CORPORATIONS - DERIVATIVE SUITS - INSOLVENCY AS A BAR

Authors

Edmund O'Hare, University of Michigan Law SchoolFollow

Abstract

Plaintiff, stockholder in defendant bank, brought a derivative suit against the bank's directors to recover moneys allegedly wrongfully appropriated by them from the bank's assets. Before the commencement of the suit the bank had become insolvent and was in the process of liquidation. Held, the directors' motion to dismiss should be granted, since a stockholder may not maintain an action to hold an insolvent corporation's directors liable for fraud or mismanagement unless it appears that he will be benefited by the relief demanded, and full recovery here would still leave an excess of liabilities over assets. Falvey v. Foreman-State National Bank, (C. C. A. 7th, 1939) 101 F. (2d) 409.

Recommended Citation

Edmund O'Hare, CORPORATIONS - DERIVATIVE SUITS - INSOLVENCY AS A BAR, 38 Mich. L. Rev. 96 (1939).
Available at: https://repository.law.umich.edu/mlr/vol38/iss1/15