Case Name: BANGOR PUNTA OPERATIONS, INC., et al. v. BANGOR & AROOSTOOK RAILROAD CO. et al.
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1974-06-19
Citations: 417 U.S. 703
Docket Number: No. 73-718
Parties: BANGOR PUNTA OPERATIONS, INC., et al. v. BANGOR & AROOSTOOK RAILROAD CO. et al.
Judges: Powell, J., delivered the opinion of the Court, in which Burger, C. J., and Stewart, BlackmuN, and RehNQUist, JJ., joined. Marshall, J., filed a dissenting opinion, in which Douglas, Bren-NAN, and White, JJ., joined, post, p. 719.
Reporter: United States Reports
Volume: 417
Pages: 703–732

Head Matter:
BANGOR PUNTA OPERATIONS, INC., et al. v. BANGOR & AROOSTOOK RAILROAD CO. et al.
No. 73-718.
Argued April 15, 1974
Decided June 19, 1974
Powell, J., delivered the opinion of the Court, in which Burger, C. J., and Stewart, BlackmuN, and RehNQUist, JJ., joined. Marshall, J., filed a dissenting opinion, in which Douglas, Bren-NAN, and White, JJ., joined, post, p. 719.
James V. Ryan argued the cause for petitioners. With him on the briefs was Roger L. Waldman.
Alan L. Lejkowitz argued the cause for respondents. With him on the brief was Edward T. Robinson.
Fritz R. Kahn, Betty Jo Christian, and Charles H. White, Jr., filed a brief for the Interstate Commerce Commission as amicus curiae.

Opinion:
Mr. Justice Powell
delivered the opinion of the Court.
This case involves an action by a Maine railroad corporation seeking damages from its former owners for violations of federal antitrust and securities laws, applicable state statutes, and common-law principles. The complaint alleged that the former owners had engaged in various acts of corporate waste and mismanagement during the period of their control. The shareholder presently in control of the railroad acquired more than 99 % of the railroad's shares from the former owners long after the alleged wrongs occurred. We must decide whether equitable principles applicable under federal and state law preclude recovery by the railroad in these circumstances.
I
Respondent Bangor & Aroostook Railroad Co. (BAR), a Maine corporation, operates a railroad in the northern part of the State of Maine. Respondent Bangor Investment Co., also a Maine corporation, is a wholly owned subsidiary of BAR. Petitioner Bangor Punta Corp. (Bangor Punta), a Delaware corporation, is a diversified investment company with business operations in several areas. Petitioner Bangor Punta Operations, Inc. (BPO), a New York corporation, is a wholly owned subsidiary of Bangor Punta.
On October 13, 1964, Bangor Punta, through its subsidiary BPO, acquired 98.3% of the outstanding stock of BAR. This was accomplished by the subsidiary's pur chase of all the assets of Bangor & Aroostook Corp. (B&A), a Maine corporation established in 1960 as the holding company of BAR. From 1964 to 1969, Bangor Punta controlled and directed BAR through its ownership of about 98.3% of the outstanding stock. On October 2, 1969, Bangor Punta, again through its subsidiary, sold all of its stock for $5,000,000 to Amoskeag Co., a Delaware investment corporation. Amoskeag assumed responsibility for the management of BAR and later acquired additional shares to give it ownership of more than 99% of all the outstanding stock.
In 1971, BAR and its subsidiary filed the present action against Bangor Punta and its subsidiary in the United States District Court for the District of Maine. The complaint specified 13 counts of alleged mismanagement, misappropriation, and waste of BAR's corporate assets occurring during the-period from 1960 through 1967 when B&A and then Bangor Punta controlled BAR. Damages were sought in the amount of $7,000,000 for violations of both federal and state laws. The federal statutes and regulations alleged to have been violated included § 10 of the Clayton Act, 15 U. S. C. § 20; § 10 (b) of the Securities Exchange Act of 1934, 15 U. S. C. § 78j (b); and Rule 10b-5, 17 CFR § 240.10b-5, as promulgated thereunder by the Securities and Exchange Commission. The state claims were grounded on § 104 of the Maine Public Utilities Act, Maine Rev. Stat. Ann., Tit. 35, § 104 (1965), and the common law of Maine.
