Business Organizations Law Commons^™

The Fiduciary Responsibilities Of A Surviving Partner Acting As Executor Of The Deceased Partner's Estate, Sandra L. Randleman

Vanderbilt Law Review

This Note examines the nature of the fiduciary duty in the situation in which an executor/surviving partner must decide whether to consent to a continuation of the partnership business after dissolution and in the situation in which the surviving partner has an option to purchase the deceased partner's interest in the partnership under the terms of a partnership agreement. After separately considering the nature of the fiduciary duties of an executor and a surviving partner, the Note discusses the degree to which the fiduciary loyalty that an executor/surviving partner owes the deceased partner's estate governs his decision on whether to …

Book Reviews: Two Cheers For Capitalism / Does Freedom Work?, Henry Aaron

Vanderbilt Law Review

Although Kristol's book is vastly better than Devine's--both in style and in content--the two books suffer from a common short-coming. Kristol sees a central institution of modern capitalism--the corporation-under aggressive attack, and seeks to defend it. One may disagree with his appraisal of the risks, and resent his tendency to tar all critics with the inanities of the most extreme, but he has a strong case to make-that the rise of modern American capitalism has been a magnificent success story. This success has required an uneasy cooperation between free-market institutions and collective restraints and modifications of market outcomes. By seeing …

Proposed Legislative Solutions To Tax Shelter Partnership Abuses - The End Of The Aggregate Concept?, Thomas E. Settles

Vanderbilt Law Review

This Note first will set forth the Treasury Department's perception of the present abuses of tax shelter partnerships and will analyze existing procedural rules, the Treasury Department's proposed amendments, and the House of Representatives' proposed amendments in light of these abuses. Next, the Note will examine the substantive law of Subchapter K and will attempt to point out the probable effects of the proposed amendments on the aggregate concept of partnerships, on substantive partnership tax law, and on the viability of the partnership form of business. Finally, this Note will propose a solution to the problem of tax shelter partnership …

Post-Dissolution Liabilities Of Shareholders And Directors For Claims Against Dissolved Corporations, D. Gilbert Friedlander, P. Anthony Lannie

Vanderbilt Law Review

This Article initially will explore the nature and extent of shareholders' and directors' liabilities for contingent claims against the dissolved corporation by examining section 105 of the Model Business Corporation Act and the case law of those states that have adopted the Model Act.' Two purposes underlying the Model Act are uniformity and progressive resolution of issues inadequately resolved by the common law or earlier statutes. An exhaustive analysis of the case law under section 105 of the Model Act, however,reveals that both purposes have been frustrated, if not defeated. First, uniformity among jurisdictions, as well as within each Model …

Competing Merger Offers - Disclosure And Related Problems, Law Review Staff

Vanderbilt Law Review

An attractive company that makes known its desire to find a merger partner or announces an agreement in principle to merge with another corporation is likely to receive multiple inquiries or multiple offers from acquisition-minded corporations. This Note examines various problems and duties confronting a publicly held company' that receives multiple merger inquiries and offers. The starting point for this analysis is one court's directive that a proxy statement soliciting shareholder approval of a merger recommended by management must disclose competing merger offers from third parties if such offers are "definitive" and "may" be more advantageous to the shareholders than …

Individual Liability Of Agents For Corporate Crimes Under The Proposed Federal Criminal Code, Stephen D. Goodwin

Vanderbilt Law Review

In discussing the contours of individual liability under section 403, this Note has not attempted to criticize the section's draftsmanship or counsel against its adoption. The philosophy of liability reflected in section 403 wisely avoids the imposition of vicarious liability on corporate officials. The defendant's personal misconduct, failure to act, or reckless failure to supervise invoke the sanctions of the provisions. In addition, subsections (b) and (c) provide a theoretical underpinning for punishing omissions that is preferable to the indicia of artificial "participation" relied upon in former state and federal cases.

