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Full-Text Articles in Law
Insider Securities Dealings During Corporate Crises, Victor Brudney
Insider Securities Dealings During Corporate Crises, Victor Brudney
Michigan Law Review
The problem of assuring the fidelity of corporate insiders to the public investors in their enterprises figured prominently in legal literature and law reform proposals twenty-five or thirty years ago. In recent years, that question has attracted relatively less attention-in part because of the appearance or recognition of more significant problems in the relationship of publicly-held corporate enterprise to the national well-being, but in part also because of the development by courts, legislatures and administrative agencies-and to some extent by the insiders' community itself-of more exacting standards of loyalty. Recognition of broader obligations to their corporations and to public investors …
Bankruptcy - Corporate Reorganization - Absolute Priority Rule, Kenneth J. Nordstrom
Bankruptcy - Corporate Reorganization - Absolute Priority Rule, Kenneth J. Nordstrom
Michigan Law Review
-A plan for reorganization under section 77B of the Bankruptcy Act involved a debtor holding company and two subsidiaries. Each subsidiary had a bonded indebtedness which, including unpaid accrued interest, was in excess of the value of assets that were s
Corporations - Corporate Form Used To Evade Bank Double Liability, Michigan Law Review
Corporations - Corporate Form Used To Evade Bank Double Liability, Michigan Law Review
Michigan Law Review
Plaintiff, the receiver for an insolvent bank, sued the individual stockholders of an investment corporation on an assessment to the amount of the par value of the bank stock as provided by the constitution and statutes of South Carolina. The investment corporation had been organized several years previously to secure control of a group of banks. Its holdings throughout consisted only of bank stock, and finally solely of stock of the closed bank. Plaintiff claimed, since the corporation had no assets, that the stockholders of the investment corporation were individually liable, because the use of a holding company for the …
Corporations - Rights Of Creditors Of Insolvent Corporation - Greater Than Rights Of Corporation
Corporations - Rights Of Creditors Of Insolvent Corporation - Greater Than Rights Of Corporation
Michigan Law Review
The dissenting and majority opinions of Justices Roberts and Cardozo in the recent case of McCandless v. Furlaud are illustrative of basically divergent conceptions of the status and function of the corporate receiver. In the following examination and evaluation of these conflicting positions, attention will be directed chiefly to those situations involving the problem of promoter's profits. The language and attitude of the courts, however, is typical of that adopted in all cases in which the questions considered arise and the conclusions suggested are of general application.
Corporations - Liability Of Directors To Creditors For Negligent Management
Corporations - Liability Of Directors To Creditors For Negligent Management
Michigan Law Review
There is much confusion in the cases concerning a director's liability to a creditor for negligent management of the corporation. A clearer answer might be indicated by an examination of analogous situations involving individuals instead of corporations. It adds confusion to the law to have a different rule for a corporation than for a human being, and such a result should be avoided unless separate treatment is required by something inherent in the corporation. The least that can happen if a court thinks along these lines is that it will be more likely to know what it is doing.
Corporations-Validity Of Option To Convert Preferred Stock Into Mortgage Bonds
Corporations-Validity Of Option To Convert Preferred Stock Into Mortgage Bonds
Michigan Law Review
A corporation issued preferred stock, with a fixed dividend rate, power to elect a director voting as a class, and an option in the holder to convert, at his election, into mortgage bonds which were issued at the same time. After a substantial indebtedness had been incurred by the corporation, the stockholders exercised their option to convert into bonds. The corporation then went into bankruptcy, and in reorganization proceedings, the bondholders claim a preference over general creditors. Held, that the former holders of the preferred stock were stockholders and not creditors of the corporation and that, in the absence …
Corporations-Liability For Unpaid Subscriptions-Power Of Receiver To Collect Unpaid Amount
Corporations-Liability For Unpaid Subscriptions-Power Of Receiver To Collect Unpaid Amount
Michigan Law Review
The liability of a subscriber to corporate stock exists by virtue of the contractual obligation to the corporation to pay the subscription price or the unpaid installment thereon. Because this liability is often declared by statute, it is essential, to avoid a confused analysis of the precise nature of the liability in question, to distinguish other types of stockholder's liability. Statutory super-added liability in excess of the par value of the stock, and liability for watered stock are excluded from consideration. An analysis of the subscriber's liability will be materially aided by a classification with respect to plaintiffs entitled to …
Corporations--Liability Of Stockholder In Non-Complying Foreign Corporation
Corporations--Liability Of Stockholder In Non-Complying Foreign Corporation
Michigan Law Review
The defendant was a stockholder in the A corporation, incorporated in Indiana to go business there, but carrying on its principal business in Tennessee where It had failed to comply with a law requiring foreign corporations to domesticate; Plaintiff, a holder of a trade acceptance on which the A corporation was primarily liable, sued defendant in Indiana, liability on the trade acceptance having been incurred in Tennessee. The A corporation being insolvent, plaintiff sought to hold the defendant personally liable on the ground that the failure of the corporation to comply with domestication statutes of Tennessee made its stockholders liable …
Corporations - Obligation To Refund Dividends Paid Out Of Capital
Corporations - Obligation To Refund Dividends Paid Out Of Capital
Michigan Law Review
