Friday, February 15, 2013

Schnell v. Chris-Craft Industries, Inc. case brief

Schnell v. Chris-Craft Industries, Inc. case brief summary
285 A.2d 437

SYNOPSIS: Appellant stockholders challenged an order from the Chancery Court (Delaware), which denied a petition for injunctive relief to prevent the advancement of an annual stockholders' meeting by appellee corporation.

-The Directors of Chris-Craft were worried due to certain shareholders announcing that they were going to vote on the replacement of directors at the next shareholder meeting.
-The directors moved the annual meeting from January to December, making it more difficult for stockholders to make travel arrangements.
-The bylaws said that the Directors could move up the meeting if they gave proper notice, which they did.
-Appellant stockholders sued to enjoin appellee corporation from advancing the date of the annual stockholders' meeting.
-Appellee corporation claimed it was allowed to do so by amendments to the Delaware business law. 
-The trial court found in favor of appellees. 

-On review the court found that the conclusions of the trial court amounted to a finding that appellee attempted to utilize the corporate machinery and the Delaware Law for the purpose of perpetuating itself in office, and to that end, for the purpose of obstructing the legitimate efforts of dissident stockholders in the exercise of their rights to undertake a proxy contest against management. 

-The court held that these were inequitable purposes, contrary to established principles of corporate democracy. 
-In reversing the judgment, the court stated that inequitable actions would not be allowed to stand simply because they were permitted by law.

OUTCOME: The court reversed the judgment because the actions of appellee, although permitted by law, were inequitable in purpose and could not be permitted to stand.

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