This Note has also attempted to establish some limitations …

Gasoline Marketing Divestiture Statutes: A Preliminary Constitutional And Economic Assessment, Hunter M. Meriwether, James C. Smith

Vanderbilt Law Review

This Note has traced the recent developments in the oil industry and in gasoline marketing that have led to the enactment of divestiture statutes in three states and their consideration by the legislatures in many others. The statutes are essentially of two types: those prohibiting the owning or leasing of marketing outlets by vertically integrated oil companies and those prohibiting or limiting the operation of retail outlets with company employees. Both types of statutes, however, have as their primary aim the exclusion of the majors as competitors at the retail level. This is thought to be necessary to prevent anticompetitive …

The Commodity Futures Trading Commission Act: Preemption As Public Policy, Philip F. Johnson

Vanderbilt Law Review

On October 23, 1974, President Ford signed into law P.L. 93-463, bearing the breathless title "Commodity Futures Trading Com-mission Act of 1974"' [hereinafter the CFTC Act]. The CFTC Act followed a series of hearings, beginning in the summer of 1973, held first by a subcommittee of the House Committee on Small Business and followed rapidly by the more traditional oversight committees of the Congress-the House Agriculture Committee and the Senate Agriculture and Forestry Committee.' The result was a major over-haul of the Commodity Exchange Act, which had governed the commodity futures markets since 1922. More significantly, however,the Act has become …

The Unique Problems Of The Black Businessman, Flournoy A. Coles, Jr.

Vanderbilt Law Review

This Article concentrates on problems of black businessmen rather than those of all minority businessmen for 3 reasons: first, there are more statistics on the business and other aspects of black economic life than on other nonwhite minorities; secondly, the available statistics suggest that black Americans rank lowest on the totem pole of business activity in this country--lower than any other nonwhite minority except perhaps for American Indians; thirdly, many of the solutions suggested for remedying the problems of black business enterprise would apply to the similar problems that other minority groups have encountered.

Section 355'S Active Business Rule--An Outdated Inefficacy, John A. Stemmler

Vanderbilt Law Review

In order to delineate the problems inherent in the active business rule, this Note first will examine the legislative history of tax-free separations, isolating the primary purpose and policy of section 355. Regulatory and judicial interpretations of section 355 will also be analyzed to determine their propriety in light of the statute's purpose and to illustrate the confusion that exists in the area. This, in turn, will lead to a suggested approach for dealing with section 355 transactions in the future.

Book Reviews, Charles Galbreath, George F. Shinehouse, Jr., Norman A. Coplan

Vanderbilt Law Review

How Harmless is Harmless? The Riddle of Harmless Error.

By Roger J. Traynor Columbus: Ohio State University Press, 1970. Pp. ix, 117. $6.00

reviewer: Charles Galbreath

This book is based on the author's experience of more than 30 years on the California Supreme Court and his exhaustive research into the enigma of harmless error. The overriding message is simply that there is no clear explanation for the Supreme Court's preferring the Chapman test of "harmless beyond reasonable doubt" over the California test,which allows the judgment to stand if the particular error did not result in a "miscarriage of justice" in …

Taxation Of Preferred Stock In Corporate Reorganizations, Bruce E. Gagnon

Vanderbilt Law Review

Among the sections added to the revised version of the Internal Revenue Code of 1954 was section 306, designed to close a gaping loophole which might have permitted many taxpayers to withdraw earnings and profits from a corporation through the distribution and sale of preferred stock and to receive capital gains treatment at the shareholder level rather than the dividend treatment ordinarily applicable to such distributions. In this article, Professor Gagnon argues that, as applied to corporate reorganizations, section 306 falls far from its mark. After discussing the purpose and operation of section 306 and related sections, the author suggests …

Small Business Growth And Survival During The First Two Years, Kurt B. Mayer, Sidney Goldstein

Vanderbilt Law Review

In summary, analysis of the businesses observed in this study reveals that certain conditions are more likely to have fatal effects on a business venture than others. Undercapitalization, managerial in-competence, and personality defects appear to be insurmountable liabilities which cannot be mitigated by the presence of the other assets. Although adequate capital and managerial competence are indispensable for survival, they are rarely sufficient in themselves to insure it. They must be supplemented by other factors, such as motivation, hard work, persistence, and flexibility.

Managerial Problems Of The Enterprise, Douglas C. Basil

Vanderbilt Law Review

The small firm, particularly the newly formed one, is confronted with problems ranging from the shortage of capital to the legal intricacies of organizational form. The technical obstacle of raising capital, obtaining sales outlets, and purchasing equipment must be surmounted. In the final analysis, however, the success of a small business depends upon the managerial ability of its owner.' The purpose of this article is to identify a few of the major management problems of the small enterprise and suggest appropriate solutions. One continuous difficulty is the structuring of the organization. At what point should staff specialization occur? What are …

A Symposium On Small Business, Eugene P. Foley

Vanderbilt Law Review

The diversified composition of small business frequently causes those unfamiliar with small business problems to despair of finding means to strengthen this vital segment of our economy. What can be done to help such an amorphous group develop a form that can withstand the pressures of a competitive society? There is no specialized material with which a small business can be coated, like a space capsule, to make it resistant to the heat and stresses of risk-taking in a profit and loss economy.

