Document: 354 U.S. 114 77 S.Ct. 1116 1 L.Ed.2d 1221 Ralph D. SWANSON, Marie A. Swanson and Janet C. Sheaff, Petitioners,v.Glenn W. TRAER et al. No. 149. Argued March 27, 1957. Decided June 10, Mr. James E. Doyle, Madison, Wis., for the petitioners. S. Baker, Chicago, Ill., Marland Gale, New York City, respondents. Justice DOUGLAS delivered opinion of Court. This case, a companion case to Smith v. Sperling, 91, 1112, presents another aspect problem realignment parties in stockholders' derivative suit that is brought Federal District Court on basis diversity citizenship. Plaintiff-stockholders are citizens Nevada stockholders Chicago North Shore & Milwaukee Ry. Co., an Illinois corporation. It was made defendant along with individuals, who Illinois, Delaware corporation, Indiana The complaint charged conspiracy defraud Railway Co. alleged fraud consisted series sales transit properties which it some directors were personally interested. averred demand bring suit, refusal their part, futility making any stockholders. 2 Answers filed motions dismiss. dismissed bill ground no showing had been management act redress wrong not decision entrusted good-faith judgment directors. In other words, concluded controversy did fall within exceptional group cases where stockholder may dispute take reins corporate litigation his own hands. 3 On appeal, Appeals reach question. Though appeared from record opposed bringing there such hostility plaintiffs as make 'antagonistic' meaning cases. accordingly realigned corporation party plaintiff. Since then each side litigation, requisite present orders dismissing affirmed. 7 Cir., 230 F.2d 228. here writ certiorari. 352 865, 74. 4 For reasons stated supra, we think this instance management—for good or bad—is definitely distinctly institution litigation. is, therefore, antagonistic conception has used follows properly defendant. 5 There remains consideration question ruled by reach, viz. whether character bring. 6 As since our Erie R. Tompkins, 304 64, 58 817, 82 L.Ed. 1188, these suits sue behalf governed local law. See Cohen Beneficial Industrial Loan Corp., 337 541, 555—556, 69 1221, 1229—1230, 93 1528. classical description those situations contained Hawes City Oakland, 104 450, 460, 26 827: 'Some action threatened managing board trustees beyond authority conferred them charter source organization; 8 'Or fraudulent transaction completed contemplated acting managers, connection party, among themselves, shareholders will result serious injury interests shareholders; 9 directors, majority them, interest, manner destructive itself, rights 10 themselves oppressively illegally pursuing course name violation shareholders, can only be restrained aid court equity.' 11 Whether law definition adopts falls one provided ruled. We therefore remand 12 Reversed. 13 FRANKFURTER, BURTON, HARLAN WHITTAKER, dissenting. 14 dissenting see 1119.

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