O'HARE v. Marine Electric Co.

DRAPER, P. J.

After sustaining of demurrer to her complaint, plaintiff amended. Defendant corporation and all four individual defendants demurred to the amended complaint. The demurrers were sustained. Plaintiff was granted leave to amend, but formally declined to do so. Judgment of dismissal was entered, and plaintiff appeals.

The amended complaint alleges that: since 1949 plaintiff has owned 35 shares of defendant corporation, which is a minority interest; each individual defendant was and is “an officer and/or director and/or shareholder” of defendant corporation; “over a period of many years” they have “participated ... in the distribution of benefits from the assets” of the corporation “in the nature of dividends” (later alleged to be “in the substantial nature of divi

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dends”) to themselves. On information and belief, it is alleged the benefits “took the form of payment for services not performed, of retirement and purchase of shares by the company ... and ‘distribution ... in the nature of a partial liquidation ... on terms not made available to plaintiff. ’ ’ ’ The only moderately specific allegation of any such act, again on information and belief, is that in 1959 the corporation agreed to pay one defendant “substantially in excess of $50,000” for his shares. There is no allegation that the agreement is not permitted by law. It is alleged, on information and belief, that these actions “have damaged plaintiff in her individual capacity as a shareholder ... in the amount of $20,000.”

This pleading is vague and uncertain, and its attempted allegations of fraudulent concealment are defective. The trial court, however, disclaimed basing its order on these grounds. We therefore consider only whether the complaint states a cause of action in plaintiff.

If the action be derivative (i.e., an attempt to enforce a right of the corporation) it must fail for lack of the allegations required (Corp. Code, § 834, subd. (a)(2)). Plaintiff’s brief impliedly concedes that she must stand or fall upon the sufficiency of her pleading to allege a cause of action in her individual right, and this concession was made express at oral argument.

An action is derivative if based upon injury to the corporation or to the whole body of its stock, but individual if the complaining stockholder is directly and individually injured