Hearst Corporation

“ The truth is, that the legislature of New York, instead of repealing the prohibitory clause in the original act of 1848, concerning the purchase of stock in other corporations, has modified it but slightly, by slow degrees, and in special cases, to enable a manufacturing corporation to control more perfectly its own legitimate business operations, and has thereby manifested the more clearly its intention to preserve the original inhibition. ”

“ I Amanda Acquisition Corporation is a shell with a single purpose: to acquire Universal Foods Corporation, a diversified firm incorporated in Wisconsin and traded on the New York Stock Exchange. Universal is covered by Wisconsin's anti-takeover law. Amanda is a subsidiary of High Voltage Engineering Corp., a small electronics firm in Massachusetts. Most of High Voltage's equity capital comes from Berisford Capital PLC, a British venture capital firm, and Hyde Park Partners L.P., a partnership affiliated with the principals of Berisford. ”

“ While the immediate practical effects of the merger on the operation of the Jeffersonville might be small, even minimal, a merger is the ultimate in one company obtaining control over another. So long as the Jeffersonville existed as a separate company, there was always the possibility that the Big Four, through the Central, might sell, or be forced to divest itself of, the Jeffersonville stock, and that the control of the Jeffersonville might thus pass to another railroad. ”

“ Public Service Commission of West Virginia, 95 W. Va. 91, 120 S. E. 398, in which the United Company was a party, held that 50 per cent. was a fair share of the net return of the subsidiary's business attributable to appellant United Company, and this was the conclusion adopted by the court below.
We need not labor the point that a public service corporation may not make a rate confiscatory by reducing its net earnings through the device of a contract unduly favoring a subsidiary or a corporation owned by its own stockholders. ”

“ If you will induce your associates to take bonds in our corporation, we will give you fifty, instead of forty—and," I concluded slowly, "there will be fifty thousand dollars of preferred stock for your services."
At the word "services" Slocum jumped up from the table where he had been seated and walked over to the window, then came back to the table, and tried to attract my attention. But I kept my eyes on Lokes.
"What will you do for the others?" Lokes asked significantly, meaning his two associates on the committee. ”

“ Professor DeMott's review of the differences and conflicts between the Delaware and California corporate statutes with regard to internal affairs, illustrates why it is imperative that only the law of the state of incorporation regulate the relationships among a corporation and its officers, directors, and shareholders. ”

“ It must be such a change that a new and different business is superadded to the original undertaking. [12] The act of the legislature of Indiana allowing railroad corporations to merge and consolidate their stock, was an enabling act-was permissive, not mandatory. It simply gave the consent of the legislature to whatever could lawfully be done, and which without that consent could not be done at all. By virtue of this act, the consolidations in the plea stated were made. Clearwater, before the consolidation, was a stockholder in one corporation, created for a given purpose ”

“ All that has been done, even as contended by the government, has been to concentrate the ownership of a majority of the shares of the two companies into one hand, the owner being a corporation controlled by the same men who would own and control a majority of the capital stock of both railroad companies if the holding company had not been formed.
The companies remain distinct; the stockholders are not the corporation; each company is just as much subject to all the requirements of the law as though its stock-holders were entirely different. ”

“ A bondholders' committee was formed which obtained the deposit of about 85% of the bonds outstanding. Members of the committee became directors of the old corporation and beginning in the fall of 1932 were in control of it. In 1934 equity receivers were appointed by the Delaware chancery court. A plan of reorganization was formulated which was approved by the court. The plan called for the formation of a new company which would acquire the assets of the old in exchange for voting common stock and Class A and Class B stock purchase warrants. ”

“ The nonstock type of co-operative is not adapted to enterprises, which like gins require large investment in plant, and hence considerable fixed capital. [22] For this reason it was a common practice for marketing co-operatives, which had been organized as nonstock co-operatives in order to comply with the requirements of the Clayton Act above described, to form a subsidiary co-operative corporation with capital stock to carry on the incidental business of warehousing or processing which requires a large investment in plant. ”

“ Before entering upon a discussion of the objections urged against the validity of the assessment upon stockholders which is the subject of controversy here, we may say we find no reason to disagree with the judgment of the supreme court of Minnesota in holding the Minnesota Thresher Manufacturing Company to be a corporation organized for other than the purpose of carrying on any kind of manufacturing or mechanical business, and therefore not within the exception as to stockholders' liability in favor of corporations of that kind. ”

“ It is of no importance to the inquiry, whether a new corporation was created by the union and consolidation, that the Central acquired under the act new and enlarged powers as well as new stockholders. It was authorized to own and operate a railroad from Macon to Atlanta; to operate it as its own. It was also authorized to increase its capital stock. But the gift of new powers to a corporation has never been thought to destroy its identity, much less to change it into a new being. Such a gift is not a grant of corporate existence. It assumes corporate life already existing. ”

“ It is urged that the statement in the finding as to it having been decreed that there was an undivided interest in William R. and Phoebe A. Hearst was adopted from a decree to that effect rendered by the court of private land claims, established under the act of March 3, 1891. ”

“ That is to say, the president of the board testifies that, after having used the whole gross earnings of the company, from interstate commerce, from business done in Indiana under the franchise held by that state, and also under that held by the United States, in order thereby to swell the original amount, yet, when the deductions came to be made, nothing was subtracted in consequence of having included in the original amount the results of the United States franchise, those of the Indiana franchise, and those arising from the entire interstate commerce business of the corporation. ”

