Judicial intervention in early corporate governance disputes: Vice-Chancellor Shadwell's lost judgment in Mozley v Alston (1847)

Abstract

Mozley v Alston is usually used in Anglo-American corporate law as an authority to demonstrate the premise that courts are reluctant to intervene in disputes between shareholders and directors. Using new archival sources, this article reinvestigates this case, its trajectory and its meaning as a legal precedent. Vice-Chancellor Shadwell's judgment in the lawsuit, although never published in a printed law report, can be found in manuscript form in the National Archives in the United Kingdom. It, along with other documentation from the litigants and their solicitors, provides a new lens through which to view the case. Unlike the rule that we have today, Shadwell's lost judgment shows that he supported judicial intervention in corporate governance disputes. Shadwell concurred with the arguments made by the shareholders' counsel and agreed that the directors had abandoned their duties. He ordered that a court of equity should step in to assist the complainants. Despite the clarity of Shadwell's ruling, it was ultimately overturned when the decision was appealed to Lord Chancellor Cottenham. This litigation, when placed in its original social and economic context, provides us greater insight into the role of counsel in shaping complaints, the views of the shareholders, directors, and managers as litigants, and the divisions and debates among members of the judiciary about modern company law.