The Minority Shareholder In The Nineteenth Century: A Study In Anglo‐American Legal History

Published date01 May 1965
DOIhttp://doi.org/10.1111/j.1468-2230.1965.tb01071.x
Date01 May 1965
THE,
MINORITY
SHAREHOLDER
IN
‘rm
ANGLO-AMERICAN
LEGAL
IIIsrroitY
NINETEENTH CENTURY: A STUDY
IN
INTRODUCTION
THIS
article is concerned with the differing treatment accorded to
minority shareholders by English and American law as those systems
developed during the course of the nineteenth century. This century
was the crucial period of independent growth
from
which two quite
distinct common law systems emerged.
It
is to this period that we
must look
for
an understanding
of
the major differences between
English and American private law. The rules restricting minority
shareholders’ actions afford an excellent illustration
of
the unpre-
dictable influence
of
English decisions upon the growth
of
American
law.
The law of business corporations is one area where English and
American law differ to a very marked degree.’ In both countries
modern corporation law was created by legislation and judicial
decision in the last century to meet the need
of
the industrial revo-
lution for new forms
of
economic organisation. The joint inheritance
of common law principles could not be drawn upon in solving many
of the new problems of corporate organisation.2 Thus the courts in
both countries had for the first time to decide what rights to accord
to an aggrieved minority seeking to bring disputes with the manage-
ment
or
the majority before the courts. The much larger member-
ship of corporations and joint-stock companies, and the separation
of
ownership and control which this entailed, presented problems to
which the existing law
of
agency and partnership provided
no
obvious apswer.
In the English
Foss
v.
Hurbottle
rule and its American equivalent
two rather different solutions were found to the problem of what
rights to accord to the minority shareholder. After a long period of
isolated development, the American rule was much influenced by
English decisions during the latter part of the nineteenth century.
Of particular interest to the comparative lawyer is this transforma-
tion
of
the
native
American rule brought about by the
reception
of
English material. Nevertheless, this reception did
not mean that the two rules were entirely assimilated. The American
rule
still differs considerably
from
the English rule both in the way
it is formulated and in the actual scope that it allows to minority
actions.
1
See
in
general the memoranda presented to the Jenkins Committee appended to
See also an
the Minutes
of
Evidence
for
the 14th day: Appendices 40 and
50.
article
by
Professor
L.
C.
B.
Gower in
(1956)
69
Harv.L.R.
369.
2
See
Dodd,
The
American
Business
Corporation
until
1860
(1954), p.
195.
317

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