Law Commons^™

Municipal Corporations-Circumventing Municipal Debt Limitations, Joseph F. Gricar S.Ed.

Michigan Law Review

Since municipalities are frequently indebted to the permissible extent of the constitutional, statutory, and charter debt limitations, they are constantly seeking methods of finance which avoid the debt limits. Three devices have received judicial sanction. First: Where a separate and distinct. corporation such as a school or drain district has been created it may operate with a separate debt limit over the same territory as the governing municipality. Second: Where the project to be financed is income-producing, the financing bond issue, if made self-liquidating, will not Gome within the debt limitations. Although incorporated authorities have been extensively used to administer …

Corporations-Validity Of By-Law Requiring Assent Of All Or Proportion Of Shareholders Greater Than Majority For Action, Alan C. Boyd

Michigan Law Review

The defendants, employees of the plaintiff corporation, were discharged by the president, who was empowered under the by-laws to appoint, remove, employ and discharge, and fix the compensation of, all employees of the corporation, subject to the approval of the board of directors. A majority of the directors and the holders of a majority of the shares were in agreement that the defendants should be discharged. The defendants refused to leave the premises, took possession of certain of the corporate books and records, and otherwise interfered with the conduct of the business, claiming that their discharge was ineffective because it …

Constitutional Law-Inclusion Of Corporation As "Person" Within Meaning Of Equal Protection Clause [Wheeling Steel Corp. V. Glander, U. S. Sup. Ct 1949]

Washington and Lee Law Review

No abstract provided.

Corporations-Dividend Rights-Elimination Of Dividend Accumulations By Direct Charter Amendment, Thomas L. Waterbury S.Ed.

Michigan Law Review

The many recent discussions of the problem of dividend accumulations show that plausible grounds exist for reaching a conclusion in favor of either the minority preferred shareholder who wishes to retain these rights, or the majority preferred and common shareholders who, with the corporate management, desire to eliminate or circumvent them. It is not the purpose of this comment to re-open that controversy, though it may be observed that the current trend of both legislation and decision favors the interests of the latter group. Rather, this discussion assumes that the current trend is the correct view and will examine the …

Corporations-Membership Corporations-Voting Rights Under California Law, Howard Vanantwerp

Michigan Law Review

The original owner of a subdivision recorded a declaration of restrictions which provided that "the majority of the property owners within the subdivision may form . . . a non-profit cooperative corporation without capital stock, but with one share thereof appurtenant to each of the lots in such subdivision,'' to approve plans for building on these lots. Defendants acquired 133 lots and commenced construction of homes in spite of the disapproval of their plans by the association organized under the authority of the declaration. The two defendants claimed to have acquired majority control of the association, claiming 133 votes as …

Corporations-Appraisal Statutes-What Constitutes A Written Objection To Corporate Merger Scheme, Daniel A. Isaacson

Michigan Law Review

Plaintiff sent a letter to the president of a corporation, in which he held stock, revoking his proxy and stating that he would vote against a proposed merger with defendant corporation. Later, plaintiff demanded payment of the fair value of his shares pursuant to an appraisal statute which so permitted if a stockholder, dissatisfied with a merger plan," . . . objected thereto in writing . . . . " Held, the letter constituted a sufficient written objection for purposes of this statute. Wiswell v. General Waterworks Corporation, (Del. Ch. 1949) 66 A. (2d) 424.

Corporations-Elections-Judicial Actions Of Inspectors Of Elections, Colvin A. Peterson, Jr. S. Ed.

Michigan Law Review

If the modern cases are to be judged in light of what the courts say, it is probable that Judge Tilghman's views are the weight of authority. While a few courts frankly admit that inspectors do act judicially at times, most of the courts continue to define the actions of the inspectors in ministerial terms. However, there are two areas within which the inspectors may exercise such unusual powers that they may be called judicial, namely, those relating to the ascertainment of (1) the validity of proxies and (2) title to stock. The scope of this comment is confined to …

Financial Inability As A Defense Under The Corporate Opportunity Doctrine, E. W. Rivers

Kentucky Law Journal

No abstract provided.

