Opinion ID: 2099674
Heading Depth: 1
Heading Rank: 12

Heading: analysis

Text: [7-9] Before discussing the appellants' specific arguments, it is helpful to review the basic principles underlying a corporate derivative action of this kind. As a general rule, a shareholder may not bring an action in his or her own name to recover for wrongs done to the corporation or its property. Such a cause of action is in the corporation and not the shareholders. The right of a shareholder to sue is derivative in nature and normally can be brought only in a representative capacity for the corporation. Meyerson v. Coopers & Lybrand, 233 Neb. 758, 448 N.W.2d 129 (1989). In legal effect, a stockholders' derivative suit is one by the corporation conducted by the stockholder as its representative. The stockholder is only a nominal plaintiff, the corporation being the real party in interest. Rettinger v. Pierpont, 145 Neb. 161, 15 N.W.2d 393 (1944). [10,11] However, there is a well-recognized exception to the general rule: If the shareholder properly establishes an individual cause of action because the harm to the corporation also damaged the shareholder in his or her individual capacity, rather than as a shareholder, such individual action may be maintained. Meyerson, supra . It is only where the injury to the plaintiff's stock is peculiar to him or her alone, such as in an action based on a contract to which the shareholder is a party, or on a fraud affecting him or her directly, and does not fall alike upon other shareholders, that the shareholder may recover as an individual. Id. [12-14] Although the burden is ordinarily upon the party seeking an accounting to produce evidence to sustain the accounting, when another person is in control of the books and has managed the business, that other person is in the position of a trustee and must make a proper accounting. Woodward, supra . While fraud cannot be presumed or inferred without proof in a court of equity any more than in a court of law, courts of equity are not restricted by the same rules as courts of law in the investigation of fraud and the proofs required to establish it. Bauermeister v. McReynolds, 254 Neb. 118, 575 N.W.2d 354 (1998) (supplemental opinion). The burden of proof is upon a party holding a confidential or fiduciary relation to establish the fairness, adequacy, and equity of a transaction with the party with whom he or she holds such relation. Woodward v. Andersen, 261 Neb. 980, 627 N.W.2d 742 (2001).