If a cumulative preferred stock dividend is not paid in a particular period, it remains due and payable in full before the common shareholders receive any additional dividends. True or False?

Two attorney-shareholders in Ched Realty sought to buy out the shares of two recently deceased shareholders in the company. The attorneys cited a clause in a shareholder agreement that allowed them to buy the shares at “book value or $200 per share, whichever was greater.” At the time, the book value of the shares was negative, as the assets of the longstanding corporation had been depreciated to nothing. However, the market value of the shares was well over$40,000 per share. The estates of the two deceased shareholders sued to block the sale for $200 per share claiming that the deceased shareholders were not fully aware of what they were signing because they were older and had not completed high school. The lower court disallowed the shareholder agreement. The two attorneys appealed. Should the appeals court overturn the lower court’s ruling? Why or why not? (Rosiny v. Schmidt, 587 N.Y.S.2d 929)

Years before lights were installed in Wrigley field in Chicago, Schlensky, a minority stockholder in the Chicago National League Ball Club (Inc.), owner of the Chicago Cubs, sued the corporation and its board of directors, including Philip K. Wrigley. Wrigley also was president and owned about 80 percent of the voting stock. Schlensky alleged negligence and mismanagement for failure to install floodlights to permit night games. He claimed that funds for the installation could be obtained and would be far more than recaptured by increased ticket sales. Allegedly Wrigley thought that baseball was a daytime sport and that night games would have a negative effect on the neighborhood surrounding the ball park, and the other directors gave in. The trial court dismissed the complaint, and Schlensky appealed. How should the appellate court rule? (Schlensky v. Wrigley, 237 N.E.2d 776, Ill.)

General Telephone Company of Florida owned more than 1 percent of the stock of Florida Telephone Corporation. General sought to examine the latter’s stock records in order to make a list of the names, addresses, and holdings of all shareholders. Florida refused, claiming that General intended to use this information in order to buy more shares and thus get control of the corporation. Can General get a court order to compel the disclosure? (Florida Telephone Corporation v. State ex ref. Peninsular Telephone Company, 111 So. 2d 677, Fla.)

A group of shareholders of the Manganese Corporation of America sued the corporation and four officers who also were directors. The group of shareholders sought to recover damages for the corporation and all its shareholders. Evidence indicated that the officers and directors negligently had caused the corporation’s assets to drop from $400,000 to$30,000 in less than two years by being wasteful, careless, and unwise. Are the officers and directors liable for the losses? (Selheimer v. Manganese Corporation of America, 423 Pa. 563, 224 A.2d 634)

Pillsbury believed U.S. involvement in the Vietnam War was wrong. He learned that Honeywell, Inc., had a large contract to produce antipersonnel fragmentation bombs and he became determined to stop such production. He learned that a trust set up for his benefit owned 242 shares of the stock, but the shares were voted by a trustee. Pillsbury bought one share in his own name. As a shareholder, he petitioned the court to order Honeywell to produce its shareholder ledgers and all records dealing with weapons manufacture. He wanted to convince other shareholders to change the board of directors and have the corporation stop making munitions. Should the court grant his request? (Pillsbury v. Honeywell, Inc., 291 Minn. 322, 191 N.W.2d 406)

As the testing of its new anti-arthritis drug showing results that exceeded anyone’s expectations, JointEase Corporation bought back more than one-third of its outstanding, publicly traded stock. As a consequence, because of the decreased supply, when the company announced the test results its stock price increased to more than double what would have been expected without the buyout. Feeling that they had been defrauded, the exshareholders who had sold their stock back to JointEase picketed outside company headquarters and complained to the media. Has the drug company done anything wrong?

Charlene Bertram owned 98 percent of the stock of Traces of Beauty, Inc. The company had been founded in the 1920s by her maternal grandmother. The company had been run by professional managers after the grandmother died and left Charlene her stock. Traces imported cosmetics from France, England, and Sweden. The products were then sold directly to consumers by mail, 800 numbers, and on the Internet. While on a trip to Italy, Charlene found a new line of cosmetics that dazzled her. Without consulting any of the company officers, Charlene negotiated an exclusive distributorship for Traces with the Italian cosmetic maker. Upon her return to the states, Charlene met with the company president and told her about the deal. The president was shocked and noted that carrying the Italian line would breach an existing contract with the French cosmetic firm. This contract had made Traces millions of dollars over the last 10 years. The president then consulted the corporate legal staff to see if there was any way out of the contract with the Italian firm. Assume you are the company attorney. How would you answer the question posed by the president? Explain your answer.

In its press release, Able Products, a Virginia corporation, announced that it was forming a joint venture with Hyallah, Inc., a toy-making corporation chartered in South Korea. In the release, Hyallah was referred to as a public, foreign corporation. Lin, the CEO of Hyallah, pointed out the terms “public and foreign” were legally incorrect. Is he correct, and why or why not?

Hull organized a corporation to manufacture antibiotics for cattle. She owned most of the capital stock. All went well until a faulty batch of the drugs caused the serious illness or death of more than 3,000 cows. After a series of lawsuits, the corporation was forced into bankruptcy with some $200,000 in debts unpaid. Could Hull be held personally liable for these debts?

Read a book on the development of the corporation, for example, Bruce Brown’s The History of the Corporation, in which he cites the Benedictine Order of the Catholic Church, founded circa 529 A.D., as being the oldest surviving corporation. Draw conclusions and give a report to the class on your findings.

Corporate debentures are (a) secured (b) unsecured (c) government guaranteed

Unlike officers, directors do not have a fiduciary duty to the corporation. True or False?

Can a partnership continue on perpetually? Yes or No?