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Appeal from Salt Lake County, Third District

and against the officers and directors of the corporation; and another alleged cause of action is stated against the incorporation for an injunction, and still another to annul and set aside certain assessments, and a further cause of action on behalf of the plaintiffs for personal relief. The district court sustained both the motion and the demurrers, and, plaintiffs refusing to plead further, the court entered judgment dismissing the action. Plaintiffs appeal, and assign the rulings of the court as error.

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It seems to us that there is no escape from the conclusion that there are several causes of action commingled in the complaint in a single statement. It cannot be doubted that, notwithstanding the alleged control that Vahrenkamp had over the officers and directors of the corporation, and therefore over the corporation, the cause of action to annul and to enjoin the assessments levied on the capital stock is manifestly against the corporation, and that it could be enjoined regardless of the power or influence of any one or of all the officers and directors. It is clear that each assessment is a completed transaction, and if wrong constitutes a complete and independent wrong in itself. For example: The assessment of August, 1916, was a complete transaction, and if wrongful or unlawful constituted complete and independent wrong and thus a separate cause of action. The same is true respecting the assessment of Janu ary, 1917. Moreover, the levying of an assessment is a corporate act, and if a cause of action exists at all respecting the levying of the assessment it is in favor of the stockholder. With respect to the levying of an assessment on his stock, the cause of action, if there be one, is against the corporation.

In Tutwiler v. Tuskaloosa, etc., Co., 89 Ala. 391, 7 South. 398, a stockholder, for himself and others, commenced an action to enjoin the sale of his stock by the corporation, and in the same action he, as did plaintiffs in the case at bar, also alleged various wrongs against other stockholders and demanded an accounting from them. The Supreme Court of

Vol. 50-23

Blake et al. v. Boston Development Co. et al., 50 Utah 347

Alabama, in passing upon the objection that several causes of action were improperly joined, said:

"A bill claiming such relief [to enjoin the sale of stock] is a bill against the corporation as the only necessary and proper party. The contention is between the stockholder and the corporation, and any relief obtained will necessarily be against the corporation."

The court then points out that under certain circumstances, where the corporation fails to proceed to protect its rights, a stockholder may do so, but it also points out that that will not justify the joining of causes of action for and against the corporation. In this case the plaintiffs have not only commingled a cause of action against the corporation with one in its favor, but they have also commingled separate and distinct causes of action which are in their favor and against the corporation in one statement. Each assessment, as we have pointed out, is a completed transaction, and, if wrongful, constitutes a separate and distinct cause of action. It is not a case where distinct injuries may arise out of a single wrong and where damages for all of the injuries may be recovered in one action and may be stated as a single cause of action. In case of stock assessments the corporation may have separate and distinct defenses as to each assessment, and where the corporation interposed proper and timely objection, as in this case, it is entitled to have each assessment which is claimed was wrongfully or unlawfully levied stated as a separate cause of action to the end that the corporation may interpose any defense, legal or otherwise, it may have to the several causes of action. Upon the other hand, the alleged wrongful acts and practices of Vahrenkamp and the officers and directors affecting the property and property rights of the corporation constitute a cause of action in favor of the corporation. Any wrongful or unlawful interference with the property of the corporation, or with its property rights, constitutes a wrong against the corporation and not against the stockholder. Niven v. Peoples, 23 N. D. 202, 136 N. W. 73; Tutwiler v. Tuskaloosa, etc., Co., supra; Bachus v. Brooks, 195 Fed. 452, 115 C. C. A. 354. See, also, 3 Cook, Corps. (7th Ed.) sec. 739.

Appeal from Salt Lake County, Third District

In Nevin v. Peoples, supra, in referring to the matter of an accounting, the court said:

"In an action for an accounting against Peoples and Severton and the return to the bank of any property they may have wrongfully taken from it during their administration the proper party plaintiff is the bank itself."

The doctrine just stated is elementary. It is suggested, however, that in this case the corporation wrongfully failed and neglected to sue, and hence it was not only the right of the plaintiffs, but, perhaps, it was their duty, to proceed. Let that be conceded, and yet it does not in the least affect the principle of pleading and procedure that is involved here. True, if the corporation failed and neglected to protect the corporate interests and property, a stockholder, or any number of them, may proceed to do what the corporation refused in that regard. The cause of action, however, is still one in favor of and not against the corporation. The mere fact that the corporation is made a defendant in the action does not constitute it an adverse party in the sense that the officers and directors are adverse parties. It is made a defendant as a matter of necessity and because it has neglected or refused to complain itself. Whatever judgment may be obtained in the action for an accounting against the officers and directors or others is for the benefit of the corporation. While the stockholder is interested in such an action and in the result, yet he is only indirectly interested, and the cause of action is not his, but belongs to the corporation, and he may sue only in the place of such corporation, for the reasons before stated.