The complaint focused on four intercompany transactions which allegedly resulted in injury to BAR. Counts I and II averred that B&A, and later Bangor Punta, overcharged BAR for various legal, accounting, printing, and other services. Counts III, IV, V, and VI averred that B&A improperly acquired the stock of the St. Croix Paper Co. which BAR owned through its subsidiary. Counts VII, VIII, IX, and X charged that B&A and Bangor Punta improperly caused BAR to declare special dividends to its stockholders, including B&A and Bangor Punta, and also caused BAR's subsidiary to borrow in order to pay regular dividends. Counts XI, XII, and XIII charged that B&A improperly caused BAR to excuse payment by B&A and Bangor Punta of the interest due on a loan made by BAR to B&A. In sum, the complaint alleged that during the period of their control of BAR, Bangor Punta, and its predecessor in interest B&A, "exploited it solely for their own purposes" and "calculatedly drained the resources of BAR in violation of law for their own benefit."
The District Court granted petitioners' motion for summary judgment and dismissed the action. 353 P. Supp. 724 (1972). The court first observed that although the suit purported to be a primary action brought in the name of the corporation, the real party in interest and hence the actual beneficiary of any recovery, was Amoskeag, the present owner of more than 99% of the outstanding stock of BAR. The court then noted that Amoskeag had acquired all of its BAR stock long after the alleged wrongs occurred and that Amoskeag did not contend that it had not received full value for its purchase price, or that the purchase transaction was tainted by fraud or deceit. Thus, any recovery on Amos-keag's part would constitute a windfall because it had sustained no injury. With this in mind, the court then addressed the claims based on federal law and determined that Amoskeag would have been barred from maintaining a shareholder derivative action because of its failure to satisfy the "contemporaneous ownership" requirement of Fed. Rule Civ. Proc. 23.1 (l). Finding that equitable principles prevented the use of the corporate fiction to evade the proscription of Rule 23.1, the court concluded that Amoskeag's efforts to recover under the Securities Exchange Act and the Clayton Act must fail. Turning to the claims based on state law, the court recognized that the applicability of Rule 23.1 (1) has been questioned where federal jurisdiction is based on diversity of citizenship. The court found it unnecessary to resolve this issue, however, since its examination of state law indicated that Maine probably followed the "prevailing rule" requiring contemporaneous ownership in order to maintain a shareholder derivative action. Thus, whether the federal rule or state substantive law applied, the present action could not be maintained.
The United States Court of Appeals for the First Circuit reversed. 482 F. 2d 865 (1973). The court stated that its disagreement with the District Court centered primarily on that court's assumption that Amoskeag would be the "sole beneficiary" of any recovery by BAR. The Court of Appeals thought that in view of the railroad's status as a "public" or "quasi-public" corporation and the important nature of the services it provides, any recovery by BAR would also inure to the benefit of the public. The court stated that this factor sufficed to support a corporate cause of action and rendered any windfall to Amoskeag irrelevant. In addition, the court noted that to permit BAR to recover for the alleged wrongs would provide a needed deterrent to "patently undesirable conduct" in the management of railroads. Id., at 871. Finally, the court confronted the possibility that any corporate recovery might be diverted to enrich the present BAR shareholders, mainly Amoskeag, rather than re-invested to improve the railroad's services for the benefit of the public. Although troubled by this prospect, the court concluded that the public interest would nonetheless be better served by insuring that petitioners would not be immune to civil liability for their allegedly wrongful conduct. Without deciding the issue, the court also suggested the possibility of devising "court-imposed limitations" on the use BAR might make of any recovery to insure that the public would actually be benefited.
We granted petitioners' application for certiorari. 414 U. S. 1127 (1974). We now reverse.
