Keith Harris, a shareholder of Fastway Airlines, Inc., discovered that Donald Fleure , chief e x...

Question

Keith Harris, a shareholder of Fastway Airlines, Inc., discovered that Donald Fleure , chief e x ecutive officer of Fastway , had sold some of his own land to the corporation at what Harris be lieved to be excessive prices. Can Harris bring a direct or a derivative suit in this situation? E x plain. Would the fairness rule or the business judgment rule be used to evaluate the activities of Fleure ? Explain.

David · Accepted Answer

Keith Harris v. Donald Fleure 
 
Before going to determine what type of suit Mr. Harris could bring in this case, we have to 
understand the legal rights one can have by owning some shares of stocks in a particular 
corporation
1
. The rights being for example inspection of corporate books and records given a 
show of good faith and at a reasonable time.  
Now, if a shareholder is denied this right, he or she may sue the organization to compel its 
directors to grant him or her to see the books. This type of lawsuit is clearly a “direct suit”, i.e. a 
suit brought down by the shareholder in his own right to redress an injury sustained directly by 
him for he has a right to persona relief
2
.  
On the other hand if there a case of conversion of corporate assets by a director,

Keith Harris, a shareholder of Fastway Airlines, Inc., discovered that Donald Fleure , chief e x ecutive officer of Fastway , had sold some of his own land to the corporation at what Harris be lieved...

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