FARRIS V. GLEN ALDEN CORP.
Pa. S. Ct., 393 Pa 427, 143 A.2d 25 (1958)
NATURE OF THE CASE: This was an action to prevent execution of a corporate reorganization. Glenn Alden (D), corporation, challenged the decree that denied its motion for judgment on the pleadings on Farris' (P) claims brought under 908A of the Pennsylvania Business Corporation Law.
FACTS: Glen Alden Corp. (D) is a Pennsylvania corporation engaged principally in the mining of anthracite coal. This operation had resulted in $14 million in tax loss carry overs. In October, 1957, List Industries Corp. purchased 38.5% of the stock in D and placed three of its directors on D's board. In March of 1958, the two corporations entered into a reorganization agreement whereby List was to sell all assets to D in exchange for stock and changing the name of D to List Alden. Notice and proxy was sent on March 20, 1958 for the April 11 meeting to vote on the agreement. A majority of outstanding stockholders approved the agreement. Farris (P), a stockholder of D, alleged the notice was defective and the approval should be invalidated. P's complaint was that the reorganization agreement was actually a merger between defendant corporation and another company and that proper notice was not given to the shareholders of their right to dissent and claim fair value for their shares. D contends that the agreement was a purchase of corporate assets of which shareholders had no right of dissent or appraisal. The trial court held that the plan was a de facto merger and because D did not provide notice and appraisal rights the shareholder vote and agreement were void. D appealed.
ISSUE:
RULE OF LAW:
HOLDING AND
DECISION:
LEGAL ANALYSIS:
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