Financing -- A Major Problem Of Small Business, Joseph T. Howell Jr.

Vanderbilt Law Review

It is imperative that a definitive study of small business include a discourse on financing.' Generally, the first consideration of a prospective entrepreneur is the availability of sufficient capital, borrowed or paid-in, to support the activity of his business. Of paramount importance, however, to those who attempt to assess the prospects of survival and future growth of a company is the recognition that all considerations are secondary to the human factor. The careful banker, while requiring collateral to secure a loan, depends on his estimation of the applicant's personality traits. While the adequacy of capital contributes to the success of …

Prologue, Joe L. Evins Mc

Vanderbilt Law Review

A more vivid awareness of the significance of small business to the economic structure of the nation must be cultivated. Those who have examined the role of the small businessman in our economy have emphasized repeatedly that a strong small business sector is essential to the preservation of our free enterprise system, the maintenance of a balance of economic and political power, and the assurance of a constant flow of new ideas and vigor into that system.

When Will The Corporate Form Save Taxes?, Richard L. Strecker

Vanderbilt Law Review

While major emphasis will be placed upon the tax considerations involved in answering the question posed by the title, the broader problem is aptly stated in the familiar phrase, "Choice of Business Form."' It is not possible to consider this problem realistically without taking into account the context of the business and private law considerations which must enter into the decision, and may indeed be controlling over the tax factors. Therefore, the question, "When Will the Corporate Form Save Taxes?" will be discussed in the light of the full legal and business milieu.

Business Associations--1963 Tennessee Survey, Robert N. Covington

Vanderbilt Law Review

Section two of the act creating Tennessee's new Law Revision Commission charges that body with the duty to study and report to the next legislature on "the laws governing the organization and operation of corporations, partnerships and other forms of business and social endeavor." The study is now roughly a year old and is reportedly making good headway. Since much of our law of business organizations may therefore be changed in the near future, this Survey has been abbreviated as much as possible.

Economic Aspiration And Method, Jesse W. Markham

Vanderbilt Law Review

The topic I have chosen concerns the changing nature of organized economic enterprise, especially its social and legal environment. By organized economic enterprise I shall mean any economic entity in which decision-making is essentially composite rather than individual, of which business corporations and labor unions are the most obvious and, in terms of impact on the total economy, the most important. But by the criterion employed--decisions are essentially composite rather than individual--the average household consisting of at least one wife and husband surely falls within its ambit. Nor do I mean to imply that organized economic enterprise can be assessed …

Changing A Partnership Into A Corporation, Daniel J. Gifford

Vanderbilt Law Review

The present essay will deal only with those businesses which possess unlimited growth potential in respect of the amount of assets which they can profitably employ in the production of income. If such businesses grow sufficiently, they will probably ultimately reach the stage of publicly held corporations. The reasons for this will vary, although it would seem that once the growth process has picked up momentum, the business may require capital at a rate faster than earnings can be accumulated or funds can be obtained from lenders.

Book Reviews, Estes Kefauver, Stanley D. Rose, W. Edward Sell, Harold G. Wren, Robert N. Covington

Vanderbilt Law Review

Congress and the Court By Walter F. Murphy. Chicago: The University of Chicago Press, 1962. Pp. xi, 308. $6.95. (judicial power)

reviewer: Senator Estes Kefauver

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Interstate Apportionment of Business Income for State Income Tax Purposes By Charles E. Ratliff, Jr. Chapel Hill: The University of North Carolina Press, 1962. Pp. xi, 132. $4.00. (tax law)

reviewer: Stanley D. Rose

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Expulsion or Oppression of Business Associates By F. Hodge O'Neal and Jordan Derwin. Durham, N.C.: Duke University Press,1961. Pp. vii, 263. $10.00. (business organizations)

reviewer: W. EDWARD SELL

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The Ideologies of Taxation By Louis Eisenstein. New York: The …

Business Associations -- 1961 Tennessee Survey (Ii), Kenneth L. Roberts

Vanderbilt Law Review

I. REVOCATION OF CHARTER OF GENERAL WELFARE CORPORATION

In the much-publicized case of Highlander Folk School v. State ex rel.Sloan, the supreme court upheld the revocation of the charter and dissolution of a general welfare corporation.

