SALAMI NAZEM HAIDER, Informant/Appellee, v. NADIA NAZEM, HER HONOUR GLORIA M. SCOTT, Judge Monthly and Probate Court for Montserrado County, MAJOR EDWARD V. RICKS, and the Sheriff, Probate Court, Montserrado County, Respondents/Appellants.

INFORMATION PROCEEDINGS FROM THE MONTHLY AND PROBATE COURT, MONTSERRADO COUNTY.

Heard: December 8, 1993. Decided: February 18, 1994.

1. The assets of a corporation are the property of the corporation and not the personal property of any of the shareholders or members of the board of directors.

2. A shareholder cannot sue as an individual to recover corporation assets, but must instead, if the corporation refuses to sue, bring a stockholder’s suit. If a stockholder or other person has funds accruing from the sale of corporate property, another stockholder cannot recover any part thereof without the consent of the corporation, since it belongs to the corporation and not the individual stockholders.

3. A corporation is a distinct legal entity which takes and holds title to its property, manages its business through its agents, enter into contracts and conveys its property.

Co-appellant/Informant Nadia Nazem Haider, a shareholder of Haider Fishing Company and petitioner below, filed a bill of information in the probate court against her brother for interfering with the property of the company which she claimed was part of the intestate estate of their late father. She requested the court to impound the vessel and close the coldroom, which were owned and operated by the company. Although no returns was filed to the bill of information, appellee, respondent in the probate court, filed a writ of prohibition before the Justice in Chambers requesting him to restrain the probate judge from impounding the vessel and closing the coldroom, and permit him to file an indemnity bond. The Chamber Justice did not grant the prohibition, but instructed the probate judge to release the vessel, open the coldroom, and permit appellee to file the indemnity bond, and thereafter proceed to determine the merits of the case.

The probate judge failed to adhere to the orders of the Chambers Justice because, instead of filing an indemnity bond, the appellee filed an auxiliary testamentary bond. Consequently, the appellee therein filed a bill of information for contempt against the probate judge before the Chambers Justice. The then Justice in Chambers ruled for the informant, and the respondents appealed.

The Supreme Court held that the action instituted by the corespondent was the wrong form of action since the assets of the corporation did not form part of the intestate estate of their father. The Court also held that ordinarily, a stockholder cannot sue as an individual to recover corporation assets, but must, if the corporation refuses, bring a stockholder suit. And if a stockholder or other person has funds accruing from the sale of corporate property, another stockholder cannot recover any part thereof since it belonged to the corporation and not the stockholders individually. The Court then ordered the probate court not to accept any bond from the parties, and to release the vessel and open the coldroom. The granting of the information was therefore affirmed.

Joseph P. H Findley appeared for informant/appellee. Roger K Martin appeared for respondents/appellants.

MR. JUSTICE SMALLWOOD delivered the opinion of the Court.

This is an appeal from the Chambers of Mr. Justice Boima K. Morris based on information for contempt filed before him by the informant/appellee against the judge of the Monthly and Probate Court of Montserrado County for refusing to release the fishing vessel, Kathy Lynn, after approving a bond in keeping with the instruction of the previous Chambers Justice.

The facts of the matter leading to the filing of the bill of information are that a Lebanese national, the late Nazem Wadih Haider, during his residency in Liberia, formed a fishing company known as Haider Fishing Company, Inc. in which his daughter, Nadia Nazem Haider, is the owner of 36 percent of shares. The late Haider also owned real estate in Liberia. In his latter years, he traveled to Lebanon where he executed a last will and testament in which he willed only his cash and 600 shares which he inherited from his father, a real estate company in Lebanon. No mention is made of any of his properties held in Liberia.

It is said that the son of the deceased, Salami Nazem Haider, appellee herein, began to make use of the proceeds from the fishing vessel, property of the corporation, to the exclusion of his sister, Nadia Nazem Haider, co-appellant herein.