“ He had no interest in the Meat Products Company. If the corporation went into the hands of a receiver, he and his friends might consider buying it up, and he was willing to discuss terms if we wished to deal in a friendly manner before it reached the courts. I rose from my chair as if to go.
"Very well, Mr. Strauss," I said dryly. "You have made it impossible for us to get any money in Chicago, but you don't own the earth. There is money in New York—about four hundred thousand dollars lying there for me at this moment."
"To pay the interest on your bonds!" ”

“ The Government, however, contends that a merger more closely resembles a stock acquisition than an asset acquisition because of one similarity of central importance: the acquisition by one corporation of an immediate voice in the management of the business of another corporation. But this is obviously true a fortiori of asset acquisitions of sufficient magnitude to fall within the prohibition of § 7; if a corporation buys the plants, equipment, inventory, etc., of another corporation, it acquires absolute control over, not merely a voice in the management of, another business. ”

“ Nowhere did it intimate that the lease was not an "acquisition of control," even though the Central already had stock ownership control of both railroads. In fact, the refusal to set aside the Commission's order necessarily involved approval of the Commission's finding of an 'acquisition of control,' and the Court further stated:
'The public interest is served by economy and efficiency in operation. ”

“ The assertion is that co-operatives organized under the law of 1919, being stock companies, do business with the general public for the sole purpose of making money, as do individual or other corporate competitors; whereas co-operatives organized under the law of 1917 are 'for mutual help, without capital stock, not conducted for profit, and restricted to the business of their own members.' The fact is that these tow types of co-operative corporations-the stock and the nonstock-differ from one another only in a few details, which are without significance in this connection ”

“ When a shareholder seeks to maintain a derivative action on behalf of a corporation, Delaware law requires that shareholder to first make demand on that corporation's board of directors, giving the board the opportunity to examine the alleged grievance and related facts and to determine whether pursuing the action is in the best interest of the corporation. ”

“ Another of the dangers that beset the path of the new Corporation lay in the fact that it was not an operating company with a number of plants controlled by one central management, but a holding company controlling by stock ownership a number of industrial units which had previously been owned by utterly conflicting interests and each of which continued necessarily to operate under a separate management. ”

“ The first act does, in fact, if it can have any effect, create a new corporation, and transfer to it all the property and franchises of the old. The two corporations are not the same in anything which essentially belongs to the existence of a corporation. They have different names, and different powers, rights, and duties. Their organization is wholly different. The powers of the corporation are not vested in the same, or similar hands. In one, the trustees are twelve, and no more. In the other, they are twenty-one. In one, the power is in a single board. ”

“ In 1888, pursuant to a reorganization agreement, mortgages upon the Houston Company properties were foreclosed, and these were acquired by the Houston & Texas Central Railroad Company; the old company's outstanding bonds were exchanged for bonds of the new; all the new company's stock was delivered to the Southern Pacific; its lines of railroad were incorporated in the transcontinental system of that corporation; and the minority stockholders of the old Houston Company received nothing. ”

“ In merger proceedings, however, there is no obstacle to the practice pursued by the Commission of deciding what is 'just and reasonable' and in 'the public interest' as to each class of securities, while at the same time permitting any dissenter to stand on the terms of the particular stock issue, leaving to State law to determine what those terms are, provided only that the function of the new corporation, as part of an economic and efficient national railroad system, would not be affected by allowance of such claims. ”

“ Congress has abundant power to provide that a corporation wishing to spin off a subsidiary must, however bona fide its intentions, conform the details of a distribution to a particular set of rules.
The Commissioner contends that the 1961 distribution of Northwest stock failed to qualify under § 355 in several respects. [7] We need, however, reach only one. Section 355 (a) (1) (D) requires that, in order to qualify for nonrecognition of gain or loss to shareholders, the distribution must be such that. ”

“ Respondent is a Pennsylvania corporation, engaged in the manufacture and sale of dental supplies. Before 1918 it had organized controlled, by ownership of all the capital stock, the S. S. White Dental Manufacturing Company, m. b. h. of Berlin, Germany, a German corporation. Its investment in the German corporation in 1918, as carried on its books, aggregated more than $130,000. ”

“ Subscriptions were made to the capital stock of the defendant corporation to the amount of two millions of dollars, (of which Hoyt subscribed $50,000,) with the expectation that the defendant, when organized as a corporation, should be appointed, pursuant to its charter, receiver of two other railroad corporations, and should assume the obligations of the former receivers. ”

“ I think the record contains just enough to support invalidation of the merger, but because of evidence not referred to in the Court's opinion.
The food processing industry is composed basically of two classes of manufacturers. One class, which includes such processors as Armour and Swift, has built significant brand names commanding consumer acceptance of their products. For such companies, exposure at the retail market is assured. Consolidated Foods, as the wholesaler, is sufficiently dependent on such processors that its economic power over this class is minimal. ”

“ Thus, the board's decision to offer what it determined to be the fair value of the corporation to the 49% of its shareholders, who would otherwise be forced to accept highly subordinated "junk bonds", is reasonable and consistent with the directors' duty to ensure that the minority stockholders receive equal value for their shares. ”