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II. Foreign Corporation--"Doing Business" Service of Process

The cases of Tucker v. International Salt Co.," decided by the Tennessee Supreme Court, and Shuler v. Wood,' decided by Judge Taylor of the Federal District Court for the Eastern District of Tennessee, dealt with interesting and diverse questions of "doing business" by foreign corporations as relating to service of process. These cases are fully discussed …

Book Reviews, Lee S. Greene, Earl F. Murphy (Reviewer)

Vanderbilt Law Review

Index Digest of State Constitutions:

This is a revision of the first edition of Index Digest of State Constitution prepared in 1915 for the use of the New York State Constitutional Convention of that year. Both the first and the present second edition were prepared by the Legislative Drafting Research Fund of Columbia University. The editor of the present volume was Richard A. Edwards, who worked with the aid of associate editors James L. Blawie and Marilyn B. Blawie. Over forty years have passed since the first Index Digest appeared.This has been a period of some rewriting of state constitutions,considerable …

The Corporate Guaranty, Arthur M. Kreidmann

Vanderbilt Law Review

Corporate business, with increasing frequency, is conducted through subsidiary and affiliated corporations. Normally, one or two of the entities in a multi-corporate enterprise enjoy a highly rated credit standing. The remaining corporations, engaged in selling, marketing, maintenance, or other functional activities, are often under-capitalized and cannot alone develop their credit resources. Similarly, many businesses which fall without the pale of the parent-subsidiary-affiliate relationship are commercially interdependent and can operate only with the aid of a corporation whose credit position is strong. Material men and contractors, manufacturers and suppliers, sellers and customers typify such relationships connoting a business nexus.

Stock Options And Other Executive Incentive Arrangements, Charles W. Steadman

Vanderbilt Law Review

The immense economic expansion and changes of the post-war period have generated numerous problems. In American business a major product of this is to be found in the difficulty of developing and maintaining the reservoir of executive talent at levels sufficiently high that managerial functions can continue to be performed with an advanced degree of efficiency. The shortage of qualified executives has been widely reported. The competition for those available is intense and increasing.

Unfortunately, it would seem that at the very time the need is greatest the normal incentives for an individual to assume major executive status have been …

Business Associations--1959 Tennessee Survey, F. Hodge O'Neal

Vanderbilt Law Review

The Eighty-first General Assembly enacted a considerable number of significant statutes affecting business organizations or their activities. One of the new statutes made important changes in the Securities Law of 1955. Several of the statutes were designed, or at least professed to be designed, to encourage the commercial and industrial development of Tennessee. On the other hand, Tennessee courts handed down during the survey period only two or three opinions touching on business associations questions, and those questions were of but little importance. In general, this article discusses the statutes first, then the judicial decisions.

Book Reviews, William J. Curran, Edward R. Hayes (Reviewer)

Vanderbilt Law Review

Forensic Medicine By Douglas J. A. Kerr New York: MacMillan Co.,1957. Pp. v, 363. $6.50.

Practical Forensic Medicine By Francis E. Camps & W. B. Purchase New York: MacMillan Co., Pp. vii, 541. $13.50.

reviewer: William J. Curran

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Close Corporations: Law and Practice By F. Hodge O'Neal. Chicago: Callaghan & Co. 2v. Pp xx, 369; vii, 437. $30.00.

reviewer: Edward R. Hayes

Business Associations--1958 Tennessee Survey, F. Hodge O'Neal

Vanderbilt Law Review

Only a handful of cases were decided in Tennessee during the survey period which raised questions in the field of business associations.Some of the issues raised in these cases, however, were of considerable interest and importance. ...

Disregarding Corporate Entity in Close Corporation: The close corporation, just as the public issue corporation, is generally viewed as a "legal entity" having in law an existence separate and apart from its shareholders. This means that rights, duties and other legal relations arising out of an incorporated enterprise, irrespective of whether it is widely held or closely held, are usually adjusted as though …

The Legal Status Of Joint Venture Corporations, Thomas F. Broden, Alfred L. Scanlan

Vanderbilt Law Review

American industry employs many forms of business organizations. The sole proprietorship, the partnership, general and limited, the joint venture, the joint stock company, the corporation, public issue and close, and many others are all familiar and well established in their use. This article deals with the use by American industry of the close corporation to carry on a joint venture. With due deference to purists in legal terminology we have elected to refer to this particular type of corporate entity as the joint venture corporation. In this article we not only look at the use made of the joint venture …