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10 Erie Cnty. B. Bull. 1 (1947)

handle is hein.baecl/ericoubarb0010 and id is 1 raw text is: Erie County Bar ULLETIN U. S. POSTAGE Permit No. 2639 PAID Buffalo, N. Y. Sec. 562 P. L. & R. VOL. 10-NO. 1 BAR ASSOCIATION OF ERIE COUNTY JANUARY, 1947 Bankruptcy Jurisdiction of Bankruptcy Court After an involuntary petition in bankruptcy has been filed and while the proceeding is before the Bankruptcy Court, that Court is a court of competent jurisdiction to determine matters pertaining to the property of the alleged bank- rupt and property found in his possession, and no other court during the pendency of the pro- ceeding may, without the consent of the Bankruptcy Court, enter- tain litigation in connection with the property of the alleged bank- rupt. Re Abbot Kinney Co., 66 F. Supp. 841. Corporations Directors who are also Preferred stockholders may vote on direc- tors' resolution redeeming Preferred stock Plaintiff move to enjoin, pen- dente lite, a Delaware corporation and it resident officers from act- ing upon a resolution of the board of directors to redeem the pre- ferred stock of the corporation. The resolution was passed by a vote of three to two. Plaintiff al- leged that two of the directors who voted in favor of the resolu- tion were holders of some of the preferred stock. Plaintiff did not allege fraud but claimed that the mere fact that two of the direc- tors who voted for the resolution were holders of preferred stock disqualified them from voting upon the resolution and. thus rendered void any action taken by the ma- jority. It was held that while directors may not act against the interests of the corporation for their pri- vate and personal gain, this does not mean that they cannot pass upon any matter in which they may be involved as stockholders. A breach of trust, i.e., some wrong doing, must be shown before their action can be impeached. A cor- poration would be powerless to act on any question involving stock- holders if the directors were dis- qualified from acting merely by virtue of being stockholders them- selves. Stieglitz vs. Electrol, Inc., 60 N.Y.S. 2d 490. Waste of Corporate Assets Plaintiff brought a derivative stockholders' action against direc- tors for waste of corporate assets. The directors contended that the loss to the corporation amounted to only 5% of the money involved inasmuch as the corporation was subject to a 95% excess profits tax and the loss had been deducted on the corporation's tax return. The court held that a full re- covery for waste of corporate as- sets could not be defeated by the claim that the government sus- tained a large portion of the loss instead of the corporation. Brai- man vs. Westway, 60 N.Y.S. 2d 190. Option to Purchase Corporation's Assets at Price to be determined by Appraisal or Arbitration - Specific Performance Granted - thd Court determining the Purchase Price Plaintiff, a petroleum producer, in 1929 entered into a contract to sell its products to a distributor, the contract to continue until ter- minated by either party in accord- ance with its terms. In consider- ation of the execution of said con- tract by the plaintiff, it was granted, by an accompanying agreement, the option, while said contract was in effect, to buy all the assets of the distributor cor- poration at such price as the American Appraisal C o m p an y shall fix as the fair value thereof or, if the price so fixed be unsatis- factory to either of the parties, such price as may be fixed by ne- gotiation or arbitration. In 1944, all the stock of the dis- tributor corporation was bought by a rival oil producer. Plaintiff immediately elected to exercise its option, but the distributor corpo- ration repudiated the option agree- ment. The court held, that despite the general rule that a contract of sale providing for the determina- tion of the price by arbitration cannot be specifically enforced, specific performance will lie and the court will determine the pur- chase price where the appraisal provision is not a condition nor the essence of an agreement, but only subsidiary or auxiliary to its main purpose. Plaintiff had per- formed its part of the contracts for a long time and could not be placed in statu quo if court had refused to enforce the option. Texas Co. v. Z & M Independent Oil Co. 156 F. (2d) 862. Criminal Law Polygamy Within Mann Act The defendants, members of the Mormon Sect, were accused of transporting their plural wives across the state lines for the pur- pose of co-habitation, contrary to the Mann Act. The Act makes an offence the transportation of a woman for the purpose of prosti- tution or debauchery or any other immoral purpose. The appellants argued that the Act was designed to cover only the white slave busi- ness and was not designed to cover voluntary actions bereft of sex commercialism. The Supreme Court, by a di- vided bench, considered that the appellant's plural marriages were immoral acts and thus within the scope of the Mann Act. The court refused to conclude that the Act is confined only to commercialized sexual vice. Cleveland v. U. S., 67 S.C.T. 13. Decedent's Estates Right of Election A spouse convicted of the felo- nious killing of the deceased may not exercise right of election to take against the provisions of a DECEDENT'S ESTATES (Continued on page two)

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