Fiduciary Duty Owed Creditors By Director Of Insolvent Corporation

Indiana Law Journal

Recent Cases: Corporations

Promoters' Ability To Share Profits Of Successful Corporate Ventures, Alvin Gilmore

Mercer Law Review

Promoters' frequently experience difficulty in obtaining a proper reward for their initiative in organizing a corporation. This difficulty arises from two well-established principles of corporation law. The first of these rules is that a promoter stands in a fiduciary relation to the corporation, charged with a duty to exercise the utmost good faith, as in cases of other trusts, so that he cannot lawfully make secret profits' in transactions relating to the promotion or organization of the corporation, and must account to the corporation for such profits if made.3 The second rule is that the promoter cannot lawfully receive compensation …

Does A Corporation Realize Gain Or Loss On A Liquidating Distribution In Kind?, Charles S. Cork

Mercer Law Review

In view of the thousands of corporations which have been liquidated over the last three decades, it is surprising that there should have been so little judicial consideration and analysis of whether a corporation realizes gain or loss recognizable for Federal income tax purposes on the distribution of its property in partial or complete liquidation.

Corporations--By-Laws--Restrictions On Transfer Of Bank Stock, Hugh B. Muir

Michigan Law Review

Plaintiff received thirty shares of bank stock by bequest. Before she presented the shares to the bank for transfer, the stockholders, by a majority vote (plaintiff dissenting), amended the by-laws so as to limit to certain classes the persons to whom the bank stock could be transferred, whether by transfer inter vivos, will, or descent. A mandamus proceeding was initiated against the bank to compel a transfer of the shares free of the restrictions. On defendants' appeal from a ruling denying a motion to quash an alternative writ, held, affirmed. The restrictions sought to be imposed were not authorized …

Corporations-Applicability Of General Corporate Dissolution Procedure To Associations Organized Under Building And Loan Act, Howard W. Haftel S.Ed.

Michigan Law Review

Building and loan associations are organizations designed for the general purpose of accumulating by gradual payments of their members a fund to be invested primarily in loans on real estate. At present these organizations almost invariably are corporations for profit. Because of their economic importance these associations have long been regarded as affected with a public interest and therefore subject to a higher degree of regulation than would be sustained in the case of ordinary profit-making corporations. Special legislation is necessary because building and loan associations differ widely from other corporations in financial structure and operation.

Corporations-General Effect Of Statutes Prohibiting Corporate Loans To Directors, Officers And Stockholders, Paul W. Eaton, Jr.

Michigan Law Review

Over the years a number of states have felt that loans by private corporations to their directors and stockholders should be regulated to protect the interests of creditors and, in many cases, stockholders. At present, twenty-two states have statutes which either absolutely prevent such loans or else limit their scope, and this number will probably increase. A typical statute may be found in New Jersey: "No corporation shall loan money to a stockholder or officer thereof. If any such loan be made the officers who make it, or assent thereto, shall be jointly and severally liable, to the extent of …

Taxation--Income Tax--Family Partnerships--Application Of The Tower-Lusthaus Doctrine, Earl R. Boonstra S.Ed.

Michigan Law Review

Respondent and his four sons formed a partnership in 1939. The sons contributed cattle and property purchased from respondent who accepted their notes in return. Subsequently, part of the notes were forgiven and part paid from shares of the firm proceeds. A firm bank account was opened on which all members could draw. It was planned that all the sons would render substantial services to the partnership. However, the plan was disrupted when the two eldest were called to military duty, and the two minor sons continued their education. A partnership return was filed for 1940. The Commissioner determined a …

Corporations-Shareholders' Derivative Suits-When Demand On Shareholders Is A Prerequisite To Maintenance Of Suit, Thomas L. Waterbury S.Ed.

