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92 A.2d 295

Kaufman v. Shoenberg

Court of Chancery of Delaware

Decided November 13, 1952

Court of Chancery of Delaware · decided 1952-11-13

Key passage — most relied on by later courts

“[Wjhether, as a matter of law, a stockholder is entitled to his reasonable investigation fees if his demand produces some real benefit to the corporation without the necessity for litigation.”

quoted by 2 later decisions, including Mintz v. Bohen, Bird v. Lida, Inc.

“[Substantially the same benefit accrues to the corporation whether it be as a result of the demand or of successful litigation. To grant a fee based upon legitimate investigation expenses in connection with a successful demand is to discourage litigation and yet encourage stockholder vigilance, without unduly prejudicing the general corporate welfare.”

quoted by 1 later decision, including Bird v. Lida, Inc.

Relies on Kaufman v. Shoenberg

Good law ✅— No negative treatment on recordhow we know

Decided 1952-11-13

How this case has been cited

Cited by 48 later decisions — most recently June 2015 · most notably Unocal Corp. v. Mesa Petroleum Co. (1985), Cheff v. Mathes (1964)

2 federal appellate · 1 district · 44 state decisions

2201952196019701980199020002010decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

View the full empirical analysis of this case →

¶1Court of Chancery of Delaware, New Castle.

November 13, 1952.

¶2Stanley L. Kaufman (of Kaufman, Imberman & Taylor) and Joshua Peterfreund, New York City, and William Marvel (of Morford, Bennethum, Marvel & Cooch), Wilmington, for plaintiff.

¶3Albert R. Connelly and Edward C. Perkins (of Cravath, Swaine & Moore), New York City, and Caleb S. Layton and Henry M. Canby (of Richards, Layton & Finger), Wilmington, for defendants.

¶4SEITZ, Chancellor.

¶5Plaintiff seeks an attorney's fee for services rendered in connection with the so-called Eleventh cause of action.

¶6I ruled that since the Corporation complied with the demand made in connection with the Eleventh cause of action within a reasonable time thereafter, the Eleventh cause should be dismissed. See Kaufman v. Shoenberg, Del.Ch., 91 A.2d 786. The question therefore is whether, as a matter of law, a stockholder is entitled to his reasonable investigation fees if his demand produces some real benefit to the Corporation without the necessity for litigation. I conclude that he is so entitled if he is able to substantiate his contention factually. I reach this conclusion because I believe substantially the same benefit accrues to the Corporation whether it be as the result of the demand or of successful litigation. To grant a fee based upon ligitimate investigation expenses in connection with a successful demand is to discourage litigation and yet encourage stockholder vigilance without unduly prejudicing the general corporate welfare. See 60 Harvard Law Review 835.

¶7I leave it to the parties to decide whether or not they desire a hearing on plaintiff's right to, and the amount of such investigation fees. The parties may also comment on whether the fee, if any, is properly within the scope of this litigation or whether it should be brought as a separate action.

¶8Order on notice.

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