Business Organizations Law Commons^™

Service On Foreign Corporations After Withdrawal From The State, Alvin E. Evans

Michigan Law Review

It might reasonably be expected in this corporate age that the question of how service of process should be made upon foreign corporations would have been solved, especially in situations where the cause of action arose within the state and grew out of business done there. Such is not the case, at least respecting suits brought after the withdrawal of the corporation from the state on causes of action arising during the period that it did business there. That there is a conflict in the decisions seems to be due either to a difference inter se of the statutes under …

Corporations-The Executive Committee In Corporate Organization-Scope Of Powers, Dickson M. Saunders

Michigan Law Review

From the very beginning of the use of the corporate structure as a device for carrying on the businesses and activities of man, it has been apparent that the nominal brain, the board of directors, could not feasibly run the affairs of the inanimate entity unless certain powers could be delegated to officers and agents. The early case of Hoyt v. Thompson's Executor illustrates the judicial recognition of delegated powers. The charter authorized all business of ordinary nature to be transacted by a board of directors of twenty-three.

Soviet Government Corporations, John N. Hazard

Michigan Law Review

Public ownership of the means of production is a basic principle of Soviet economy. Private ownership of property is now limited to ownership of consumer's goods, and private trading is confined to the narrowest areas and subjected to such rigid control that it has been reduced to the limitations of street peddling.

With the emphasis on public ownership, the management, protection and development of property belonging to the state has become a major activity of the Soviet government. Production, distribution and consumption of property are aspects of this activity.

Development of a mechanism of management has occupied Soviet jurists and …

Taxation-Capital Stock Tax-What Constitutes "Doing Business", James E. Dunlap

Michigan Law Review

The capital stock tax is an excise tax levied not on the business itself but on the exercise of the privilege of doing business in a corporate capacity; hence the determination of tax liability involves a decision in each case as to whether the corporation is carrying on or doing business within the meaning of the tax statutes.

Corporations - Foreign Corporations - Effect Of Complying With Domestication Statute, E. George Rudolph

Michigan Law Review

Decedent was a resident of Nebraska and all his property was located there. By his will he left the residue of his estate to a number of charitable institutions including the Topeka Branch of the Women's Foreign Missionary Society of the Methodist Episcopal Church, a corporation incorporated in Kansas. The Topeka Branch claimed exemption from the Nebraska inheritance tax because it was a domestic charitable corporation, having complied with the Nebraska statute providing, "Any corporation organized under the laws of any other state . . . which has filed . . . with the secretary of state of this state, …

Deeds - Effect Of Noncompliance With Statute Requiring Grantor To Set Forth In Deed Name Under Which He Derived Title, Mary Jane Morris

Michigan Law Review

In a suit between plaintiff and defendant Girola Bros., plaintiff obtained a judgment and levied upon certain property. Plaintiff purchased the land at an execution sale and recorded the sheriff's deed conveying the property to him. Prior to the commencement of the action, defendant Girola Bros. had changed its name to Madalay, Inc., and under the latter name had conveyed the property, subsequently levied on by plaintiff, to defendant M. Girola, pending the action by plaintiff. This deed was recorded. It set forth Madalay, Inc., as grantor, but failed to set forth the name in which Madalay, Inc., derived title …

Joint Adventure-Actions At Law For Share Of Profits, Hobart Taylor, Jr.

Michigan Law Review

Action in assumpsit for money due under a contract whereby defendant leased plaintiff's entire clothing factory for the manufacture of 20,000 coats for which defendant held a government contract. By the terms of the agreement, plaintiff was to receive one-half of the net profits. The agreement expressly stated that they were not to be partners. The coats were manufactured pursuant to the agreement. Held, a mere agreement to share profits is, between the parties, insufficient to create a partnership, and assumpsit may be maintained by the members of a joint adventure inter sese for the agreed share of profits. …

Taxation - Federal Income Tax - Capital Gain On Sale Of Partnership Interest, Herbert Sott

