Sunday, November 24, 2013

Applestein v. United Board & Carton Corp. case brief

Applestein v. United Board & Carton Corp. case brief summary
159 A.2d 146 (1960)


CASE SYNOPSIS
Plaintiff stockholders and defendant corporation filed cross-motions for partial summary judgment on the issue of the validity of an agreement that amounted to a merger that entitled dissenting stockholders to an appraisal of their stock.

CASE FACTS
Plaintiff stockholders challenged the proposed transfer of all shares and assets of first defendant corporation to second defendant corporation, which would have included an assumption of all liabilities, a pooling of interests, total absorption of the first corporation and dissolution of it, joinder of officers and directors from both corporations, retention of some personnel, and a surrender by the first corporation's sole stockholder of his stock in exchange for newly issued shares in the second corporation. The parties filed cross-motions for summary judgment, and the sole issue before the court was whether the action constituted a merger.

DISCUSSION

  • The court held that the corporate combination of both defendant corporations was a practical or de facto merger within the protective purview of N.J. Stat. Ann. § 14:12-7, and therefore plaintiffs were entitled to have been notified and advised of their statutory rights of dissent and appraisal. 
  • The court further held that the failure of defendant's corporate officers to have taken those steps and to have obtained stockholder approval of the agreement rendered the proposed corporate action invalid.

CONCLUSION
The court granted partial summary judgment and held that the corporate combination of two defendant corporations was a practical or de facto merger and because plaintiff stockholders were entitled to be notified and advised of their statutory rights of dissent and appraisal but defendants' corporate officers failed to take those steps, the corporate action was invalid.


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