Professional Documents
Culture Documents
5) June ‘63- Alberto illegally seized and took control of all the assets
and books of C from the accountant-cashier, concealed them illegally and
refused to allow any member of the C to see and examine these.
6) Alberto refused to vacate his office and deliver the assets and books
to De la Rosa and also continued to perform unauthorized acts for and in
behalf of the C.
8) CFI: granted PI
“Ds shall serve until the election and qualification of their duly
qualified successor.”
8) Feb ’77- in a special meeting held specially for that purpose, the
Amended B-Ls were Ratified by more than 80% of the stockholders of
record
HELD 1: YES, C has the power to provide for the qualifications of its
Directors!
In this jurisdiction, under section 21 of the Corporation Law, a
corporation may prescribe in its B-Ls "the qualifications, duties and
compensation of directors, officers and employees". This must necessarily
refer to a qualification in addition to that specified by section 30 of the
Corporation Law, which provides that "every director must own in his
right at least one share of the capital stock of the stock corporation of
which he is a director.
RATIO:
7) a few days after said notice was issued- Coruña (as member of the
existing BOD) and Ledesma (as a simple shareholder) instituted before
CFI Neg Occ a civil action against the trustees and the BINALBAGAN
ESTATE, INC. for the purpose of enjoining the meeting contemplated in
the notice above-mentioned
RATIO: The law contemplates and intends that there shall be one set
of directors at a time and that new directors shall be elected only as
vacancies occur in the directorate by death, resignation, removal, or
otherwise.
2) Sept ’32- Minority SHs (Angeles, de Lara and Bernabe) for and in
behalf of the corporation, PARANAQUE RICE MILL INC. filed a complaint
against a majority of the BODs. They allege, inter alia, that:
Prayed that:
a) C be placed under receivership
c) BOD be removed
HELD 1: There is ample evidence in the present case to show that the
defendants have been guilty of breach of trust as directors of the
corporation and the lower court so found.
RATIO:
1) The board of directors of a corporation is a creation of the
stockholders and controls and directs the affairs of the corporation by
delegation of the stockholders. But the board of directors, or the majority
thereof, in drawing to themselves the powers of the corporation, occupies
a position of trusteeship in relation to the minority of the stock in the
sense that the board should exercise good faith, care and diligence in the
administration of the affairs of the corporation and should protect not
only the interests of the majority but also those of the Minority of the
stock.
HELD 2: In the present case, however, the properties and assets of the
corporation being amply protected by the appointment of a receiver and
in view of the statutory provisions above referred to, we are of the
opinion that the removal of the directors is, under the circumstances,
unnecessary and unwarranted. The seventh assignment of error is,
therefore, sustained.
HELD 3: We, therefore, find no error in the decision of the lower court
ordering the issuance of a certificate for 600 shares of stock of the total
par value of P15,000 to Higinio Angeles.
Campbell v. LOEW’S INC. (Delaware Case)
0) LOEW’S BOD has 13 Ds
1) 2 Factions have been fighting for control of LOEW’S
a) Pres. Vogel’s Faction
b) Tomlinson’s Faction
3) July 17-18:
a) 2 Vogel Directors resigned
b) neutral D resigned
4) July 19- Tomlinson faction asked that a D’s Meeting be called for
July 30 to consider the problem of filling the Director vacancies
5b) Since the Vogel faction will not attend the Directors’ meetings, or at
least will not attend directors’ meetings at which matters may possibly be
considered to which they do not desire to have considered, it follows that
the Tomlinson faction is unable to muster a quorum of the B and is thus
unable to take action on behalf of the B.
6) July 29- Pres. Vogel sent out a Notice calling a SH’s Meeting for
Sept 12 for the ff purposes:
a) fill director vacancies
b) amend B-L
i. to increase BOD from 13 to 19
ii.to increase the quorum from 7 to 10
c) to elect 6 additional Ds
d) to remove Meyer and Tomlinson as Ds and to fill such
vacancies
PART 1
ISSUE 1: WON the Pres. has the authority to call a special meeting of
SHs upon policy matters w/c have not been defined by the BOD?
HELD 1: Though the purposes for w/c the Pres. called the meeting
were not in furtherance of the routine business of the C, NEVERTHELESS
the SHs, by permitting the quoted B-L to stand, have given the Pres. the
power to state there broad purposes in his call.
