holding that beneficial owner of stock who was not a shareholder of record had standing to assert derivative claims on behalf of corporation
How later courts described this case
- holding that beneficial owner of stock who was not a shareholder of record had standing to assert derivative claims on behalf of corporation
- concurring opinion of Lindley, D. J.
- beneficial owner need not also be a record owner in order to maintain an action
- beneficial owner need not also be record owner in order to maintain an action
Written by the judges who cited it.
The opinion
LINDLEY, District Judge
(concurring).
I agree that the judgment should be reversed, but 1 would employ somewhat different reasoning. Rule 23(b) of the Federal Rules of Procedure is clearly of procedural character. Its function is to endow a shareholder with the right to maintain a suit such as this. But who constitutes a shareholder, it seems to me, is a question of substantive law, which under Erie R. Co. v. Tompkins, 304 U.S. 64 , 58 S.Ct. 817 , 82 L.Ed. 1188 , 114 A.L.R. 1487 , must be determined by the law of the state. In other words, the status of plaintiff who claims to be a stockholder is a question of Illinois law. Under that law, plaintiff’s status is that of a shareholder, as pointed out in Judge Major’s opinion. Hence it has a right to maintain the suit as provided in Rule 23(b).