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Keywords

contractplaintiffdefendantmotionsummary judgmentcorporationmotion for summary judgment
plaintiffmotionsummary judgmentcorporationmotion for summary judgment

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Marks v. Autocar Co., 153 F.Supp. 768

Facts

The plaintiff, a minority stockholder of Autocar, owned 1,400 shares and dissented from a plan where Autocar transferred most of its assets to White in exchange for White stock, which was then distributed to Autocar's stockholders. The transaction was part of a dissolution proceeding, and the plaintiff argued that her rights as a dissenting stockholder were violated. The defendants contended that the transaction was merely a sale of assets and not a merger, as the required statutory steps for a merger were not completed.

The plaintiff, a minority stockholder of Autocar, owned 1,400 shares and dissented from a plan where Autocar transferred most of its assets to White in exchange for White stock, which was then distributed to Autocar's stockholders.

Issue

Whether the transaction between Autocar and White constituted a de facto merger despite the absence of filed articles of merger, and whether the stockholder could maintain her action for the value of her stock.

Whether the transaction between Autocar and White constituted a de facto merger despite the absence of filed articles of merger, and whether the stockholder could maintain her action for the value of her stock.

Rule

A dissenting stockholder cannot be forced into a new corporation, and their property cannot be taken without compensation, as established in Lauman v. Lebanon Valley Railroad Company.

A dissenting stockholder cannot be forced into a new corporation, and their property cannot be taken without compensation, as established in Lauman v. Lebanon Valley Railroad Company.

Analysis

The court determined that the transaction, while labeled a sale, effectively functioned as a merger due to the transfer of assets, assumption of liabilities, and the requirement for Autocar to dissolve. The court emphasized that the character of the transaction should not be viewed piecemeal, as the contract mandated the stockholders of Autocar to become stockholders of White, thus infringing on the plaintiff's rights.

The court determined that the transaction, while labeled a sale, effectively functioned as a merger due to the transfer of assets, assumption of liabilities, and the requirement for Autocar to dissolve.

Conclusion

The court held that the stockholder could maintain her action for the value of her stock, granting her motion for summary judgment and denying the corporations' motions.

The court held that the stockholder could maintain her action for the value of her stock, granting her motion for summary judgment and denying the corporations' motions.

Who won?

The stockholder prevailed in the case because the court recognized her rights as a dissenting stockholder were violated by the de facto merger, allowing her to seek compensation for her stock.

The stockholder prevailed in the case because the court recognized her rights as a dissenting stockholder were violated by the de facto merger, allowing her to seek compensation for her stock.

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