I do not believe the call of the SH’s meeting for the purposes
mentioned is action of the character w/c would impinge upon the power
given the directors by the statute. A B-Ls giving the Pres the power to
submit matters for SH action presumably only embraced matters w/c are
appropriate for SH action. So construed, the B-L do not impinge upon the
statutory right and duty of the board to manage the business of the C.
___________
HELD 3: B-L permit the Pres to call a meeting for any purpose. This is
broad and all-embracing language and must include the power to call a
meeting to fill vacancies. The fact that the SHs may on their initiative
have the right to call a meeting for that purpose does not seem to be a
sufficient reason for implying that the Pres is hereby deprived of that
power.
Under the B-Ls, the Pres has the power to call a meeting to fill
vacancies on the BOD.
__________
LT 5: SHs of a Delaware C have no power to remove Ds from office even
for cause and thus the call for that purpose is invalid.
PART 2
HELD 2: The Vogel group should be enjoined from voting any proxies
unless and until the Tomlinson board members are given a reasonable
period to solicit proxies after a SH’s lists is made available to them w/o
expense by the C.
LT: Vogel group should be enjoined from voting any proxies obtained as a
result of the material sent out by Vogel. Vogel’s letter to th SHs, the
proxy statement and the form of proxy deceived and misled the SHs into
believing that the matters noticed for consideration by the SHs were
proposed by the company or its management, whereas the Vogel group is
not authorized to speak as “management”.
HELD 5: I cannot find that the fact that the so-called Vogel directors
did not attend D’s meetings called to take action which would give an
opposing faction an absolute majority of the Board-solely because of
director resignations- is such a beach of their fiduciary duty that they
should be judicially compelled to attend board meetings. This is
particularly so where SH action is in the offing to fill the board.
In Re Giant Portland Cement Co. (1941, Delaware Case)
0) 24 Feb- SH’s meeting
7) Petitioners LT:
Not only claim that numerous votes cast on certain shares
should not be counted for the “Opposition” ticket, declared elected,
but also claim that certain other votes cast for the “Management”
ticket were improperly rejected by the inspectors and should be
counted.
10) Certain shares were however sold by record owners, and the stock
certificate were duly assigned and delivered to the purchasers prior to the
SH’s meeting
11) Of the shares claimed to have been improperly counted, 5472 were
cast and counted for the “Opposition” Ticket on which the 5 th placer
(Craigmyle) and his associates were nominees, and all of whom were
elected.
12) 1384 shares in the same category were however voted and counted
for the “Management” Ticket.
HELD 1: The persons on whose proxies the SHs’ meeting was held,
were SHs of record w/n the provision of the statute, though they were not
real beneficial or equitable owners of that stock.
RATIO
1) As between the transferor and the unrecorded transferee to the
stock certificates, the legal title, apparently, passes to the latter. Practical
reasons may, perhaps, justify that rule. But a very different rule applies
between the C and the mere unrecorded assignee of the certificate of
stock. That is because limited contract restrictions, relating to stock
transfers, are for the benefit of the C, and to enable it to ascertain from
its records, who its members or stockholders are.
4) All of the stock in PACIFIC WAXED PAPER CO. have voting power.
In the event of the death of Jordan, Engle will have the same voting
right as to the stock of PACIFIC WAXED PAPER CO. and Jordan, or either
of them and contained a similar irrevocable proxy provision in favor of
Engle binding upon the successors, heirs and legal representatives,
respectively of PAINE-MITCHELL CO. and Jordan.
ISSUE: WON the proxy to vote the stock (in PACIFIC WAXED PAPER
CO.) owned by the PAINE-MITCHELL and Jordan was REVOCABLE?
It is clear from the proxy agreement and the facts of the case that
the parties intended that the Paine-Mitchell Co. stock should be used in
conjunction with the stock owned by Engle so that the policies of the
respondent could thus be controlled.
In the situation before us, Engle was more than a mere agent. In
voting the stock, he served purposes of his own in maintaining control of
the C by the choice of directors and the determination of its policies and
business affairs. This voting of the stock for these purposes was the
subject matter of the agency. Engle acquired an interest in the subject
matter of the power given to him and this interest was coupled with such
power. The power to vote the stock was necessary in order to
make Engle’s control of the C secure.
