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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

Permit No. 2639
Buffalo, N. Y.
Sec. 562 P. L. & R.


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.
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-
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
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
(Continued on page two)

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