A.P. Smith Manufacturing Co. v. Barlow case brief

A.P. Smith Manufacturing Co. v. Barlow

13 N.J. 145 (1953) 

 

OVERVIEW

The New Jersey Supreme Court held that a corporation may make donations

to the public good.

FACTS

A.P. Smith Manufacturing Company made a donation to Princeton University. According to the president of the company, the donation was “good” business” because it helped to produce an educated citizenry from which the company could hire. The president further stated that such donations were a “reasonable and justified public expectation.” The company’s shareholders sued on the ground that the company’s charter allowed no such donations.

ISSUE

May a corporation make donations for the public good?

HOLDING

A corporation may make donations for the public good.

REASONING

The realities of the twentieth century have driven courts to

construe corporate powers more and more broadly. The original restrictions on corporate powers developed in the nineteenth century, when wealth was concentrated in private hands rather than corporations. As corporations became more powerful, new legislation allowed them to donate within broad limits. Since nothing suggests that the donation was made to a pet charity, the donation is valid