The general rule is fairly well established that, where dividends are paid, in whole or in part, out of the capital stock, corporate creditors, being such when the dividend was declared, or becoming such at any subsequent time, may, to the extent of their claims, if such claims are not otherwise paid, compel the stockholders to whom the dividend has been paid to refund whatever portion of the dividend was taken out of the capital stock. This, however, has been modified in the federal courts to the extent that where the dividend, although paid entirely out of capital, was received …
When Is A Corporation Insolvent?, Floyd Mathew Rett
When Is A Corporation Insolvent?, Floyd Mathew Rett
Michigan Law Review
There is general unanimity that as to real persons "insolvency" means the inability of a debtor to pay his obligations as .they fall due in the usual course of business - even though the value of his assets exceeds the aggregate of his liabilities. But the question - when is a corporation insolvent - the question to which this paper is devoted, is one with very varied answers. The answers may vary both with the nature of the corporation concerned and with the type of transaction involved. There are, however, two conventional definitions of corporate "insolvency," with occasional variations and …
Receivers -Liability For Corporate Franchise Taxes Accruing After Appointment
Receivers -Liability For Corporate Franchise Taxes Accruing After Appointment
Michigan Law Review
General business conditions of the last three years have made the field of receivership law an extremely interesting and important one to that portion of the bar which has been picking up the pieces left by the debacle of 1929. The widespread liquidation and dissolution of great business organizations has been effected in large part through the medium of the receivership. One of the more difficult problems arising in connection with such receiverships has been the liability of the receiver for franchise taxes. Such taxes have been held to be not property levies but excises on the privilege to carry …
Corporations - Rights Of Bondholder Under A Trust Indenture
Corporations - Rights Of Bondholder Under A Trust Indenture
Michigan Law Review
Plaintiff was the owner of bonds issued by the defendant real estate corporation which were secured by real estate mortgages in the control of a trustee under a trust indenture to which reference was made in the bonds. The indenture provided, "no holder . . . shall have any right to institute any suit, action or proceeding at law or in equity or take any other steps or proceedings for any remedy hereunder," unless 25 per cent of the holders shall have requested the trustee to exercise the powers granted and the trustee thereafter fails or refuses to proceed. Plaintiff, …
Corporations - Power To Dispose Of Realty
Corporations - Power To Dispose Of Realty
Michigan Law Review
A cattle company, authorized by its charter to deal only in live stock, was in possession of three tracts of land. Upon a decision of the stockholders and directors to dissolve, two of these tracts were sold outright. The third, being near a large city, was subdivided into city lots with streets, sidewalks, water, lights, etc., for the purpose of a more advantageous sale. This involved the expenditure of considerable sums of money, and at the end of four years some of the lots were still unsold. The corporation became insolvent and the receiver refused to pay the money borrowed …
Torts-Negligent Misrepresentation-Duty Arising From Contract To Persons Not Parties
Torts-Negligent Misrepresentation-Duty Arising From Contract To Persons Not Parties
Michigan Law Review
The defendants, accountants, examined the books of the Stern Co., knowing that their balance sheet and 32 certified copies would be exhibited as a basis for future credit, but not knowing of the plaintiff particularly. Through negligence they failed to discover and report insolvency. Relying upon the report showing a solvent concern plaintiff extended credit to the Stem Co. He sued for his loss in two counts, negligence and fraud. Held, defendants had no duty to plaintiff to exercise due care, so he can not recover for negligence in the examination. But defendants might be liable for fraud as …
Partnership-Dissolution By Death Of Partner
Partnership-Dissolution By Death Of Partner
Michigan Law Review
Suit was brought by holders of certificates of deposit against the defendants as partners in an insolvent private bank. At the trial plaintiffs amended their petition by alleging that though defendants called themselves a partnership, they were in law and fact a joint stock company. But they failed to strike out the first allegation. The articles of agreement provided for a manager and a financing committee and for transferable stock, but transferable only to those whom the committee might admit. Several of the shareholders were deceased previous to the time the liability was incurred by the manager, and the status …
Corporations-Dissolution-Distribution Of Assets Between Preferred And Common Stockholders
Corporations-Dissolution-Distribution Of Assets Between Preferred And Common Stockholders
Michigan Law Review
The Commonwealth Hotel Construction Co. became insolvent, and, after the creditors had been paid in full, the preferred and common stockholders disagreed to the distribution of the remaining assets. The articles of incorporation provided that the holders of preferred stock should be entitled to dividends at the rate of seven per centum per annum which should be cumulative "so that, if dividends for any past dividend period at the rate of seven per centum per annum shall not have been paid thereon or set apart therefor, the deficiency shall be fully paid or set apart, but without interest, before any …
Corporations-Dissolution-Distributi0n Of Assets Between Holders Of Fully And Partially Paid Stock
Corporations-Dissolution-Distributi0n Of Assets Between Holders Of Fully And Partially Paid Stock
Michigan Law Review
On the insolvency of the Commonwealth Hotel Construction Co. and after, the creditors had been paid in full, there were assets on hand for distribution among the stockholders. The holders of partially paid stock requested that the assets be distributed in proportion to the amounts which the various stockholders had paid in. This in effect meant that the losses were to be proportional to the amounts paid in, instead of being proportional to the amounts which the stockholders had contracted to pay, and was resisted by the holders of fully paid stock as being inequitable. The chancellor (after holding in …