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Corporations - Stockholders' Suits - Effect Of Erie Railroad V. Tompkins On Federal Equity Rule 27, Leonard D. Verdier Jr.

Michigan Law Review

Plaintiffs filed a stockholders' bill in federal equity court to enforce certain rights of Hearst Consolidated Publications, Inc., a Delaware corporation. The individual defendants, directors of the corporation, were charged with having effected a plan to sell various Hearst properties to the corporation at excessive prices. Defendants moved to strike from the bill of complaint paragraphs referring to transactions which occurred prior to the date when plaintiffs acquired their stock. The motion was based on equity rule 27. The contention of counsel for plaintiffs was that rule 27 is based on the federal general law, which on this point conflicts …