6) The reason for rejecting the proxies and the votes offered by
Alejandrino:
ISSUE 1: WON the said contracts of pledge are against public policy.
HELD1: NO, the contracts of pledge are valid! If it is not against
good morals or public policy for a person to loan money on shares
of stock, we discern no reason whatsoever why it should be
considered immoral or violative of public policy for him to
demand, as part of the consideration for the loan, the right to
protect his investment by exercising the right to vote the stock or
, in other words, to manage the property delivered to him as
security, so long as the loan is unpaid.
8) Agreement lasted Dec ’54 (at w/c time the Agreement was not
adhered to)
9) Suit was filed by 3 SHs who were not part of the agreement
(Abercombie, PHILLIPS and SUNRAY) against the other Shareholders and
the Agents contending that:
10) Answer: it is not, and was not intended to be, a voting trust, and is
a mere pooling agreement of the kind recognized as legal in Delaware by
the decision in Ringling.
3) 29th Dec ’22- TEAL & COMPANY was solvent and in the
enjoyment of a large, growing, and lucrative business and in the
possession of a valuable reputation and good-will.
4) Since its organization (in May, 1919) TEAL & COMPANY had done its
banking business and financing almost exclusively thru and with ASIA
BANKING CORP. (BANK)
5) By reason of such continued relations the officers of TEAL &
COMPANY had acquired trust and confidence in the integrity and good
intentions of ASIA BANKING CORP. and its officers and the other
defendants in their friendliness to themselves and the COMPANY.
a) personal property
8) Toward the end of the year 1922- the BANK (through its manager
the defendant Mullen) represented to the COMPANY and its managers
that for the protection both of the BANK and the COMPANY it was
advisable for them both that:
c) BANK represented that if this were done the BANK would then
finance the COMPANY under its own supervision
10) Relying upon the previous friendly relations between the BANK and
the COMPANY and between the individual defendants and these plaintiffs
and relying upon the promise and representations of the defendants,
Plaintiffs were induced to sign and did sign and deliver to the BANK
simultaneously a so-called 'Voting Trust Agreement,' executed by Plaintiff
stockholders and a 'Memorandum of Agreement' executed by the
COMPANY, both dated and executed and delivered the 29th day of
December, 1922, the two forming one document.
11) Upon their reliance on the good faith and good-will of the
defendants, Plaintiffs were- induced to sign the 'Memorandum of
Agreement,' and 'Voting Trust Agreement,' Exhibit A, understanding from
the defendants that
c) that they did not contain the true agreement between the
Bank and the Company which was to finance the Company
without interference from the above named creditors,
e) the further agreement that in case the Bank did not operate
under the said voting trust because of the disapproval by its
New York headquarters of such action, or for any other cause,
the said trust would be cancelled and the stock in and control
of the Company returned to its true owners.
12) ACT 1. Shortly after the execution and delivery of the ‘voting
trust’ and ‘memorandum of agreement’, defendant Mullen, caused and
procured, by virtue of the powers delegated in the said voting trust, the
displacement and removal from the BOD of the COMPANY of each and
every person who was at the time of the execution of the said voting trust
a stockholder in the Company and the substitution in their places as such
directors, of the above named persons defendant, or of other persons at
the time employees and servants of the Bank, that thereafter and at no
subsequent time did the said trustee allow or permit to act as a Director
of the Company any person who was in fact a stockholder in the
Company; that no one of the so-called directors so placed in ostensible
office, at any time has ever purchased from any stockholder of the
Company a single share of the capital stock thereof, or paid to any
stockholder or the Company any money or consideration whatsoever for
the stock by virtue of the assumed ownership of which he has assumed to
be a director of the Company, and that at all time since, the Company has
been exclusively controlled and managed by the said defendants none of
whom had any legal or equitable right to a voice in the control or
management thereof.
13) ACT 2. The new directors proceeded to remove from office the
Secretary of the Company, and to discharge from employment all of the
old responsible managers and foremen in the office and shops who were
loyal to the Company and to these plaintiffs as the stockholders thereof
and to displace them substitute for them creatures of their own choosing
whose interest consisted wholly in pleasing themselves and the Bank, and
who were wholly foreign to the stockholders, these plaintiffs who were
and are the real owners of the Company.
