Hawes v. Oakland - 104 U.S. 450 (1881)
U.S. Supreme Court
Hawes v. Oakland, 104 U.S. 450 (1881)
Hawes v. Oakland
104 U.S. 450
1. A shareholder in the Contra Costa Waterworks Company brought his bill in equity against the Cty of Oakland, the company, and its directors, alleging that the company was furnishing the city with water, free of charge, beyond what the law required it to do, and that the directors, contrary to his request, continued to do so, to the great injury of himself, the other shareholders, and the company. Held that in such a case there mast be shown 1, some action or threatened action of the directors or trustees which is beyond the authority conferred by the charter, or the law under which the company was organized, or 2, such a fraudulent transaction, completed or threatened, by them, either among themselves or with some other party or with shareholders, as will result in serious injury to the company or the other shareholders or 3, that the directors, or a majority of them, are acting for their own interests, in a manner destructive of the company, or of the rights of the other shareholders, or 4, that the majority of shareholders are oppressively and illegally pursuing, in the name of the company, a course in violation of the rights of the other shareholders, which can only be restrained by a court of equity; 5, it must also be made to appear that the complainant made an earnest effort to obtain redress at the hands of the directors and shareholders of the corporation, and that the ownership of the stock was vested in him at the time of the transactions of which he complains, or was thereafter transferred to him by operation of law.
2. It is the duty of the circuit court to dismiss the suit if the parties thereto have been improperly or collusively made or joined for the purpose of creating a case of which that court would have cognizance.
The facts are stated in the opinion of the Court.