Commercial Law Commons^™

State Buy-American Laws - Is There A Judicial Solution?, George C. Lamb, Iii

Vanderbilt Law Review

State buy-American statutes are among the most peculiar of legislative responses to problems of unemployment and low levels of economic growth in the United States. Designed to decrease unemployment among American workers by promoting the development of American industry, the statutes typically require that purchasers of goods to be used in state-subsidized projects prefer products manufactured in America over those made in foreign countries, often regardless of price or quality.' State buy-American statutes are presently in effect in a number of states, despite criticism that they constitute devices of economic protectionism for domestic goods and barriers to a unified United …

Section 243 And Bootstrap Sales: The Dilemma Of The Corporate Shareholder, Don B. Cannada

Vanderbilt Law Review

The differences in the tax treatment of dividends and redemptions, the tax goals of individual and corporate shareholders, and the characterizations given corporate distributions by the Internal Revenue Service and the courts have combined to create over-whelming confusion for corporate bootstrap sales. The purpose of this Note is to formulate a rational, consistent approach to the tax treatment of corporate bootstrap sales. Accordingly, this Note initially will discuss various lines of cases governing the possible tax treatment of the seller in a bootstrap acquisition. Special emphasis will be placed on the recent line of cases that deny section 243 intercorporate …

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 …

Recent Cases, James S. Hutchinson, James R. Newson, Iii, Andrew W. Byrd, Judith Mi. Janssen, John E. Tavss

Vanderbilt Law Review

Civil Procedure--Attorney-Client Privilege-- Privilege Protects Communications Made by Corporate Employee To Secure Legal Advice and a Matter Committed to a Professional Legal Advisor Is Prima Facie Committed To Secure Legal Advice

James S. Hutchinson

attorney-client privilege, the "predominance" test, legal activities

In summary, courts have not yet resolved how to determine who may qualify as the corporate client for purposes of the attorney-client privilege...

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Constitutional Law-- Confrontation Clause-Admission at Trial of Slain Informant's

Prior Grand Jury Testimony Against Defendants Does …

Remedies Under The Tennessee Commercial Code, John A. Walker, Jr.

Vanderbilt Law Review

The scope of this Article is limited to a discussion of the enforcement of consensual' liens under the Uniform Commercial Code as enacted in title 47 of the Tennessee Code. It does not include the panoply of other, nonconsensual remedies such as prejudgment attachment and postjudgment levy. In particular, this Article examines the applicability of the doctrine of election of remedies, the mechanics of repossession, and the rules applicable to the disposition of collateral, primarily as these concepts have been interpreted and applied by the courts of Tennessee.

Preamble, Herbert Wechsler

Vanderbilt Law Review

As readers of the Review are undoubtedly aware, the American Law Institute was organized in 1923 as a permanent organization of lawyers, judges, and law teachers "to promote," as its charter recites, "the clarification and simplification of the law and its better adaptation to social needs." ...

Work on the Code began' in 1969 with Professor Loss as the Reporter, aided by consultants and advisers whose experience and expertise is equaled only by their high distinction in this field. Five tentative drafts have been printed in the years from 1972 to 1976 and a sixth, which now is off the …

Antitrust Consequences Of United States Corporate Payments To Foreign Officials, James F. Rill, Richard L. Frank

Vanderbilt Law Review

This Article examines the feasibility and desirability of marshalling section 2(c)' of the Clayton Act as amended by the Robinson-Patman Act and sections 1 and 2 of the Sherman Act against a practice having deep legal, political, and emotional significance in the United States and overseas. Difficult questions of jurisdiction and coverage are presented, as are major issues of public policy on what the role, if any, should be for these provisions.

Products Liability--Liability Of Transferee For Defective Products Manufactured By Transferor, P. Anthony Lannie

Vanderbilt Law Review

In the landmark decision, Greenman v. Yuba Power Products,Inc., , the California Supreme Court eliminated a similar barrier to consideration of products liability goals-the breach of warranty theory designed to meet the needs of commercial transactions. Justice Traynor addressed the central question-"When should the manufacturer be responsible to those injured by his products?"'-and concluded that "rules . . .that were developed to meet the needs of commercial transactions cannot properly be invoked to govern the manufacturer's liability to those injured by their defective products unless those rules also serve the purposes for which such liability is imposed."' Confronted with another …

Fiduciaries And Fairness Under Rule 10b-5, Thomas J. Sherrard

Vanderbilt Law Review

In Marshel v. AFW Fabric Corp., decided on February 13,1976, the court unanimously sustained a challenge to long-form merger under New York law for the sole purpose of "going private,"concluding that despite full disclosure, the merger itself constituted a fraudulent scheme because it represented an attempt by the majority stockholders, in violation of their fiduciary obligations, to utilize corporate funds strictly for personal benefit and for no legitimate corporate purpose...

