Nature of the Case
To access this section all you need to do is click here and register.
Facts
Ps sued D derivatively for claimed misapplication of corporate funds and waste of its property by past directors and officers and other defendants. Section 61-b of the General Corporation Law was enacted in 1944. In a stockholder's derivative action, the plaintiffs - unless they represent at least 5% of the corporation's shares or an aggregate of its shares having a value in excess of $50,000 - must give security for the reasonable litigation expenses, including attorneys' fees, of all parties joined as defendants in the action. Ps own approximately 4/1000ths of 1% of the stock of the corporation - an interest which at the commencement of this action had a market value of about $350. D is entitled to apply for the security authorized by section 61-b. D applied and Special Term made an order which (1) fixed security in the sum of $40,000 and directed a bond therefor to be filed within sixty days; and (2) gave leave to Ps to move for a vacating of the order if within that time additional stockholders should join them in number sufficient to meet the requirements of section 61-b. Both Ps and D appealed to the Appellate Division where Ps challenged the constitutionality of section 61-b. D made an attack upon the provision respecting the joinder of additional stockholders as parties plaintiff in the action. D also appealed rom an order made by Special Term that had directed D to allow them to inspect and copy its stock book and stockholders' list. The Appellate Division (1) upheld section 61-b as a constitutional enactment; (2) modified the security order by deleting the provision respecting the joinder of additional stockholders of the corporation as parties plaintiff in the action and affirmed that order as so modified; and (3) reversed on the law the order permitting Ps to inspect the corporation's stock book and stockholders' list and denied the petition for such inspection. Ps appealed.
Support@ bsmsphd.com
Casebriefs Co