No one would for a moment contend that, if the corporation in this case had commenced an action for an accounting against Vahrenkamp and the officers and directors, it could have enjoined itself from collecting the alleged unlawful assessment. The incongruity and impropriety of attempting such a thing would then have been apparent to all. The fact, however, that the corporation does not bring the action for itself in its own name does not give the plaintiffs, who are acting on behalf of the corporation, the right to join causes of action in one complaint that the corporation could not

Blake et al. v. Boston Development Co. et al., 50 Utah 347

have joined, and of course, they, under no circumstances, have the right to commingle several causes of action in one statement. The attempt, therefore, to join a cause of action to enjoin the corporation from collecting certain assessments, which we have seen is a cause of action against the corporation, with one for an accounting against the officers and directors of the corporation, which is a cause of action in its favor, cannot be sustained.

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We desire to add that it is not possible to lay down any hard and fast rule regarding what may and what may not be incorporated in one complaint or in a single statement in stockholders' actions, or in any action, for an accounting, where it is alleged that the corporation officers have been derelict and have mismanaged the corporation's affairs and have wrongfully appropriated the corporation's property. In an action for an accounting, wrongful acts, if charged against the same individuals, may, as a rule, be incorporated into one statement in the complaint, regardless of how numerous or how involved the alleged wrongs may be. Under such circumstances the wrong consists in appropriating the property or property rights of the corporation, and that wrong constitutes but one cause of action, regardless of the number of acts on the part of the wrongdoer. The numerous wrongful acts alleged against Vahrenkamp and the officers and directors in this case, therefore, constitute but one cause of action. That, however, is not true respecting the several assessments. As we have seen, each assessment constitutes a complete transaction and an independent wrong by the corporation and an action as against it.

While it is true, therefore, that the plaintiffs, in their complaint, have stated sufficient facts to constitute a cause of action against Vahrenkamp and the officers and directors for an accounting, yet it is also true that the plaintiffs have improperly joined that cause of action with several causes of action against the corporation to prevent the enforcement by it of alleged wrongful assessments against their stock, and have commingled the several causes of action respecting said assessments in a single statement in the complaint. That

Appeal from Salt Lake County, Third District

may not be done where proper and timely objection is made. It is not necessary to dwell upon the other alleged defects of the complaint.

For the reasons stated, the judgment is affirmed, with costs to respondents.

MCCARTY, CORFMAN, THURMAN, and GIDEON, JJ.,

concur.

MOYLE v. SALT LAKE CITY.

No. 2998. Decided September 10, 1917. (167 Pac. 660.) 1. WATERS AND WATER COURSES-CONTRACTS-CONSTRUCTION. A city, to obtain a supply of potable water which had already been appropriated, entered into a contract whereby the appropriators agreed to exchange the waters which they had appropriated for an equivalent quantity of water from a canal of which the city was the owner. The contract fixed the quantity of water which plaintiff, one of the appropriators, was entitled to receive from the city's canal, and obligated the city to maintain the canal in repair. The limits of the city were extended, and the land on which plaintiff formerly used the water for irrigation purposes became urban property, and she asserted the right to divert the water at another point on the canal and apply it to other lands. The diversion would in no way injure the city, but merely relieve it of the burden of transporting the water some distance. Held that, as the right of an appropriator of water to change the place of diversion is well recognized, plaintiff was, in view of the fact that waste of water is prohibited in arid countries, entitled to demand that the city allow her to take the water from a new location, where she could use it, notwithstanding she had, for many years after the contract was entered into, received the water at a different location. (Page 361.)

2. WATERS AND WATER COURSES-APPROPRIATORS-CHANGE OF POINT OF DIVERSION. An appropriator of water, who was entitled to a given amount, may, for the purpose of increasing the benefit from his use, change the point of diversion.1 (Page 361.)

Appeal from District Court, Third District; Hon. C. W. Morse, Judge.

Action by Alice E. Moyle against Salt Lake City.

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Hague v. Nephi Irrigation Co., 16 Utah, 421, 52 Pac. 765, 41 L. R. A. 311, 67 Am. St. Rep. 634.

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