Friday, November 22, 2013

Stokes v. Continental Trust Co. of City of New York case brief

Stokes v. Continental Trust Co. of City of New York case brief summary
78 N.E. 1090 (1906)

The appellant, a stockholder, challenged a decision that was made in favor of the appellee corporation from a New York appeals court. 
It was asserted that the appellee was required to dispense new stock in greater value to prior stockholders.

The capital stock of appellee corporation increased and the appellant shareholder argued that he was entitled to a greater share amount of the stock.
Basically, the appellant asserted that his shares should have been calculated before the appellee issued new stock.
Litigation eventually ensued and the appellee responded by claiming that it had a legal right to issue stock at a fair or at a fixed price.
Moreover, the appellee asserted that, by granting appellant an increased share, it would be prejudicing the other shareholders.
The trial court ruled in favor of the appellant, granting the appellant substantial damages.
The appeals court reversed, finding that the appellant had no increased entitlements.

The Court of Appeals reversed the appellate court's ruling and partially reinstated the decision of the lower tribunal.
The court held that appellant was deserving of damages that only amounted to a difference in the market value of his prior stock.

The Court of Appeals reversed the appellate court's decision denying appellant a proportionate share of new stock where the market value of appellant's prior holdings was of a greater value than appellee's new securities. As a result, the calculations of the trial court were partially reinstated.

Recommended Supplements for Corporations and Business Associations Law

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