Corporations – Stockholders – Availability of Federal Remedy as Basis for Denial of Attorney Fees in Derivative Action
Defendants were directors of Merritt, Chapman and Scott Corporation and of Montgomery Ward & Co., Inc. simultaneously. Plaintiff, a stockholder in Merritt, instituted a derivative suit to compel the resignation of defendants from their positions with Ward on the ground that an interlocking directorate existed making Merritt subject to criminal and civil prosecution under federal law. Defendants resigned before judgment. Plaintiff, arguing that its suit was the cause of the resignations and that Merritt was thereby benefited, moved for an award of counsel fees to be assessed against Merritt. Held, application for counsel fee denied. Plaintiff could have achieved the results sought here by invoking the aid of the Federal Trade Commission without expense to the corporation. Schechtman v. Wolfson, (S.D. N.Y. 1956) 141 F. Supp. 453.