It is the purpose of this article to analyze the Green and Marshel decisions against the backdrop of previous cases in the area of fraudulent mismanagement, to gauge their impact …

Membership Rights In Nonprofit Corporations: A Need For Increased Legal Recognition And Protection, Robert H. Brownlee

Vanderbilt Law Review

This Note has focused on three issues concerning membership in nonprofit corporations: whether members are entitled to increased protection of voting rights; whether state courts adequately have analyzed questions of membership standing to assert individual claims; and whether members should have standing to institute derivative actions on behalf of a nonprofit corporation. In each of these areas membership rights deserve increased legal recognition and protection.

Interstate Corporate Income Taxation-Recent Revolutions And A Modern Response, Eugene F. Corrigan

Vanderbilt Law Review

In recent years significant technical advances have enabled large corporations to sell into states from great distances and with a minimum of contact in those states. Nevertheless, the states and their political subdivisions are confronted with the claims of corporations that jurisdictional barriers to corporate income taxes should be raised, that improved enforcement techniques should be prohibited, and that certain classes of income should be immunized completely from state taxation. These revolutionary technical advances have created both major tax administration problems and tax administration opportunities for the states. Some of the latter, however, remain unexploited. This article examines the ramifications …

State Taxation Under The Commerce Clause: An Historical Perspective, Jerome R. Hellerstein

Vanderbilt Law Review

Although Congress has plenary power under the commerce clause to regulate state taxation of interstate commerce, that power remained virtually unexercised until 1959. As a consequence of the silence of Congress, the task of reconciling the competing interests of states, multistate businesses, and local businesses, and accommodating those interests to the needs of a national economy fell by default to the Supreme Court. The instrumentality available to the Court for dealing with the complex political, fiscal, and economic controversies inherent in state taxation of multistate business was the commerce clause (augmented by due process restrictions and,to a lesser extent, the …

Taxation Of Income From Intangibles Of Multistate-Multinational Corporations, William D. Dexter

Vanderbilt Law Review

In determining whether income from intangible investments should be subject to general apportionment rules or assigned to the commercial domicile or elsewhere the challenge to the states currently is to ascertain the true facts surrounding large corporate investments in intangible properties. The distinctions in UDITPA between business and nonbusiness income mandate this kind of factual inquiry. It is questionable, however, whether this distinction should continue to be given any significant effect, since it lacks substance and leads to endless conflict between large multistate and multinational corporations and each state in which they do business. Furthermore, in determining the state income …

"Solicitation" And "Delivery" Under Public Law 86-272: An Uncharted Course, Paul J. Hartman

Vanderbilt Law Review

In 1959, in response to pressure from multistate business and over the protest of state tax authorities and others, Congress passed Public Law 86-272 limiting the power of state and local governments to tax net income derived from interstate commerce.' The provisions of Public Law 86-272, briefly stated, prohibit state or local governments from imposing net income taxes on sellers of tangible personal property whose business activities in the state are limited to one or more of the following:. solicitation of orders for sales of tangible personal property by the seller or his own representative when the orders are sent …

The Constitutionality Of The Multistate Tax Compact, Robert M. White

Vanderbilt Law Review

It is now firmly established that states have the constitutional power to tax multistate businesses on net income reasonably attributable to activity within the taxing state. Within this legal frame-work, limited only by Public Law 86-272, the states have fashioned separate and diverse rules for the taxation of multistate corporations.'The recently formed Multistate Tax Compact provides an efficient alternative to both the present disarray of state statutes and possible federal regulation of interstate taxation. The principal purposes of the Compact are to establish uniform rules for determining state tax liabilities of multistate taxpayers, to eliminate ineffective tax administration and the …

Recent Cases, Susan E. Dominick, Robert D. Butters, Walter T. Eccard

Vanderbilt Law Review

The first amendment guarantee of free exercise of religion, although couched in absolute terms, has never been considered an absolute right. The first significant free exercise case, Reynolds v.United States,' upheld the conviction of a Mormon polygamist who claimed a religious exemption from the bigamy laws on the basis of the first amendment. The Court held that while Congress was left powerless to legislate in matters of mere opinion, it was nonetheless" left free to reach actions which were in violation of social duties or subversive of good order."'

