Scarlett on the Origins of Shareholder's Derivative Litigation

Out recently in the (ungated) Buffalo Law Review, 61 (2013): 837-908, is Ann M. Scarlett’s Shareholder Derivative Litigation's Historical and Normative Foundations.  From the article:

[The] debate over corporate purpose is not new. It raged in the first half of the 20th century with the proliferation of public corporations, in which many investors could purchase shares in corporations on a public stock exchange but play no active role in the management of those corporations.  Before the early 1900s, most corporations were privately owned by a small group of shareholders who typically participated in managing the corporation.  But even then, courts struggled with the question of corporate purpose within these private companies as shareholders sought to challenge the actions of directors through litigation. The shareholder derivative lawsuit is an important part of the debate about corporate purpose because, through such lawsuits, shareholders seek to hold directors accountable for their decisions. Yet scholars in the modern debate over corporate purpose have ignored its historical origins as reflected in shareholder litigation prior to the 20th century. Almost all scholarship that even briefly mentions early shareholder derivative lawsuits in the United States relies solely upon a 15-page paper by Professor Bert Prunty published in 1957. This Article seeks to remedy this gap in the literature by more fully examining English and U.S. law on the shareholder derivative action to understand its true historical and normative foundations.