Siebrecht
organized Siebrecht Realty Co., a corporation and then transferred his building
to the corporation in exchange for its stock. The corporation rented different
parts of the building to different tenants. Elenkrieg, an employee of one of
the tenants, fell and was injured because of the defective condition of the
stairway. She sued Siebrecht individually on the ground that the corporation
had been formed by him for the purpose of securing limited liability. Decide.
Substantive response.
Chapter
45 Question 3
Business
Week magazine is sent to a national distributor of magazines. Curtis
Circulations Co., which sells the magazines to various wholesalers, including
Hudson News. Business Week publishes a column entitled “Inside Wall Street,”
and the evidence shows that stocks discussed favorably in the column tend to
increase in value after release to the public. Business Week has a strict
confidentiality policy prior to release of the magazine to the public
applicable to all employees involved in production and distribution. This
policy also applies to Hudson News, Gregory Savage, an employee of Hudson News,
and the “top person” in the delivery room area, arranged to have the “Inside
Wall Street” column faxed to his neighbor, a stockbroker named Larry Strath,
prior to the close of the market on Thursday and prior to release to the public
that evening, Strath traded on the information and passed it on to Joseph
Falcone, who likewise traded on the basis of this information. While Falcone
paid Strath $200 for a copy of the column each week, he contends that the
information he received was too remote from the Business Week confidentiality
policy to be actionable by the SEC. What theory do you believe the SEC pursued
against Falcone? What are the elements of the theory? How would you decide the
case? Substantive response.
Chapter
46 question 9
Hicks,
the president and manager of Intermountain Merchandising, wanted to sell the
business to Montana Merchandising, Inc. To provide a basis for the transaction,
he retained Bloomgren, an accountant, to make an audit of Intermountain.
Bloomgren knew that Montana would use the audit report in making the purchase
of the business from Intermountain. Bloomgren’s audit report showed the
Intermountain business as profitable. Thayer, Montana’s president, relied on
this report in agreeing to purchase the business of Intermountain and in
agreeing to the terms of the purchase. Sometime later, it was discovered that
the accountant had made a number of mistakes and that the business that was
sold was actually insolvent. Thayer and Montana Merchandising sued Hicks and
Bloomgren for damages. The suit claimed that the accountant had negligently
misrepresented the facts. The accountant defended on the basis that Thayer was
not in privity of contract with him and therefore could not sue him. Was he
right? Substative response
Chapter
47 question 3
The
majority shareholder and president of Dunaway Drug Stores, Inc., William B.
Dunaway, was structuring and executing the sale of virtually all of the
corporation’s assets to Eckerd Drug Co. While doing this, he negotiated a side
noncompete agreement with Eckered, giving Dunaway $300,000 plus a company car
in exchange for a covenant not to compete for three years. He simultaneously
amended two corporate leases with Eckerd, thereby decreasing the value of the
corporation’s leasehold estates. The board of directors approved the asset
sale. Minority shareholders brought a derivative action against William
Dunaway, claiming breach of his fiduciary duty in negotiating the undisclosed
noncompete agreement, which did not require him to perform any service for
buyer Eckerd Drug? Did William Dunaway make sufficient disclosure about all of
the negotiations of the asset sale to Eckerd Drug? Did William Dunway violate
any fiduciary Duty to the corporation? Decide. Substative response.
Let’s
talk about executive salaries: Most media outlets will be happy to talk
about how “excessive” US executive salaries have become. The media
outlets rarely point out that US Corporations are also the most profitable in
the world. Do the high salaries explain the high profits? Or is it
the other way around?