II
A
We first turn to the question whether respondent corporations may maintain the present action under § 10 of the Clayton Act, 15 U. S. C. § 20, and § 10 (b) of the Securities Exchange Act of 1934, 15 U. S. C. § 78j (b), and Rule 10b-5, 17 CFR § 240.10b-5. The resolution of this issue depends upon the applicability of the settled principle of equity that a shareholder may not complain of acts of corporate mismanagement if he acquired his shares from those who participated or acquiesced in the allegedly wrongful transactions. See, e. g., Bloodworth v. Bloodworth, 225 Ga. 379, 387, 169 S. E. 2d 150, 156-157 (1969); Bookman v. R. J. Reynolds Tobacco Co., 138 N. J. Eq. 312, 372, 48 A. 2d 646, 680 (Ch. 1946); Babcock v. Farwell, 245 Ill. 14, 40-41, 91 N. E. 683, 692-693 (1910). This principle has been invoked with special force where a shareholder purchases all or substantially all the shares of a corporation from a vendor at a fair price, and then seeks to have the corporation recover against that vendor for prior corporate mismanagement. See, e. g., Matthews v. Headley Chocolate Co., 130 Md. 523, 532-535, 100 A. 645, 650-651 (1917); Home Fire Insurance Co. v. Barber, 67 Neb. 644, 661-662, 93 N. W. 1024, 1030-1031 (1903). See also Amen v. Black, 234 F. 2d 12, 23 (CA10 1956). The equitable considerations precluding recovery in such cases were explicated long ago by Dean (then Commissioner) Roscoe Pound in Home Fire Insurance Co. v. Barber, supra. Dean Pound, writing for the Supreme Court of Nebraska, observed that the shareholders of the plaintiff corporation in that case had sustained no injury since they had acquired their shares from the alleged wrongdoers after the disputed transactions occurred and had received full value for their purchase price. Thus, any recovery on their part would constitute a windfall, for it would enable them to obtain funds to which they had no just title or claim. Moreover, it would in effect allow the shareholders to recoup a large part of the price they agreed to pay for their shares, notwithstanding the fact that they received all they had bargained for. Finally, it would permit the shareholders to reap a profit from wrongs done to others, thus encouraging further such speculation. Dean Pound stated that these consequences rendered any recovery highly inequitable and mandated dismissal of the suit.
The considerations supporting the Home Fire principle are especially pertinent in the present case. As the District Court pointed out, Amoskeag, the present owner of more than 99% of the BAR shares, would be the principal beneficiary of any recovery obtained by BAR. Amos-keag, however, acquired 98.3% of the outstanding shares of BAR from petitioner Bangor Punta in 1969, well after the alleged wrongs were said to have occurred. Amos-keag does not contend that the purchase transaction was tainted by fraud or deceit, or that it received less than full value for its money. Indeed, it does not assert that it has sustained any injury at all. Nor does it appear that the alleged acts of prior mismanagement have had any continuing effect on the corporations involved or the value of their shares. ' Nevertheless, by causing the pres ent action to be brought in the name of respondent corporations, Amoskeag seeks to recover indirectly an amount equal to the $5,000,000 it paid for its stock, plus an additional $2,000,000. All this would be in the form of damages for wrongs petitioner Bangor Punta is said to have inflicted, not upon Amoskeag, but upon respondent corporations during the period in which Bangor Punta owned 98.3% of the BAR shares. In other words, Amos-keag seeks to recover for wrongs Bangor Punta did to itself as owner of the railroad. At the same time it reaps this windfall, Amoskeag desires to retain all its BAR stock. Under Home Fire, it is evident that Amoskeag would have no standing in equity to maintain the present action.
We are met with the argument, however, that since the present action is brought in the name of respondent corporations, we may not look behind the corporate entity to the true substance of the claims and the actual beneficiaries. The established law is to the contrary. Although a corporation and its shareholders are deemed separate entities for most purposes, the corporate form may be disregarded in the interests of justice where it is used to defeat an overriding public policy. New Colonial Ice Co. v. Helvering, 292 U. S. 435, 442 (1934); Chicago, M. & St. P. R. Co. v. Minneapolis Civic Assn., 247 U. S. 490, 501 (1918). In such cases, courts of equity, piercing all fictions and disguises, will deal with the substance of the action and not blindly adhere to the corporate form. Thus, where equity would preclude the shareholders from maintaining an action in their own right, the corporation would also be precluded. Amen v. Black, supra; Capitol Wine & Spirit Corp. v. Pokrass, 277 App. Div. 184, 98 N. Y. S. 2d 291 (1950), aff'd, 302 N. Y. 734, 98 N. E. 2d 704 (1951); Matthews v. Headley Chocolate Co., supra; Home Fire Insurance Co. v. Barber, supra. It follows that Amoskeag, the principal beneficiary of any recovery and itself estopped from complaining of petitioners' alleged wrongs, cannot avoid the command of equity through the guise of proceeding in the name of respondent corporations which it owns and controls.
