Plaintiff brought a derivative suit against the defendant, a Delaware corporation, in a United States district court in New Jersey. While the suit was in process, New Jersey passed a statute permitting a corporation in whose name a suit was brought to demand security for reasonable expenses including attorney fees. The plaintiff stockholder was to be liable for such expenses if the suit was unsuccessful. The statute was not to apply when the complainant's holding represented 5% of the par or stated value of the corporation's outstanding stock or had a value of $50,000. Since the act applied to suits in which no final judgment had been rendered, the defendant moved 'to require security. The district court ruled the statute not applicable to an action in the federal courts. After the circuit court reversed, the Supreme Court granted certiorari. Held, affirmed. Assuming that expenses can be secured only from the time the statute becomes effective, the statute is not unconstitutionally retroactive nor a denial of due process or equal protection of the laws. Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221 (1949).
Joseph Gricar S.Ed.,
CONSTITUTIONAL LAW–DUE PROCESS–EQUAL PROTECTION OF THE LAWS–ANTI-"STRIKE SUIT'' LEGISLATION HELD CONSTITUTIONAL,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol48/iss5/13