Michigan Law Review

In 1936, a taxpayer sold his interest in a partnership the assets of which were mainly acquired subsequent to his entering the partnership in 1932. The government contended that the taxpayer acquired and disposed of an interest in specific partnership assets and that the period for determining the capital gains percentages was properly measured from the date of acquisition of the specific capital assets. In his suit for refund on part of the tax thus computed, the taxpayer claimed that the partnership was a separate juristic entity, that his interest therein was an intangible capital asset, and that the period …

Corporations - Dissolution At Suit Of A Minority Stockholder, E. George Rudolph

Michigan Law Review

The general statement has often been made that a court of equity has no power to dissolve a solvent corporation at the suit of a minority stockholder, in the absence of special statutory authority. However, some of the cases which seem to support this rule hedge considerably by saying that "ordinarily" or "generally" equity has no such jurisdiction. These cases would seem little different than those which hold that a court of equity has inherent jurisdiction to dissolve a corporation but will exercise it only in cases of extreme necessity. The latter seems to be the prevailing view and on …

Corporations - Legal Aspects Of Corporation Bonuses, H. Marshall Peter

Michigan Law Review

It would clearly be inaccurate to say that the percentage method of compensation represents a modern idea. Its rationale is so simple that there must have been instances of its utilization in early history. Be that as it may, it is a device which attained little prominence in this country before the beginning of the present century and which has grown since then with amazing rapidity. Along with the growth of bonus plans in some form or another, perplexing problems have arisen economic, social and perhaps even moral as well as legal. The emphasis of this comment will be upon …

Corporate Proxies: Ii, Leonard H. Axe

Michigan Law Review

The first installment of this article discussed the historical development of the right and power to vote by proxy, and examined the cases dealing with the regulation by by-law of the right to vote by proxy, who may act as proxy holders, and the form of the proxy. Emphasis was placed upon the practical aspects of the execution of proxies and the duties of inspectors of elections. The present installment will take up the persons entitled to appoint proxy holders, the right to examine proxies, the scope of authority conferred and exercise of power, circumstances under which a stockholder is …

Joint Adventure - Fiduciary Relation Of Parties Thereto, E. George Rudolph

Michigan Law Review

Defendant corporation and one Goldberger, the testator of the plaintiff, entered an agreement to carry on a trading account in the stock of a certain brewery over a limited period of time. By the terms of the agreement both were to contribute 50,000 shares of the stock, which were to be held by the corporation, and all purchases and sales of the stock by the corporation were to be deemed made in behalf of the account. Defendant corporation was to receive twenty per cent of the net profits for its services and the rest was to be equally divided. During …

Corporate Proxies, Leonard H. Axe

Michigan Law Review

The earlier forms of corporations in England seem to have been political units and the normal mode of conferring corporate rights was by an issue of a charter from the crown, whereby a body of individuals was designated a corporation with the sovereign power to exercise appropriate privileges. Since the charter was issued by the crown, the corporation was considered a part of the government and each member of the corporation was entitled to one vote if given by him in person. As one writer has so well stated, this "was the result of a political philosophy which assumed that …

Corporations - Voting Trusts - Power Of Voting Trustee To Elect Directors And Officers For Period Extending Beyond Termination Of Trust, Andrew J. Sawyer, Jr.

Michigan Law Review

Defendants held all the stock of a corporation as voting trustees under a voting trust which provided that it should terminate November 18, 1941, and that the trustees should deliver the stock to the holders of the participation certificates within thirty days thereafter. The agreement further provided that the trustees might elect themselves directors and officers of the corporation. At the time of the execution of the agreement, the by-laws of the corporation provided for annual shareholders' meetings in March. In 1939, defendant trustees, who had elected themselves directors and officers of the corporation, amended the by-laws to require the …

Corporations - Rights Of Action By The Representative Of Corporate Creditors - Effect Of Corporate Assent, Edward W. Adams

Michigan Law Review

By various acts the directors and officers of a corporation--its agents for the conduct of corporate business--may wrong the corporation or make possible a wrong to the corporation or to the body of corporate stockholders. When the corporation becomes involved in insolvency proceedings, in order to make available to creditors as many assets as possible, the receiver or trustee in bankruptcy determines whether some cause of action will lie to recover damages or property, or whether he may successfully defend to preserve assets. If the corporation itself could have been successful in the litigation, the solution would be easy because …

