Q U E S T I O N S
1. The stock in Hotel Management, Inc., a hotel management corporation, was divided equally between two families. For several years, the two families had been unable to agree on or cooperate in the management of the corporation. As a result, no meeting of share- holders or directors had been held for five years. There had been no withdrawal of profits for five years, and last year the hotel operated at a loss. Although the corporation was not insolvent, such a state was imminent because the business was poorly managed and its properties were in need of repair. As a result, the owners of half the stock brought an action in equity for dissolution of the corporation. Will they succeed? Explain.
2. a. When may a corporation sell, lease, exchange, mortgage, or pledge all or substantially all of its assets in the usual and regular course of its business?
b. When may a corporation sell, lease, exchange, mortgage, or pledge all or substantially all of its assets other than in the usual and regular course of its business?
c. What are the rights of a shareholder who dissents from a proposed sale or exchange of all or substantially all of the assets of a corporation other than in the usual and regular course of its business?
3. The Cutler Company was duly merged into the Stone Company. Yetta, a shareholder of the former Cutler Company, having paid only one-half of her subscription, is now sued by the Stone Company for the balance of the subscription. Yetta, who took no part in the merger proceedings, denies liability on the ground that, inasmuch as the Cutler Company no longer exists, all her rights and obligations in connection with the Cutler Company have been terminated. Explain whether she is correct.
4. Smith, while in the course of his employment with the Bee Corporation, negligently ran the company’s truck into Williams, injuring him severely. Subsequently, the Bee Corporation and the Sea Corporation consolidated, forming the SeaBee Corporation. Williams filed suit against the SeaBee Corporation for damages, and the SeaBee Corporation asserted the defense that the injuries Williams sustained were not caused by any of SeaBee’s employees, that SeaBee did not even exist at the time of the injury, and that the SeaBee Corporation was, therefore, not liable. What decision?
5. The Johnson Company, a corporation organized under the laws of State X, after proper authorization by the shareholders, sold its entire assets to the Samson Company, also a State X corporation. Ellen, an unpaid creditor of the Johnson Company, sues the Samson Company upon her claim. Is Samson liable? Explain
