Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/132

 § 142.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. pressively and illegally pursuing a course in the name of the corporation which is in violation of the rights of the other share- holder, and which can only be restrained by the aid of a court of equity. 1 " Possibly other cases may arise in which, to prevent irre- mediable injury or a total failure of justice, the court would be justified in exercising its powers, but the foregoing may be re- garded as an outline of the principles which govern this class of cases. " But, in addition to the existence of the grievances which call for this kind of relief, it is equally important that before the shareholder is permitted in his own name to institute and conduct a litigation which usually belongs to the corporation, he should show to the satisfaction of the court that he has ex- hausted all the means within his reach to obtain within the corporation itself the redress of his grievances, or action in con- formity to his wishes. He must make an earnest, not a simu- lated, effort with the managing body of the corporation, to induce remedial action on their part, and this must be made apparent to the court. If time permits, or has permitted, he must show, if he fails with the directors, that he has made an honest effort to obtain action by the stockholders as a body, in the matter of which he complains. And he must show a case if this is not done, where it could not be done, or it was not reasonable to require it." 2 § 142. The cases hitherto cited are scarcely authority for the proposition that a shareholder, on the improper refusal of 1 That stockholders may sue under the conditions stated in these last two paragraphs was held in Barr v. New York, L. E. &. W. R. R. Co, 96 N. Y. 444 ; Slatterly v. St. Louis, etc., News Co., 91 Mo. 217. See Sheridan v. Sheridan Electric Light Co., 38 Hun (N. Y.) 396. 2 The doctrines of Hawes v. Oak - land were approved and reiterated in Detroit v. Dean, 100 U. S. 537^ See, also, Moore v. Silver Valley Mfg. Co., 104 N. C. 534; State v. Railway Co., 45 S. C. 470. Rule 94 of the Rules of Practice 112 for Courts of Equity of the United States expresses the Federal doc- trine. It is as follows: — "Every bill brought by one or more stockholders in a corporation against the corporation and other parties, founded on rights which may properly be asserted by the corpora- tion, must be verified by oath, and must contain an allegation that the plaintiff was a shareholder at the time of the transaction of which he complains, or that his share had de- volved on him since by operation of law; and that the suit is not a collu-