` 14 rmnnaul anroarna
Bum v. Wasrnmz Union Tan. Co. and others.
(Ovreuu Umm, B.‘D. New York. March 26, 1883.)
.1.. CORPORATIONB>-LEASE nr Bonn or D1n1¤o·rons—VsLm¤•r—MAJon1r! or
l Bonw or Lesson Dmmcrons on Lassen.
As the directors of a corporation are its agents, and represent stockholders,
who are often practically voiceless in behalf of their own interests, they are
· held to the exercise of the utmost good faith in the administration of their
trust; and where a statute authorizes a telegraph company to lease or sell its _
franchises and property to any other telegraph company, provided the lease or
transfer be approved by a three-fifths vote of its board of directors, and also by
the consent in writing, or by a vote at a general meeting, of three-fifths in in-
terest of the stockholders, a lease of the property and franchises of a tele-
graph company is voidable at the election of the lessor, if at the time the lease
was made a majority of the board of the directors of the lessor were directors
of the lessee also, and the lessee owned nearly two-fifths of the stock of the
~ lessor.
2. Sum-Svx·r BY Srocxnomnsm, wmuw Mnmrsnusnn. I A
An individual stockholder can maintain an action to set aside such a lease
only when it is made to appear to the court that he has exhausted all the
. means to obtain, within the corporation itself, the redress of his grievances, or
action in conformity with his wishes, and that he has made proper effort to
induce action on the part of the other stockholders.
In Equity. t I
, Charles M. Da Costa and Luke .4. Lockwood, for complainant.
, Dillon it Swayne, for defendants.
Wlnnson, J .. The complainant, a stockholder of the Gold & Stock
Telegraph Company, has filed a bill to set aside a lease of the prop-
erty and franchises of that company to the Western Union Telegraph
Company for the term of 99 years, and now moves for an injunction ..
pendants lite to restrain the lessee from disposing of the property ac-
quired under the lease. The lessor and lessee are both corporations
of this state, and by the act of May 2, 1870, authority is conferred
upon any telegraph company organized under the laws of this state
_to lease or sell its franchises and property to any other telegraph
company organized under the laws of the state, provided the lease or
transfer be approved by a three-fifths vote of its, board of directors,
and alsoby the consent in writing, or by a vote at a general meeting,
of threeyiifths in interest of the stockholders. The theory of the com-
plainants bill is that the lease was ultra vires, because the necessary
consent of the directors and stockholders has not been given, and
‘ also that it was made for an inadequate consideration, and in breach
of trust by the directors, and in the interest of the lessee. Both the-
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