Wathen v. Jackson Oil & Refining Co., 235 U.S. 635 (1915)

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Wathen v. Jackson Oil & Refining Company

No. 79

Submitted November 9, 1914
Decided January 11, 1915
235 U.S. 635

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE SOUTHERN DISTRICT OF MISSISSIPPI

Syllabus

The right to restrain the enforcement of a statute as an unconstitutional deprivation of its property is a right existing in the corporation itself, and a stockholder is not entitled to maintain such an action without clearly showing that he has exhausted the means within his reach to obtain action by the corporation in conformity to his wishes. Under Equity Rule No. 27 (formerly No. 94), in order to confer jurisdiction upon a federal court of a suit by a stockholder to enforce a remedy belonging to the corporation, the bill must allege not only that the suit is not a collusive one for the purpose of conferring jurisdiction, but that unsuccessful efforts have been made to induce the corporation to bring the suit or the reasons for not making such efforts.

A bare assertion, by a stockholder in a suit to enjoin the officers of a corporation from complying with a statute alleged to be unconstitutional, that the officers and directors do not wish to comply with it, but intend to for fear of incurring penalties, without stating any ground for dispensing with efforts to procure action by the corporation, is not sufficient under Equity Rule No. 27.

The facts, which involve the constitutionality of certain provisions of the ten-hour labor law of Mississippi and the right of a stockholder of a corporation to enjoin the corporation from complying with those provisions, are stated in the opinion.