Current Phases Of Derivative Actions Against Directors, Ralph M. Carson

Michigan Law Review

In assuming to discuss in this place some of the current phases of stockholders' derivative actions against directors of corporations, I shall try to keep a course between two extremes. On the one hand, it is of little use to fulfill the easy duty of enunciating general rules of law, stated in such a form that both parties in a contested cause may equally invoke them. Nor, on the other hand, is it of much value to fill an hour's time with details of cases recently decided which, although interesting in themselves, resist general application. What I shall try instead …

Taxation Of Partnership Assets Received By A Deceased Partner And His Estate, Donald H. Treadwell

Michigan Law Review

The raising of funds to pay taxes will probably be a major problem of business men for many years to come. Closely rivaling it, however, is the problem of computing the tax. Though the economic definitions of income may be relatively simple, the complex business relationships necessitating equally complex accounting procedures often make the computation of income extremely difficult. This was demonstrated in the recent case of Helvering v. Enright's Estate, a tax case arising out of the death of a law partner. At the time of his death there were three types of assets which had been acquired …

Taxation - Income Tax - A Fixed Investment Trust As A Taxable Association, Harry M. Nayer

Michigan Law Review

Bonds of a prescribed kind were deposited in an investment trust with defendant, who issued certificates representing equal undivided interests in the trust corpus. Additional interests were created by the deposit of eligible bonds and sufficient cash to make up the current value of an interest, and all such bonds and cash were commingled. The depositor was not confined in making up the new units to the same kinds of bonds that were used in the original units, but could vary them in his discretion. The depositor could order the elimination of unsound bonds by sale, and the proceeds of …

Corporations - Voting Rights - Effect Of Sale Of Stock While Books Closed, Louis C. Andrews Jr.

Michigan Law Review

In a statutory action brought by a stockholder to determine the validity of an election of directors, it appeared that proxy votes of 6,856 shares had been accepted by the inspectors although these proxies were given by former owners who had sold the shares since the giving of the proxies and during the twenty days immediately preceding the election. During that twenty-day period, stock transfers registered with the corporation would have had the effect of disfranchising the stock, but none of the 6,856 shares had been offered for registration. By using these proxy votes the shareholders opposing the management were …

Tax Definition Of Reorganization: Mergers And Consolidations, Hugh B. Kuder Jr.

Michigan Law Review

In connection with income taxation, some importance is attached to the difference between mergers and consolidations. The difference may be of import in deciding whether or not income has been realized. Too, when the resulting corporation files a return, it may be necessary to determine whether it is the product of a merger or of a consolidation.

Consumers' Co-Operatives And Price Fixing Laws, Charles Bunn

Michigan Law Review

The evolution of our business institutions shows us a long procession of experimental procedures, giving rise to de facto commercial forms, many of which have in turn demanded such recognition de jure as should make their position in the business world both clear and safe. Consumers' co-operation is such a procedure. Its underlying idea is simple, that a business owned by its customers, managed under their direction and having no legitimate loyalties except to them, has a better chance to meet their needs than one owned and managed by outsiders. But it has taken many years and many failures to …

Holding Company Act - "Fair And Equitable" Plan, Michigan Law Review

Michigan Law Review

Should the words "fair and equitable" in section II (e) of the Holding Company Act be construed differently than the same words in section 77 B of the Bankruptcy Act? The Securities and Exchange Commission faced this question in disposing of a proposed plan of merger involving Utility Operators Company and subsidiaries. A divided commission gave an affirmative answer to the above question, holding "fair and equitable" in the Holding Company Act to permit relative priority. This holding merits particular interest since the United States Supreme Court has held the same words as used in section 77B permitted only absolute …

Corporations - Pre-Emptive Rights Of Shareholders In Originally Authorized But Unissued Capital Stock, Everett R. Trebilcock