The late Nazem Wadih Haider did not will any of his properties in the Republic of Liberia, nor is there a residuary clause in the will he executed in Lebanon. Therefore, his holding in Liberia became an intestate estate. It was for this reason that the co-appellant filed a bill of information before the judge of the Monthly and Probate Court of Montserrado County against appellee for interfering with the intestate estate of their late father, Nazem Wadih Haider. In her prayer, she requested the court to impound the vessel, Kathy Lynn, a trawler, asset of Haider Fishing Company, Inc., close down the coldroom, a storage operated by the fishing company and to order appropriate bank in which the company has account to submit a statement of such account. The judge impounded the fishing vessel and closed down the coldroom.

There is no returns to the bill of information in the file, but on the 19th day of July 1993, the appellee filed a petition for a writ of prohibition before the Justice then presiding in Chambers against the appellants, the clerk of the Monthly and Probate Court, the sheriff thereof and the Marshal of this court. The parties were cited for a conference and during the conference, the judge was asked as to whether she had required of the informant an indemnity bond before impounding the fishing vessel and closing down of the coldroom? She replied that she had later asked the appellee herein to file a bond which had not been done. The alternative writ of prohibition was not issued, but the judge was instructed to accept an indemnity bond from the appellee, release the fishing vessel, open the coldroom and to proceed to hear the matter on its merits. It is this instruction of the Chambers Justice that the judge had not carried out, which necessitated the filing of the bill of information before the present Chambers Justice even though she approved a bond tendered to her.

That bond, as revealed by the record, is an auxiliary testamentary bond. The counsellor who tendered that bond knows very well that it is not an indemnity bond for the release of the fishing vessel and the opening of the coldroom. The judge should have known what bond to receive for the release of the vessel and to open the coldroom.

The fishing vessel, trawlers, and the coldroom storage are all assets of the corporation, Haider Fishing Company, Inc. According to the articles of incorporation, the deceased, the late Nazem Wadih Haider, owns 49 percent of the shares, Nadia Nazem Haider owns 39 percent and Maryann Hutcheson owns 15 percent. The assets of a corporation are the property of the corporation and not the personal property of any of the share holders or members of the board of directors. It is only the proceeds from the shares held by shareholders that shall become personal property of the individual shareholders.

The decision of the probate judge to impound the fishing vessel and to close down the coldroom has paralyzed the business of the corporation.

Ordinarily a stockholder cannot sue as an individual to recover corporation assets, but instead must, if the corporation refuses to sue, bring a stockholder’s suit. If a stockholder or other person has in his hands money accruing from a sale of corporate property, another stockholder cannot recover any part of it in an action for money had and received, without the consent of the corporation, since it belongs to the corporation and not the stockholders individually.

As a distinct legal entity, a corporation takes and holds the title to its property, manages its business through its agents, enters into contracts and conveys its property. If it enters into a contract, the rights accruing therefrom belong to the corporation and not the stockholders individually. Even when all the stocks of a corporation are owned by one person, the right under a contract by the corporation are its rights and not the rights of the individual. 13 Fletcher Cyclopedia of Corporation (Permanent Ed.) § 5926, note 77, pages 286 – 287

In view of the foregoing, the original action, Interference with Intestate Estate in Liberia, is the wrong form of action to be brought against a corporation since the assets of the corporation do not form any part of decedent estate. Hence, the action brought before the Monthly and Probate Court for Montserrado County is ordered dismissed and the judge of the said court is ordered to immediately release the fishing vessel and open the coldroom. She is not to accept any bond from any of the parties to this action.

The shareholders of the corporation are not barred from instituting the correct form of action before a court of competent jurisdiction in order to protect their respective rights, if any.

The Clerk of this Court is instructed to send a mandate to the court below ordering the judge presiding therein to give effect to this opinion. Costs are disallowed. And it is so ordered.

Information granted; action dismissed.