Cohen v. Beneficial Industrial Loan Corp.

337 U.S. 541 (1949)

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Nature of the Case

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Facts

Cohen (P) was required under state statute to post security bond for expenses in a shareholder derivative action suit. The district court denied D's motion for the bond. P's initial complaint alleged that since 1929, the individual defendants engaged in a continuing and successful conspiracy to enrich themselves at the expense of the corporation. The assets that were alleged to be wasted or diverted were in excess of $100,000,000. A demand was made to the corporation but it was prevented from addressing the issue as Ds controlled the company board. P sued in 1943 and 1945 New Jersey enacted the statute that required the posting of a security bond for expenses in a shareholder derivative action suit. The court of appeals reversed, and the Supreme Court granted certiorari.