Michigan Law Review

A shareholder's derivative suit is an equity proceeding instituted by a shareholder on behalf of himself and all other shareholders to assert corporate rights. Both the corporation and the parties allegedly liable to the corporation are necessary parties. The question to be considered in this comment is, when must the plaintiff shareholder show that he sought redress for the corporation through collective action of the shareholders and failed to secure it? As a preliminary matter, we may ask what sort of collective action the shareholders are expected to take. A few authorities suggest that the shareholders, as a body, bring …

Bankruptcy-Corporate Reorganization-Power Of Court To Order Interim Payments While Petition Is Pending Under Chapter X Of Bankruptcy Act, William F. Snyder S.Ed.

Michigan Law Review

A petition for reorganization was filed, pursuant to Chapter X of the Chandler Act, October 3, 1947, which was adjudged on the same day to be in good faith and within the terms of the act. The corporation was clearly solvent, in the sense that its assets exceeded its liabilities, but needed financial adjustment to meet the principal on outstanding income notes due the following June. Thereafter, and before a plan was approved, the court entered an order directing the trustee of the debtor to pay 6% to the holders of the first mortgage bonds as an interim distribution to …

Corporations-Shares Of Stock-Reasonableness Of Restriction On Transfer Of Shares, E. Blythe Stason, Jr.

Michigan Law Review

Defendant corporation's by-laws provided, inter alia, that shareholders wishing to dispose of their shares must, in absence of contrary agreement with the remaining shareholders, give latter an option to buy at a price equal to book value, regardless of market value of these shares. This restriction was not set forth in the share certificates as required by statute. On refusal of defendant corporation to permit transfer of its shares except in compliance with the terms of the by-law, complainants brought suit for declaratory judgment, and obtained a finding that these terms were void. Held, affirmed. The by-law restriction violated …

John Howard Moore, Robert W. Sturdivant

Vanderbilt Law Review

This issue of the Vanderbilt Law Review is dedicated to Mr. John Howard Moore. At the end of this current school year Mr. Moore will have served a quarter of a century as a Professor of Law at the Vanderbilt University School of Law and will retire from active teaching.

Mr. Moore has been and remains an idealist and perfectionist in the law. This has been the theme of his teaching. We that had him as a teacher know that it is his belief that neither he nor anyone else is qualified to answer a nice legal question until the …

Should The Doctrine Of Implied Warranties Be Limited To Sales Transactions?, Robert B. Deen Jr., Charles H. Warfield

Vanderbilt Law Review

The purpose of this discussion is to examine implied warranties in order to determine if their application is limited to sales transactions. In approaching this problem, it is necessary to understand the development of warranty. In the early law, warranty was a pure action of tort.' Special assumpsit developed over a hundred years later than warranty and was based on the tort action of warranty. Thus, at the beginning, assumpsit was thought of as a tort action. Later assumpsit came to be regarded as similar to covenant and hence became classified with contract actions. Warranty was still considered a tort …

Corporations-Officers And Directors-Stock Option Incentive Employment Contracts For Corporation Executives, A. B. Perlin, Jr. S.Ed.

Michigan Law Review

In the past few decades considerable attention has been directed toward "piecework payment" for corporate executives; that is, compensation based largely upon results rather than upon past or expected performance. The stock option incentive employment contract' is one of the means utilized to achieve that desired objective.

Corporations-Right Of Corporation To Exercise Purchase Option After Dissolution, E. Blythe Stason, Jr.

Michigan Law Review

ln 1945 appellant corporation was dissolved. Under a state statute, its officers became trustees, with "full power and authority of [the] company over [its] assets and property," with the duty to settle its affairs for the benefit of creditors and shareholders. Under another statute, the corporate existence was, for this limited purpose, extended three years beyond dissolution. Appellant attempted to purchase land under an option contained in an unexpired lease, but was resisted by the appellee-option or. In an action for specific performance of the option contract, relief was denied. On appeal, held, affirmed. Corporate existence was continued only …

Trust Fund Doctrine Revisited, Part Ii, James R. Ellis, Charles L. Sayre

Washington Law Review

We have chosen the problem of recovery of unpaid subscriptions to illustrate the influence of the trust fund doctrine in our jurisdiction upon actions by creditors against shareholders.