B
Respondents fare no better in their efforts to maintain the present actions under state law, specifically § 104 of the Maine Public Utilities Act, Maine Rev. Stat. Ann., Tit. 35, § 104 (1965), and the common law of Maine. In Forbes v. Wells Beach Casino, Inc., 307 A. 2d 210, 223 n. 10 (1973), the Maine Supreme Judicial Court recently declared that it had long accepted the equitable principle that a "stockholder has no standing if either he or his vendor participated or acquiesced in the wrong See Hyams v. Old Dominion Co., 113 Me. 294, 302, 93 A. 747, 750 (1915). Thus, Amoskeag would be barred from maintaining the present action under Maine law since it acquired its shares from petitioners, the alleged wrongdoers. Moreover, the principle that the corporate entity may be disregarded if equity so demands is accepted by Maine precedents. See, e. g., Bonnar-Vawter, Inc. v. Johnson, 157 Me. 380, 387-388, 173 A. 2d 141, 145 (1961).
Ill
In reaching the contrary conclusion, the Court of Appeals stated that it could not accept the proposition that Amoskeag would be the "sole beneficiary" of any recovery by BAR. 482 F. 2d, at 868. The court noted that in view of the railroad's status as a "quasi-public" corporation and the essential nature of the services it provides, the public had an identifiable interest in BAR's financial health. Thus, any recovery by BAR would accrue to the benefit of the public through the improvement in BAR's economic position and the quality of its services. The court thought that this factor rendered any windfall to Amoskeag irrelevant.
At the outset, we note that the Court of Appeals' assumption that any recovery would necessarily benefit the public is unwarranted. As that court explicitly recognized, any recovery by BAR could be diverted to its shareholders, namely Amoskeag, rather than re-invested in the railroad for the benefit of the public. Id., at 871. Nor do we believe this possibility can be avoided by respondents' suggestion that the District Court impose limitations on the use BAR might make of the recovery. There is no support for such a result under either federal or state law. BAR would be entitled to distribute the recovery in any lawful manner it may choose, even if such distribution resulted only in private enrichment. In sum, there is no assurance that the public would receive any benefit at all from these funds.
The Court of Appeals' position also appears to overlook the fact that Amoskeag, the actual beneficiary of any recovery through its ownership of more than 99% of the BAR shares, would be unjustly enriched since it has sustained no injury. It acquired substantially all the BAR shares from Bangor Punta subsequent to the alleged wrongs and does not deny that it received full value for its purchase price. No fraud or deceit of any kind is alleged to have been involved in the transaction. The equitable principles of Home Fire preclude Amoskeag from reaping a windfall by enhancing the value of its bargain to the extent of the entire purchase price plus an additional $2,000,000. Amoskeag would in effect have acquired a railroad worth $12,000,000 for only $5,000,000. Neither the federal antitrust or securities laws nor the applicable state laws contemplate recovery by Amoskeag in these circumstances.
The Court of Appeals further stated that it was important to insure that petitioners would not be immune from liability for their wrongful conduct and noted that BAR's recovery would provide a needed deterrent to mismanagement of railroads. Our difficulty with this argument is that it proves too much. If deterrence were the only objective, then in logic any plaintiff willing to file a complaint would suffice. No injury or violation of a legal duty to the particular plaintiff would have to be alleged. The only prerequisite would be that the plaintiff agree to accept the recovery, lest the supposed wrongdoer be allowed to escape a reckoning. Suffice it to say that we have been referred to no authority which would support so novel a result, and we decline to adopt it.
We therefore conclude that respondent corporations may not maintain the present action. The judgment of the Court of Appeals is reversed.
So ordered.
Several of the alleged acts of corporate mismanagement occurred between 1960 and 1964 when B&A, BAR's holding company, was in control of the railroad. Liability for these acts was nevertheless sought to be imposed on Bangor Punta, even though it had no interest in either BAR or B&A during this period. The apparent basis for liability was the 1964 purchase agreement between B&A and Bangor Punta. The complaint in the instant case alleged that under the agreement Bangor Punta, through its subsidiary, assumed "all . . . debts, obligations, contracts and liabilities" of B&A.
Bangor Punta was alleged to have effected these transactions through its wholly owned subsidiary BPO. For purposes of clarity, we shall attribute BPO's actions directly to Bangor Punta.
Rule 23.1(1), which specifies the requirements applicable to shareholder derivative actions, states that the complaint shall aver that "the plaintiff was a shareholder or member at the time of the transaction of which he complains .'' This provision is known as the "contemporaneous ownership" requirement. See 3B J. Moore, Federal Practice ¶ 23.1 et seq. (2d ed. 1974).