Michigan Law Review

Plaintiff, a minority stockholder, brought an action to cancel 58,400 shares of originally authorized but unissued stock which the directors had issued to defendant general manager in payment of his services. Plaintiff contended this violated his pre-emptive right to subscribe to the shares and alleged the transaction was fraudulent in that defendant and the directors conspired to gain voting control. Held, the issue was proper because the stock was part of the first offering of original authorized capital stock to which plaintiff's pre-emptive right did not attach, and plaintiff failed to show collusion between directors and defendant to gain …

Corporations - Close Corporations - Methods Of Retaining Ownership Of Stock In Surviving Stockholders When One Stockholder Dies, Reid J. Hatfield

Michigan Law Review

The close corporation is generally formed by a small group who take an active part in the business and whose participation is essential to the successful operation of the venture. Thus, a partnership may decide that the corporate form will more effectively protect the interests of its members, or a small number of people interested in the same enterprise may incorporate in order to limit their individual liability in the common endeavor. Whatever the reason for the use of the corporate entity, the active participation of each stockholder is probably of vital importance to the financial welfare of all. To …

Corporations - Reserved Powers - Abrogation Of Preferred Dividend Arrearages By Charter Amendment, Merger, Or Consolidation, William D. Sutton

Michigan Law Review

The "malignant" decision in the Dartmouth College case fathered the passage of reserved-power statutes in virtually all the states. These statutes, in turn, when opposed by the retaliatory fundamental-rights safeguards invoked by the courts for the protection of corporate stockholders, procreated problems which have grown more baffling and incorrigible with age. Not the least among these are proposed changes in the liabilities or rights of stockholders, especially the attempted abolition of unpaid accrued dividends upon cumulative preferred stock where there exists a surplus which might lawfully be applied to the payment of such dividends.

Statutes - Unincorporated Association As A "Person" Under The Liquor And Sales Acts, Felicia I. Hmiel

Michigan Law Review

In 1939 the International Workers Order, an unincorporated association, had a picnic and dispensed beer through its secretary to its members without charge. The association had not obtained a license to sell beer. The secretary, defendant herein, was arrested and tried for violation of the Liquor Control Act, which made it a misdemeanor for a person to sell liquor without a license. Held, that an unincorporated association is not a person within the meaning of the statute, and therefore there was no sale. People v. Budzan, 295 Mich. 547, 295 N. W. 259 (1940).

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

Bankruptcy - Sufferance Of Turnover Order As An Act Of Bankruptcy, John C. Johnston

Michigan Law Review

A parent corporation formed a subsidiary corporation in 1932, and transferred to the subsidiary certain of its assets. In 1938 the parent filed a voluntary petition in bankruptcy and was adjudicated a bankrupt. Over a year later the referee entered a turnover order requiring the subsidiary to transfer to the parent's trustee all of its assets on the ground that the original transfer was void as being in fraud of creditors, and on the further ground that the subsidiary was in fact the "alter ego" of the parent corporation. Three days after this order was issued, creditors of the subsidiary …

Corporations - Officers And Directors - Duty To Investigate Purchasers Of Controlling Interest, Michigan Law Review

Michigan Law Review

Plaintiff corporation, an investment trust specializing in shares of small life insurance companies, brought an action against its former officers and directors, referred to as "the management group," who in 1937 owned twenty-seven per cent of the outstanding stock of the corporation. This group sold all their stock at an inflated price to another group, referred to as "the Boston group," who on the resignation of the management group immediately elected themselves to the control of the corporation. By this control the Boston group obtained access to the portfolio and proceeded systematically to rob the corporation of all its securities. …

Corporations - Liability Of Officer For Profits Made Out Of His Office, James D. Ritchie

Michigan Law Review

X, in order to obtain funds with which to bid at a government sale of steel in 1919, offered defendant, president of the Y Bank, a one-half interest in the venture. Subsequently, defendant caused the bank to make large loans to the corporation organized to handle the steel transaction. The loans were approved by the bank's loan committee on defendant's recommendation and were repaid in due time. Within the next three years defendant received from the steel enterprise $75,000 in "salary," $73,125 in dividends, and, finally, $200,000 for the sale of his stock. Upon the directors' refusal to sue, …