Susan E. Dominick

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The instant decision appears to be the …

Tax Problems Associated With The Incorporation Of A Partnership: Revenue Ruling 70-239h, Peter Olsen

Vanderbilt Law Review

The publication of Revenue Ruling 70-239 creates concern with respect to the possible impact of the very broad language of the Ruling in areas not specifically covered. This concern relates to the availability of an ordinary loss deduction under section 1244; various personal holding company and "subchapter S" problems; the impact on section 357(c) and section 1239; the effect on basis computations and the control requirement of section 351; and holding period considerations under section 1223. This article will attempt to examine Revenue Ruling 70-239 with a view to (1) evaluating the accuracy of the conclusion that all three corporation …

The Original Issue Discount Deduction In Bonds-For-Noncash Property Exchanges, Charles L. Almond

Vanderbilt Law Review

The first codification of the United States Internal Revenue laws gave a corporation a deduction from income of "[a]ll interest paid or accrued within the taxable year on its indebtedness. ...This same language is presently in force in the Internal Revenue Code of 1954. The statutory language authorizing the interest deduction has never dealt explicitly with the deductibility of discount arising upon a corporation's original issuance of bonds. Treasury Regulations promulgated pursuant to the interest deduction sections, however, have recognized continually that the statutory language embodies a deduction for original issue discount. 'The latest pre-1969 regulation, which limits itself to …

Recent Developments, Author Unidentified

Vanderbilt Law Review

The frequent criticism of the strict locality test as the sole determinant of admiralty jurisdiction resulted in the Supreme Court's requirement of a significant relationship with traditional maritime activity in Executive Jet. The Court's failure to give lucid guidance to later courts in applying the new requirement in non-aviation cases was partially remedied by the Fifth Circuit's implementation of the maritime-nexus test utilizing a factor analysis in Kelly. For those courts that follow Kelly, this new interpretation of the test will provide needed guidelines for determining when admiralty should properly exercise jurisdiction. The courts should not limit themselves, however, to …

Recent Cases, Author Unidentified

Vanderbilt Law Review

Civil Procedure--Service of Process--California Long-Arm Statutes Abrogate State's Immunity Doctrine

Seeking recovery of money owed him by defendant European corporations;' plaintiff brought suit in a California state court.While attending federal district court in Florida for the sole purpose of giving a deposition in a trademark infringement suit instituted by one of the corporations, defendants' representative was personally served with process in the California action on behalf of himself and the defendant corporations. Defendants moved to quash service of process on the ground that the immunity rule prohibited service of civil process upon a witness in attendance in a court outside …

Characterization Of Shareholder-Creditor Bad Debt: United States V. Generes Sounds The Knell For Deductions From Ordinary Income, Bland W. Cannon, Jr.

Vanderbilt Law Review

The primary focus of this Note is on the development of the judicial doctrines interpreting the provisions of section 166 as applied to share-holder losses on loans to related corporations. Whether, in any given case, advances by shareholders will be considered loans or capital investments is beyond the scope of this work. For purposes of this study, the existence of a valid debtor-creditor or debtor-guarantor relationship between the corporation and its shareholder will be assumed. A brief description of the statutory scheme of the bad debt and loss provisions will be followed by a discussion of the origins and development …

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.

The Taxation Of Stock Dividends And The Tax Reform Act Of 1969--Foreboding Implications And Constitutional Uncertainties, John A. Pickens

Vanderbilt Law Review

Federal income taxation of stock dividends has followed a diverse course. Since the introduction of a federal income tax on all stock dividends in 1916, five major changes have occurred in this area. The most recent of these changes is embodied in section 421 of the Tax Reform Act of 1969, which amends section 305 of the Internal Revenue Code of 1954. When the 1969 Amendments are compared with the treatment of stock dividends under the Internal Revenue Code of 1954, they can be viewed, in conjunction with the regulations issued in 1969 under the 1954 Code, as initiating a …