The "contemporaneous ownership" requirement in shareholder derivative actions was first announced in Hawes v. Oakland, 104 U. S. 450 (1882), and soon thereafter adopted as Equity Rule 97. This provision was later incorporated in Equity Rule 27 and finally in the present Rule 23.1. After the decision in Erie R. Co. v. Tompkins, 304 U. S. 64 (1938), the question arose whether the contemporaneous-ownership requirement was one of procedure or substantive law. If the requirement were substantive, then under the regime of Erie it could not be validly applied in federal diversity cases where state law permitted a noncontemporaneous shareholder to maintain a derivative action. See 3B J. Moore, Federal Practice ¶ 23.1.01-23.1.15 [2] (2d ed. 1974). Although most cases treat the requirement as one of procedure, this Court has never resolved the issue. Ibid.
This principle obtains in the great majority of jurisdictions. See, e. g., Russell v. Louis Melind, Co., 331 Ill. App. 182, 72 N. E. 2d 869 (1947); Klum v. Clinton Trust Co., 183 Misc. 340, 48 N. Y. S. 2d . 267 (1944); Clark v. American Coal Co., 86 Iowa 436, 53 N. W. 291 (1892); Boldenweck v. Bullis, 40 Colo. 253, 90 P. 634 (1907). See 13 W. Fletcher, Cyclopedia Corporations §5866 (1970 ed.); H. Bal-lantine, Corporations § 148 (1946 ed.).
In Home Fire, Dean Ponnd suggested that equitable principles might not prevent recovery where the effects of the wrongful acts continued and resulted in injury to present shareholders. 67 Neb. 644, 662, 93 N. W. 1024, 1031. In their complaint in the instant case, respondents alleged that "[t]he injury to BAR is a continuing one surviving the aforesaid sale [from petitioner BPO] to Amoskeag." The District Court noted that respondents alleged no facts to support this contention and therefore found any such exception inapplicable. 353 F. Supp. 724, 727 n. 1 (1972). Respondents apparently did not renew this contention on appeal.
Similarly, as to the period before October 1964, Amoskeag seeks to recover for wrongs B&A and its shareholders did to themselves as owners of the railroad.
Conceding the lack of equity in any recovery by Amoskeag, the dissent argues that the present action can nevertheless be maintained because there are 20 minority shareholders, holding less than 1% of the BAR stock, who owned their shares "during the period from 1960 through 1967 when the transactions underlying the railroad's complaint took place, and who still owned that stock in 1971 when the complaint was filed." Post, at 722. The dissent would conclude that the existence of these innocent minority shareholders entitles BAR, and hence Amoskeag, to recover the entire $7,000,000 amount of alleged damages.
Aside from the illogic of such an approach, the dissent's position is at war with the precedents, for the Home Fire principle has long been applied to preclude full recovery by a corporation even where there are innocent minority shareholders who acquired their shares prior to the alleged wrongs. See cases cited at n. 5,. supra, and accompanying text. The dissent also mistakes the factual posture of this case, since the respondent corporations did not institute this action for the benefit of the minority shareholders. See discussion at n. 15, infra.
In addition, the new Maine Business Corporation Act adopts the contemporaneous-ownership requirement for shareholder derivative actions. See Maine Rev. Stat. Ann., Tit. 13-A, §627.1.A (1974). This provision apparently became effective two days after the present action was filed. As the District Court noted, it is an open question whether Maine in fact had a contemporaneous-ownership requirement prior to that time. 353 F. Supp., at 727. See R. Field, V. McKusick & L. Wroth, Maine Civil Practice § 23.2, p. 393 (2d ed. 1970). In the absence of any indication that Maine would not have followed the "prevailing view," the District Court determined that the contemporaneous-ownership requirement of Fed. Rule Civ. Proc. 23.1 applied.
The Court of Appeals noted that its decision "is not conditioned on the devising of court-imposed limitations on the uses of any corporate recovery." 482 F. 2d 865, 871. Counsel for respondents also admitted at oral argument that BAR had no legal obligation to use its recovery to improve the railroad's services in order to benefit the public. Tr. of Oral Arg. 17.
The unjust enrichment of Amoskeag is inevitable. As the owner of more than 99% of the BAR shares, Amoskeag would obviously benefit from any increase in the value of its investment. Here, the increased value would be of dramatic proportions, with an influx of $7,000,000 into a railroad purchased for only $5,000,000. The dis sent's suggestion that this substantial infusion of capital, if devoted to "plant and equipment," would not enhance "earning capacity" or "balance sheet strength" (post, at 725) will come as a surprise to regulatory bodies, railroad management, and investors.
