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51 Cards in this Set
- Front
- Back
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Definition of Agency
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The fiduciary relation which results from the manifestation of consent by one person to another that the other shall
1) act on his behalf and subject to his control AND 2) Consent by the other to so act |
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Martin v. Peyton - New York money lending partner case.
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If a contract contemplates an association of two or more persons to carry on as co-owners of a business for profit, a partnership there is.
On the other hand, if there's an agreement to protect one person's assets but the other party still maintains day to day control of the business, no partnership. |
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Smith v. Kelly
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A guy is held out to the public as a partner, but doesn't have an equal share of the profits, or share in management - not partnership if no one intends to create it!
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Summers v. Dooley - trash business case.
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1 to 1 is not a majority. Equal rights in management of the business is important in UPA.
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National Biscuit Company v. Stroud - two guys with conflict about bread
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Partners' acts can still bind others, even if they don't agree
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Kessler v. Antinora - building house, one guy contributed money, other labor
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Implied agreement that labor equals capital. Doesn't matter what UPA says when you made an agreement.
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Roach v. Mead - borrowing money from your own client!
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Reasonable belief is key to apparent authority! Partner is liable for loans guy took out "in the course" of partnership business.
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Faranas - when you're a lawyer on retainer borrowing money
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If no legal advice is asked for, then your partnership isn't liable even for your dumb loans because it's not in the scope of partnership business.
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Meinhard v. Salmon
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Partners have fiduciary duty to one another! 'the punctilio of an honor most sensitive'.. gotta let partners know about opportunity! This is limited by RUPA 404 though.
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Enea v. Superior Court - defendants rented partnership property to themselves at low rent.
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No! Even without an express provision about fair rent, you're not supposed to hurt the partnership. Simple duty of loyalty.
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Bane v. Ferguson - angry retiree
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Don't owe a fiduciary duty to former partners.
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Singer v. Singer- dumb people said you could screw the partnership in contract.
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Well, they can! You can limit your fiduciary relationship by contract 'if not manifestly unreasonable"
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Meehan v. Shaughnessy - guys leaving law firm
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You violate your fiduciary duties if you're sneaky and violate UPA 20.
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Sullivan v. Hammer - art museum
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Business judgment rule covers charitable donation
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711 Kings Highway - ultra vires
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Um, you can't use ultra vires as a sword any more than a defense. Only limited exceptions (see MBCA 3.04c)
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Stanley How v. Boss - corporation never got formed!
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You're personally liable on contracts you sign on behalf of a nonexistent principle, until novation!
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McArthur v. Times - more promoter stuff
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Corps are NOT bound by pre-incorporation contracts, and can't ratify contracts, but can adopt by their actions.
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Robertson v. Levy - defective incorporation
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Statutes have abolished de facto and estoppel. But MBCA 2.04 makes it clear that de facto still potentially exists
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Cranson v. IBM - IBM tries to get out of a contract by denying corporate existence.
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Even if de facto doesn't work, estoppel applies if parties have acted assuming a corporation exists!
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Frontier Refining Company v. Kunkel's
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When persons hold out as corporation and none is formed,partnership is default form.
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Bartle v. Home Owners Co-Op - Never meant to make a profit, but, Corporate veil is only pierced when...
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Corporate veil is only pierced to prevent fraud or achieve equity. Here there is no fraud, misrepresentation, or illegality.
Dissent - Okay, companies should be capitalized. No reasonable expectation on behalf of creditors to deal witha business that might go under. Though on the other hand, they should have investigated. |
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DeWitt Truck Brokers v. Flemming - Fruit guy's corporation was just him.
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If corporation is a facade for an individual, big factor for piercing. Other factors : failure to follow formalities, he owned most of the stock, undercapitalization, non-payment of dividends.
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Batz v. Arrow Bar - dram shop, no piercing!
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No undercapitalization - 5k was enough!
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Radaweksi v. Telecom - getting to parent
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Errors in business judgment alone are not enough to pierce corporate veil and get to parent of subsidiary. Not undercapitalized if you have tons of insurance!
