Thursday, November 21, 2013

Manson v. Curtis case brief

Manson v. Curtis case brief summary
119 N.E. 559 (1918)

Plaintiff director sought review after the Appellate Division of the Supreme Court in the First Judicial Department (New York) affirmed a judgment in favor of defendant director. The trial court decided, under demurrers of the plaintiff to certain defenses alleged in the answer, that the complaint did not state facts sufficient to constitute a cause of action and that it should be dismissed.

Plaintiff and defendant were directors of a corporation. Plaintiff and defendant entered into an agreement by which defendant acquired a controlling interest in the outstanding shares and the parties in effect agreed to withdraw from the directors of the corporation the control and direction of the corporate affairs and business. The trial court dismissed the complaint. The appellate court affirmed.

  • On appeal, the court held that the agreement was illegal and void and that violation of the agreement did not state a cause of action. 
  • Directors were the exclusive, executive representatives of the corporation and were charged with the administration of its internal affairs and the management and use of its assets. 
  • The law did not permit the stockholders to create a sterilized board of directors. 
  • Corporations were creatures of the state and were required to comply with the regulations that the state imposed.

The court affirmed the judgment that dismissed the complaint.

Recommended Supplements for Corporations and Business Associations Law

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