Respondents have also conceded, both in their brief and at oral argument, that the present action could not be maintained if Amoskeag were the real party in interest, or alternatively, if only an unregulated private corporation were involved. Brief for Respondents 28-29; Tr. of Oral Arg. 19-20.
The dissent's suggestion (post, at 723-724) that Amoskeag, a highly sophisticated investor, was defrauded in the-purchase transaction and that it has suffered an injury is without support in the record. Not even Amoskeag has ever so asserted, in either the complaint or the briefs, or at oral argument. And in granting the motion for summary judgment, the District Court expressly observed that Amoskeag did not contend that it was defrauded in the purchase transaction. 353 F. Supp., at 726. This statement has since stood uncontroverted by Amoskeag. In short, prior to the dissent today, it has never been alleged or suggested that Amoskeag did not acquire exactly what it bargained for in this transaction.
The dissent makes much of the supposed public interest in railroads and the power of a court of equity to ensure that the public will actually be benefited by any recovery. Post, at 724-725, 727-730. This argument misses the point. To begin with, the present action is, in substance, a typical derivative suit seeking an accounting from the previous controlling shareholder for various acts of corporate waste and mismanagement. It is settled law that the fiduciary duty owed by a controlling shareholder extends primarily to those who have a tangible interest in the corporation. Similarly, the recovery provided is intended to compensate, not the public generally, but those who have been injured as a result of a breach of a duty owed to them. In the present case, however, the actual beneficiary of any recovery, Amoskeag, has suffered neither an injury nor a breach of any legal duty. In short, Amoskeag has no cause of action.
The dissent argues that respondents' complaint is based on federal antitrust and securities statutes and that such laws are designed in part to benefit the public. With that much we agree. But the statutory design has not been effectuated through the indiscriminate provision of causes of action to every citizen. Rather, these statutes create specifically defined legal duties to particular plaintiffs and vest the appropriate causes of action in them alone. Here, the statutorily designated plaintiffs are respondent corporations. But, as we have stated, these plaintiffs cannot maintain the present action because a recovery by Amoskeag would -violate established principles of equity.
As Dean Pound stated in reply to a similar argument in Home Fire:
"But it is said the defendant Barber, by reason of his delinquencies, is in no position to ask that the court look behind the corporation to the real and substantial parties in interest. . . . We do not think such a proposition can be maintained. It is not the function of courts of equity to administer punishment. When one person has wronged another in a matter within its jurisdiction, equity will spare no effort to redress the person injured, and will not suffer the wrongdoer to escape restitution to such person through any device or technicality. But this is because of its desire to right wrongs, not because of a desire to punish all wrong-doers. If a wrong-doer deserves to be punished, it does not follow that others are to be enriched at his expense by a court of equity. A plaintiff must recover on the strength of his own case, not on the weakness of the defendant's case. It is his right, not the defendant's wrong-doing, that is the basis of recovery. When it is disclosed that he has no standing in equity, the degree of wrong-doing of the defendant will not avail him." 67 Neb, at 673, 93 N. W, at 1035.
Our decision rests on the conclusion that equitable principles preclude recovery by Amoskeag, the present owner of more than 99% of the BAR shares. The record does not reveal whether the minority shareholders who hold the remaining fraction of 1% of the BAR shares stand in the same position as Amoskeag. Some courts have adopted the concept of a pro-rata recovery where there are innocent minority shareholders. Under this procedure, damages are distributed to the minority shareholders individually on a proportional basis, even though the action is brought in the name of the corporation to enforce primary rights. See, e. g., Matthews v. Headley Chocolate Co., 130 Md. 523, 536-540, 100 A. 645, 650-652 (1917). In the present case, respondents have expressly disavowed any intent to obtain a pro-rata recovery on behalf of the 1% minority shareholders of BAR. We therefore do not reach the question whether such recovery would be appropriate.
The dissent asserts that the alleged acts of corporate mismanagement have placed BAR "close to the brink of bankruptcy" and that the present action is maintained for the benefit of BAR'S creditors. Post, at 726. With all respect, it appears that the dissent has sought to redraft respondents' complaint. As the District Court noted, respondents have not brought this action on behalf of any creditors. 353 F. Supp, at 726. Indeed, they have never so contended. Moreover, respondents have conceded that the financial health of the railroad is excellent. Tr. of Oral Arg. 18.