Corporations-Appraisal Statutes-Exclusiveness Of Statutory Remedy, William R, Worth

Michigan Law Review

Defendant corporation's charter provided for retirement 'of preferred stock at par plus accumulated dividends, before payment could be made to common stockholders, in the event of dissolution or "recapture" of its assets by the enfranchising city. Under authority of a majority vote of its stockholders, the corporation conveyed all its assets to defendant City of Quincy, the enfranchising city. Defendants offered to pay preferred stockholders only $150 per share, although par plus accumulated dividends amounted to $205 and some common stockholders had already received $5 per share. Plaintiffs, preferred stockholders, sued to secure full payment, but the trial court held …

Corporations-Nonprofit Corporations-Expulsion Of Member By Board Of Directors, Paul W. Eaton, Jr.

Michigan Law Review

The board of directors of defendant, a nonprofit corporation, passed a resolution that persons should not be denied membership on racial, religious or political grounds. Plaintiff, a branch member of defendant, had enacted by-laws denying Negroes admission to its group. Defendant's board declared plaintiff's by-laws were in conflict with the resolution and threatened to expel plaintiff branch if its by-laws were not amended. Plaintiff brought suit to enjoin defendant from carrying out its threat. Held, injunction granted. No national by-law required admission of all races to membership in branches, nor did the national directors have power to expel a …

Corporations--Stock Transfer By Trustee In Fraud Of Cestui--Corporate Liability Under Uniform Fiduciaries Act, R. B. P.

West Virginia Law Review

No abstract provided.

Corporations-Receivership And Dissolution As Remedies For Management Deadlock, E. C.V. Greenwood S. Ed.

Michigan Law Review

The exodus of small businesses from proprietorship and partnership units into corporate units has brought numerous advantages, but not all attributes of the new form are beneficial. When two or more individuals form a partnership and later find they have reached an impasse, one partner may in most instances bring the relationship to a rapid termination and cause a division of the partnership assets. However, once the corporate form has been adopted, the problem becomes somewhat more difficult. It is the purpose of this comment to examine two possible remedies for a holder, or holders, of one-half of the voting …

Corporations-Forfeiture Of Charter-Criminal Act As A Ground Therefor, James A. Sprunk S. Ed.

Michigan Law Review

Plaintiff, a private citizen, brought a civil action for forfeiture of defendant's corporate franchise, alleging a violation of the Minnesota anti-trust statute. In addition to penal sanctions, the statute provided that any corporation violating its provisions "shall forfeit all of its corporate franchises," and, further, that any citizen may enforce the statute. Defendant contended that proceedings under this statute, a part of the criminal code, were criminal, and that a private citizen could not conduct a criminal prosecution. Held, forfeiture of a corporate charter is a civil consequence of violating the criminal statute; thus, a criminal conviction is not …

Trust-Fund Doctrine Revisited [Part I], James R. Ellis, Charles L. Sayer

Washington Law Review

The foundation case in Amenca was an action to restore dividends paid out to shareholders by an insolvent bank, but from limited beginnings the trust-fund doctrine expanded to become a major legal weapon for corporate creditors under a wide variety of conditions. In this discussion we propose to treat separately three major aspects of the trust-fund problem: (1) the status of corporate insolvency, which was a condition precedent to the operation of the rule; (2) the rights of creditors against creditors; and (3) the rights of creditors against shareholders. Our analysis will be confined chiefly to the statutory and case …

Corporations-Election Of Directors-Power To Enjoin Shareholders' Meeting Until Shareholders Are Furnished Information Concerning Condition Of Corporation, Robert W. Shadd

Michigan Law Review

Defendant company was operating at a loss of approximately $50,000 per month; the directors delayed three months in reporting the financial affairs of the company; and the shareholders' meeting was delayed six months in violation of the by-laws. On January 24, 1948, the directors called an election meeting for February 16, 1948. On receipt of this notice, plaintiff and others formed an independent shareholders' committee to effect a change in management. The directors refused to allow the plaintiff to make a photostatic copy of the list of 3,080 shareholders, but did permit him to inspect the list five days before …