The Multinational Corporation As A Challenge To The Nation-State: A Need To Coordinate National Competition Policies, G. Philip Nowak

Vanderbilt Law Review

The recent growth and development of the multinational corporation presents the international community with a unique challenge. For the first time man has an instrument which enables him to use the world's resources with maximum efficiency. He is no longer restricted by national boundaries, but is able to allocate resources on a world wide basis. In addition, the multinational enterprise provides a means for linking the developing countries to an international productive scheme. These countries are now able to undertake production of goods in which they have a comparative advantage and more rapidly increase their rate of economic development.Since the …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Constitutional Law--Armed Forces--Courts-Martial Jurisdiction over Military Personnel Limited to Service--Connected Offenses

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Constitutional Law--Desegregation--Public Housing Authority Required to Build Most Units in White Neighborhoods

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Constitutional Law--Double Jeopardy--Fifth Amendment's Guarantee against Double Jeopardy is Applicable to the States through the Fourteenth Amendment

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Constitutional Law--Garnishment--Prejudgment Wage Garnishment, in Absence of Conditions Requiring the Special Protection of a State or Creditor Interest, Violates the Due Process Clause of the Fourteenth Amendment

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Constitutional Law--State Taxation--State Use Tax Invalidly Applied to Fuel Gas Used as an Integral Part of Interstate Commerce

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Corporations--Corporate Director Accountable to Corporation Under State Law for Profits …

The Priority Conflict Between A Purchase Money Security Interest And A Prior Security Interest In Future Accounts Receivable, Howell J. Reeves

Vanderbilt Law Review

Article 9 of the Uniform Commercial Code established an exhaustive scheme for the determination and control of security interest in personal property and fixtures' which is now the law of all but one of the states and the District of Columbia Not the least momentous of the provisions in Article 9 are those that govern priorities among conflicting security interests in the same collateral. The purpose of this inquiry is to examine the rules of priority that the U.C.C. provides for a conflict between the holder of a purchase money security interest in inventory and proceeds and a holder of …

Insider Liability For Short-Swing Profits Pursuant To Mergers And Related Transactions, James P. Hemmer

Vanderbilt Law Review

This article considers the problems presented by the application of section 16(b) of the Securities Exchange Act of 1934 to corporate merger transactions. Mr. Hemmer argues that the"matching across" proposal, which has been suggested by some commentators, should not be applied to the merger situation. Instead, the author advocates that the "possibility of abuse" test, which the courts have applied to conversion transactions, should also. be applicable to the corporate merger. Mr. Hemmer feels this approach will prevent the abuses for which section 16(b) was enacted and, at the same time, provide the courts with a flexible test for this …

Bank Merger Policy And The Third National Bank Decision, Benjamin J. Klebaner

Vanderbilt Law Review

As measured by regional standards, banking in Tennessee's capital for years centered around three very large institutions and one of middle size. The latter, Nashville Bank and Trust Company(hereinafter Nashville Bank), merged into Third National Bank (the second largest bank in the area) in August, 1964, after the Justice Department failed to secure a preliminary injunction blocking the merger. This left Davidson County (the county in which Nashville is located) with seven banks, four of which were quite small. Nashville Bank was less than one-fourth the size of third-ranking Commerce Union Bank, but almost seven times as large as the …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Corporations--Equity--Specific Performance of Stock Option Granted Because of Tax Advantage Feature of Option

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Property--Landlord-Tenant--Rabbinical Court Establishes Far-Reaching Standard of Landlords' Obligations to Tenants

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Taxation--Federal Estate Taxation--Under Treasury Regulation Section 20.2031-8(b), Value of Shares in Mutual Funds Is Public Offering Price on Date of Death Rather Than Redemption Price

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Taxation--Mineral Rights--Carried Interest Loses Deduction for Depletion, Depreciation, and Intangible Drilling Costs During Recoupment

Some Legal And Economic Aspects Of Industrial Development Financing, Everett H. Falk

Vanderbilt Law Review

The increasing popularity of industrial development financing suggests that there are considerable benefits to be gained from the intelligent use of these plans. However, before a community commits itself to a particular industrial development project it should develop a clear concept of the direction in which the community is to move and it should seek to define its long-range economic objectives in the context of its ability to support industrial growth and its economic relation to other regions. The states themselves can, with professional assistance,undertake studies to define regional objectives; but statutory standards implemented by state agencies are necessary to …