for dissolving the corporation would necessarily be a legal cause,—a cause for which the sovereign authority might by law, resume the franchise granted. It can not be presumed that the legislature intended, by the use of the language here employed, to authorize a decree forfeiting the corporate franchise for causes for which the State might not procure judgment of forfeiture at law. The bill is not maintainable upon this ground.
Nor do we think the bill can be maintained upon the second ground. It seems well settled that if the agents of the corporation, in whom the authority to control its affairs is vested, are themselves guilty of wrong against the corporation, either by personal conversion of its funds, or being interested in another corporation or business, fraudulently manage- the affairs of the corporation to its detriment and for the benefit of such other corporation or concern, a court of equity will, upon proper bill filed, interfere, at the suit of a stockholder, to protect his interest in the corporation, without requiring him to first request or demand that the guilty agents proceed, virtually, against themselves. 1 Morawetz on Corporations, sec. 242; Harden v. Newton, 4 Blatch. 379; Heath v. Erie Ry. Co. 8 id. 347; Peabody v. Flint, 88 Mass. 52; Dodge v. Woolsey, 18 How. 341; Rogers v. LaFayette Agricultural Works, 52 Ind. 297; Railroad Co. v. Elliott, 57 N. H. 398.
It is, however, fundamental in the law of corporations, that the majority of its stockholders shall control the policy of the corporation, and regulate and govern the lawful exercise of its franchise and business. (Morawetz on Corporations, 216; Dudley v. Kentucky High Schools, 9 Bush, 518; Durfee v. Old Colony Railroad Co. 5 Allen, 242.) Every one purchasing or subscribing for stock in a corporation impliedly agrees that he will be bound by the acts and proceedings done or sanetioaed by a majority of the shareholders, or by the agents of the corporation' duly chosen -by such majority, within the scope of the powers conferred by the charter, and courts of equity will not undertake to control the policy or business methods of a corporation, although it may be seen that a wiser policy might be adopted and the business more successful if other methods were pursued. The majority of shares of its stock, or the agents by the holders thereof lawfully chosen, must be permitted to control the business of the corporation in their discretion, when not in violation of its charter or some public law, or corruptly and fraudulently subversive of the rights and interests of the corporation or of a shareholder.
Tested by these rules the bill is wholly insufficient to warrant the interference of a court of equity at the instance of these shareholders. Por aught that appears the manner of conducting the business of the corporation may have been resorted to in the utmost good faith, and with an honest purpose to subserve and promote the best interests of the corporation. Nor can it be said, from the facts alleged, that the interests of the stockholders, have suffered more by the course pursued than if a different policy had been adopted. It is not shown by the bill what the product of the company amounted to, or that a market could be found for its output at any price. True, it is alleged that if the sales to the Pullman Gar Company, had been at the market price, without alleging what either was, the iron company would have realized a much larger profit; but whether it could have been sold upon the market is wholly left to conjecture. It may be, and it often is, undoubtedly, more advantageous to sell the entire output of the business, even at a small profit, rather than depend upon an uncertain general market. Moreover, as it appears, the corporation was organized to manufacture under certain letters patent, which upon trial proved to be valueless, and the business abandoned. The corporation had expended $116,000 on its plant, which, if it was abandoned, would prove a total loss. Its cash $100,000, derived from sale of stock, had been spent and $16,000 of indebtedness remained. Under these circumstances it may not have been wise, but was perfectly legitimate, for the stockholders, none of whom seem to have dissented, to utilize the plant as far as practicable, by changing the business to the manufacture of bar iron, and sell the same to the best advantage. It may well be questioned, considering the financial condition of the company at the time, whether the policy of supplying a single customer, and obtaining a line of credit thereby which enabled it to operate its works, was not dictated by the soundest business discretion. But whether it was or not; it is clear, but for the course pursued, the concern now shown to be making a surplus over and above its interest and expense account, must have ceased doing business, and its stock, including that of appellants, have become absolutely worthless, unless help could have been had from some other source. No facts or circumstances are so alleged that fraud in the management of the affairs of the corporation can be said to exist. Aside, therefore, from the indefinite and uncertain character of the allegations of the bill, which, we concur with the Appellate Court in saying, rendered the bill obnoxious to demurrer, we are of opinion that no case is shown by the bill, even if intendments could be indulged in its favor, that will authorize an accounting at the suit of the shareholders. For aught that is alleged, the officers and shareholders of the corporation are willing and capable of taking every step, with fidelity to the interest of the stockholders, that is necessary, if any such interest is prejudicially affected or jeopardized.
Finding no error, the judgment of the Appellate Court is affirmed.
Judgment affirmed.