18) ACT 6. That after the incorporation of PMC, the Bank turned
over to the Philippine Motors Corporation all of the business and assets of
the company of every name nature and description and with the
connivance and consent of the individual defendants acting in their double
capacity as directors of both corporations, permitted and assisted the said
Philippine Motors Corporation to enter and possess itself of the premises
and good will of the Company and to continue and carry on the said
business for the sole benefit of the new corporation and to collect the
debts owing to the Company and convert the advantages, profits and
proceeds thereof to itself.
19) And that at all times since the said Philippine Motors Corporation
has continued to conduct and advantage itself of the business of the
Company to the disregard of and detriment to the rights of these plaintiffs
and to their damage.
20) Plaintiffs pray that the Defendants be ordered at once to cancel the
said Voting trust and to return to these plaintiffs their shares of the stock
of Teal & Company, taken under said trust and to return to them all the
books and records of every kind and nature of said Teal & Company, and
to regain to these defendants their pretended positions in and control of
Teal & Company.
HELD: Plaintiffs state a good cause of action for equitable relief and
their complaint is not in any respect fatally defective. The judgment of the
court below is therefore reversed, the defendants' demurrer is overruled,
and it is ordered that the defendants answer the complaint within ten
days from the return of the record to the Court of First Instance.
The conclusion of the court below that the plaintiffs, not being
stockholders in the Philippine Motors Corporation, had no legal right to
proceed against that corporation in the manner suggested in the
complaint evidently rest upon a misconception of the character of the
action. In this proceeding it was necessary for the plaintiffs to set forth in
full the history of the various transactions which eventually led to the
alleged loss of their property and, in making a full disclosure, references
to the Philippine Motors Corporation appear to have been inevitable. It is
to be noted that the plaintiffs seek no judgment against the corporation
itself at this stage of the proceedings.
The court below also erred in holding that the investigation of the
transactions referred to in the complaint is not within the province of the
courts, but should be conducted by some other agency. That discovery,
such as that demanded in the present action, is one of the functions of a
court of equity is so well established as to require no discussion.
4) The cost of the hotel was to be about $3M to be raised by the sale
of $1.8M of 1st mortgage bonds and $1.25M of preferred stock.
8) Plaintiff (Mackin) and the intervener (Cooper) are the owners of the
trust certificates representing 80 shares and 1,520 shares, respectively,
of the common stock held by the defendant trustees. Their claim is that
the voting trust is VOID, that the trustees and those appointed by them
have mismanaged the C and have caused large losses; that in the event
of a SH’s meeting, the trustees will vote the common stock; and that the
Plaintiff has been denied the right to inspect the books.
ISSUE: WON the voting trust executed on 3 March ’23 (whereby the
SHS of the no par value common stocks of the NICOLLET HOTEL, INC,
agreed that said stock shall be voted by 3 designated trustees for at least
a period of 10 years)?
Also, it appears that both the plaintiff and the intervener here
became purchasers of the trust certificates after the creation of the TA
and thereby presumably had full knowledge of the limitation of their
rights which went with such holdings at the time of purchase.
a) Davao City
b) Misamis Occidental and
c) Leyte
4) In need for additional operating capital to place the three (3) coco-
processing mills at their optimum capacity and maximum efficiency and
to settle, pay or otherwise liquidate pending financial obligations with the
different private banks, Batjak applied to PNB for additional financial
assistance.
5) That a voting trust agreement for five (5) years over 60% of the
outstanding paid up and subscribed shares shall be executed by
your stockholders in favor of NIDC;”
9) As regards the oil mill located at Davao City, the same was
similarly foreclosed extrajudicial by NIDC. It was sold to NIDC as
the highest bidder. After Batjak failed to redeem the property,
NIDC consolidated its ownership of the oil mill.
10) When Haley (as proxy for Mrs. Haley) refused to follow the
instructions given by Loos that the stock be voted for an adjournment and
the meeting continued, the arbitrator Loos then directed that the stock of
the 2 parties should be voted for 5 named nominees for directors.
11) Haley, as proxy for his wife, contrary to the instructions of Loos,
voted all his wife’s shares for the election of Aubrey Haley and James
Haley.
