Friday, November 22, 2013

Merritt-Chapman & Scott Corp. v. Wolfson case brief

Merritt-Chapman & Scott Corp. v. Wolfson case brief summary
321 A.2d 138 (1974)


CASE SYNOPSIS
Defendant claimants sought indemnification from plaintiff corporation pursuant to Del. Code Ann. tit. 8, § 145 against expenses incurred in a criminal action when defendants were charged by indictment with participation in a plan to cause plaintiff to secretly purchase shares of its own common stock.

CASE FACTS
The claimants were charged by indictment with participation in a plan to cause plaintiff to secretly purchase hundreds of thousands of shares of its own common stock. Count one charged all claimants with conspiracy to violate federal securities laws, which was dropped as to all claimants. Counts two and three charged two claimants with perjury and counts four and five charged all with filing false annual reports. Counts four and five were dropped as to two claimants. One of the remaining claimants entered a plea of nolo contendere and the other agreed to not appeal his conviction. The parties sought indemnification from the corporation.

DISCUSSION

  • The court found that, as to the expenses incurred in the charges that were dropped, all claimants were entitled to indemnification. 
  • However, the court held that the two claimants who were convicted on the perjury and filing false annual reports claims were not entitled to indemnification.

CONCLUSION
The court found in favor of the claimants and held that they were entitled to indemnification of the expenses incurred on the criminal charges that were dropped; the court did not allow for indemnification of expenses for two claimants who were convicted of perjury and filing false annual reports.


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