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Milton v. Caveny. Lawyer director swimming pool.
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In Cali, inadequate capitalization alone is sufficient to pierce the corporate veil.
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Fletcher v. Atex - People trying to pierce through Atex to get to Kodak!
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Alter ego parent/subsidiary piercing only happens when two things are present:
1) The parent and subsidiary operated as a single economic entity 2) An overall element of injustice or unfairness is present. Generally though, parents are supposed to dominate subsidiaries! |
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Cargill v. Hedge
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Reverse piercing was allowed because of close identity between Hedges and their corporation and strong policy reasons to further homestead exemption.
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Pepper v. Litton - deep roooock
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If company is going into insolvency and you do something to disadvantage creditors, we'll ratchet you down to treating your "loan" as equity, biatches!
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Nissen v. Miller
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Only four situations in which successor liability is allowed
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Slappey Drive
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Reclassify where the risk of business and other factors show that debt is DISGUISED as equity. Fine line between them sometimes. 13 factors - one is untimely interest payments
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Getting away with deep rock? Obre v. Allen
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NO sign of undercapitalization, fraud, or misrepresentation - this guy is cool!
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Hanewald v. Bryan - no more freebiwes
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Shareholders will be liable to corporate creditors to the extent their stock is not paid for! Gotta be at least par value.
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Smith v. Gross
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Worms- broad definition of the word security - if it is you can rescind under section '12 of 33 Act!
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Stokes wanted more stock!
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Common law pre-emptive right, holding that voting rights should be protected. We have elected option in 6.30.
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Katzowitz v. Sidler - Katz being squeezed out
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Even when pre-emptive rights are protected have to have a business reason for dilution of equity especially in closed corporations.
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Hyman v. Vesicol
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Outside shareholder had to give a million dollars to stay even or watch his interest decline from 20% to fraction. BUT, okay because of a valid business reason!
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Gottfried v. Gottfried, whiny family
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Courts are VERY deferential on the question of dividends - no bad faith, no problem!
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Dodge v. Ford Motor Company
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Uhhh, even if no bad faith, gotta give a business reason for lack of distributions - "shareholder maximazation principle"
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Donahue v. Rodd Electric
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Ummm, actually, closed corporation is like a partnership - same FDs - if no equal opportunity, then you've violated fiduciary duty. Equal opportunity test for buying back shares.
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Wilkes v. Springside
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You need a LEGIT BUSINESS REASON to fire minority shareholder, under Donahue.
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McQuade v. Stoneham
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Directors-stockholders cannot band together to keep each other in office – impeaches on domain of directors!
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Clark v. Dodge
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Welll, SLIGHT impingements are okay, esp if they're "sole stockholders"
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Long Park v. Trenton
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Um, sterilzation is NOT okay - they had appointed stockholder to a position that couldn't be changed by directors!
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Galler v. Galler
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Closed corporations are different – can impinge slightly on stuff directors should manage and still NBD. Can put shareholder protections in contract and it will be enforced. Significant statutory impact - people made whole CC statutes! We have 7.32.
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Zion v. Kurtz some people on crack
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Didn't comply with the statute for otherwise unenforceable CC agreement giving shareholders veto power, but court was like, 'this is cool'. Dissent thought they were crazy.
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Salgo v. Matthews
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Only record owner can vote.
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Ringling Bros.
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Vote pooling agreements are cool, guys, even if you're submitting things to arbitrator. MBCA 7.31 confirms this, finds they're specifically enforceable.
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Brown v. McLanahan asshole trustes
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Trustees can't screw around! Have to return voting rights in the condition they're given in.
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Lehrman v. Cohen
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It's okay to make new stock, with only voting rights, and give it to their attorney to prevent against deadlocks. Delegation of duty,but made by stockholder action!
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Ling and Co. v. Trinity Savings
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Reasonableness of share restrictions - our standard is 6.27
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Humphrys v. Winous Co
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Statutes allowing RIGHT of cumulative voting don't GUARANTEE that it will work! Can still classify directors
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