12) Petitioner filed a suit to contest the validity of the election of Ds and
officers of defendant C.
13) Defense 1: said document was only “an agreement to agree” which
means that there exists no legally enforceable obligation
HELD 3: The stock held under the A should have been voted pursuant
to the direction of the arbitrator Loos to the parties or their
representatives.
5) E.K. BUCK RETAIL STORES, Earl Buck filed a Suit for Declaratory
Judgment against Walter Harkert, his wife and HARKERT HOUSES to test
the validity of a C control agreement entered into by the parties in their
capacities as SHs in HARKERT HOUSES.
“and such directors and managers shall not be elected in any other
manner”
HELD 3: SHs’ control agreements are valid where it is for the benefit of
the C, where it works no fraud upon creditors or other SHs, and where it
violates no statute or recognized public policy.
It is not here established that the contract worked a fraud upon the
C, creditors, SHs, or any other person.
HELD 5: The Agreement does not place Buck (the owner of 40% of the
stock) in control of the C. It does give him a veto power over questions of
corporate policy. It is plain that Buck would not have cancelled the gross
indebtedness of Harkert and paid in fresh money w/o the SCA being
made. It must be assumed that the purpose of the A was to prevent the C
from getting into financial distress by a continuance of the C-policy which
brought about the necessity for its reorganization at the time Buck upon
the C not spreading itself too thin in the enlargement of its business.
Clark (25% SH) v. Dodge (75% SH) et al. (NY case, 1936)
1) The 2 Corporate defendants are NJ C manufacturing medicinal
preparations by secret formulae.
2) Clark owned 25% while Dodge owned 75% of the stock of each C.
7) Feb. ’21- Dodge and Clark and the sole owners of the stock of
both Cs, entered into a written A under seal, which after reciting the
stock ownership of both parties, the desire of Dodge that Clark should
continue in the efficient management and control of the business of BELL
& COMPANY, INC., so long as he should ‘remain faithful, efficient and
competent to so manage and control the said business;” and his further
desire that Clark should not be the sole custodian of a specified formula
but should share his knowledge thereof and of the method of
manufacture with a son of Dodge, provided in substance as follows:
That Dodge during his lifetime and, after his death, a Trustee to be
appointed by his will, would so vote his stock and so vote as a D that the
plaintiff:
a) should continue to be a D of BELL & COMPANY
b) should continue as its GM so long as he should be ‘faithful,
efficient and competent;”
c) should during his life receive ¼ of the net income of the Cs
either by way of salary or dividends;
d) that no unreasonable or incommensurate salaries should be paid
to other officers or agents which would so reduce the net income
as materially to affect Clark’s profit
8) Clark filed an action for specific performance against Dodge
alleging:
HELD: A LEGAL! The A was legal and the complaint states a cause of
action. There was no attempt to sterilize the BOD. The only restrictions on
Dodge were:
The provision that such stock may vote upon the happening of such
contingencies clearly implies that it may not until the contingencies
happen.
“That for and during the period of 20 years from the date
hereof, [SHERMAN & ELLIS, INC. (Managing C)] will supply xxx the
underwriting and executive management xxx in the person of
its president, Frank Ellis, or such other of its officers as it may from
time to time designate”
The length of time (20 years) during which the agreement was to
operate likewise indicated that not only managerial powers, were
delegated, but the entire policy of the CASUALTY CO. business was to be
fixed and determined by SHERMAN & ELLIS (Managing C).
2) Minority SHs brought this suit to have those B-Ls adjudged valid
and to enjoin, the other SHs from doing anything inconsistent therewith.
HELD 1 (no.1): The B-L which requires unanimous action of SHs to pass
any resolution or take any action of any kind, is equally obnoxious to he
statutory scheme of stock C management.
RATIO 3: The very idea f a ‘quorum’ is that, when that required number
of persons goes into session as a body, the votes of a majority thereof are
sufficient of binding action.
HELD 4 (no. 4) (only valid portion): The 4th B-L requiring all SHs to
amend the B-L is not specifically or impliedly authorized or forbidden by
any NY statute. Nor does in involve any public policy or interest.
But once proper B-Ls have been adopted, the matter of amending
them is no concern of the State.