Triplex Shoe Co. v. Rice & Hutchins, Inc.
Supreme Court of Delaware · 1930-02-27 · cited 33×
The case was an appeal from the Court of Chancery's decision under Section 31 of Delaware's General Corporation Law determining the validity of the election of directors for the Triplex Shoe Company at its January 1929 annual stockholders' meeting, initiated by a stockholder's petition. The dispute centered on the validity of originally issued no-par common stock, a later certificate amendment increasing authorized shares and granting sole voting power to common stockholders, and whether preferred stockholders could vote or whether elected directors needed to own stock at the time of election. The court held that the preferred stock was entitled to vote in the absence of validly issued common stock, that directors need only qualify as stockholders before assuming office, and that the Chancellor's decree on the elected directors should be affirmed.
business & regulatory
Bodell v. General Gas Electric Corporation
Supreme Court of Delaware · 1927-02-22 · cited 27×
The case involved a dispute between holders of Class A and Class B common stock in General Gas & Electric Corporation over the directors' policy of permitting Class A stockholders to use their dividends to purchase additional Class A shares at $25 per share. The complainants argued that this arrangement unfairly favored Class A holders and violated the rights of Class B holders under the certificate of incorporation. The Court of Chancery denied injunctive relief, and on appeal the Delaware Supreme Court affirmed that decision. The court reasoned that the directors possessed broad statutory discretion to set the consideration for no-par-value stock, acted in good faith and with honest business judgment to raise needed capital at low cost, and did not infringe the equal rights of Class B stockholders.
business & regulatory
Bodell v. General Gas Electric Corporation
Supreme Court of Delaware · 1927-02-22
The case involved a challenge by holders of both Class A and Class B common stock (no par value) in a public utility corporation to the directors' policy of allowing Class A stockholders to apply their dividends to purchase additional Class A shares at $25 each, a practice intended to attract investors and raise capital for business development. The complainants sought to enjoin this issuance as unfair to Class B stockholders and beyond the directors' authority. The court affirmed the Chancellor's denial of the injunction, holding that the directors acted within the broad statutory discretion to set consideration for no-par stock sales, in good faith and using their best judgment to benefit the corporation by successfully raising needed funds at low cost without infringing the rights of Class B stockholders under the certificate of incorporation. The court noted the policy's success in achieving high market prices and average proceeds near $42 per share, and rejected the argument that the arrangement improperly exceeded the dividend preference.
business & regulatoryprocedure
Lofland v. Cahall
Supreme Court of Delaware · 1922-10-26 · cited 73×
The case involved a suit by a court-appointed receiver against the directors of the Lewes Fisheries Company, alleging that the directors improperly issued themselves shares of stock and paid themselves salaries and compensation without authorization from the company's charter, bylaws, or stockholders. The Court of Chancery found the transactions constructively fraudulent due to the directors' conflicts of interest and ordered them to return the stock, related dividends, and salary payments (with limited credit for amounts they had paid on related notes). On appeal, the Delaware Supreme Court affirmed, holding that the directors could not lawfully value their own services or promissory notes for stock issuance purposes, as no disinterested corporate officer existed to approve the transactions, and the salary payments constituted unauthorized gifts.
business & regulatory
Bryan v. Aikin
Supreme Court of Delaware · 1913-01-01 · cited 21×
The case concerned a dispute over the distribution of a stock dividend declared by the Delaware Railroad Company out of its surplus earnings. Trustees under a will held shares of the company's stock as part of a trust estate benefiting life tenants, including Annie Grier Porter after the deaths of prior beneficiaries, with remaindermen entitled to the property if she died without issue. The court held that the stock dividend constituted income payable to the life tenant rather than capital to be retained for the remaindermen. The reasoning focused on the dividend's origin in net earnings, the testator's intent that the life tenant receive all such dividends during her lifetime, and the principle that a stock dividend declared from earnings should be treated like a cash dividend belonging to the current income beneficiary.
propertyfamily law