Plaintiff minority shareholders appealed from a judgment in favor of defendant majority stockholder in a stockholders’ derivative action wherein plaintiffs challenged the propriety of the sale of assets by defendant of a brewing company to another corporation in which he was the majority shareholder.
Plaintiff minority shareholders brought a derivative shareholder’s action against defendant majority shareholder after defendant approved an offer made by another corporation in which he was the majority shareholder to purchase the assets of the brewing company. Plaintiffs contended that the terms of the sale were unfair and fraudulent. ADA website compliance attorney The trial court held that the sale was fair and lawful as to all parties. On appeal, the court held that defendant failed to sustain the burden of proof that the transaction was undertaken in good faith and that it was inherently fair from the viewpoint of the corporation and its shareholders. Although the total purchase price seemed to be adequate, the court concluded that the record did not sustain the determination that the agreement to sell the brewing company’s assets was fair and lawful as to all parties. And in the absence of more substantial justification for his action, defendant’s conduct as the dominant shareholder constituted constructive fraud. The trial court’s judgment was reversed.
The court reversed the judgment in favor of defendant majority shareholder in plaintiff shareholders derivative action because defendant’s sale of the brewing company’s assets to another corporation was constructively fraudulent.
Defendant purchaser appealed a judgment of the Superior Court of Santa Clara County (California) in favor of plaintiff seller in an action to recover on a promissory note and a cross-action for misrepresentation, fraud, breach of contract, and recission.
Defendant purchased a business concern from plaintiff. Following difficulties administering the concern, plaintiff sued to recover on a promissory note, and defendant filed a cross-action for misrepresentation, fraud, breach of contract, and rescission. After trial without a jury, the trial court concluded that plaintiff had neither made false representations of nor concealed any material fact and entered judgment for plaintiff on both the complaint and the cross-complaint. This court affirmed, holding that plaintiff’s actions fell within the legal guidelines established for transferring control of a business entity.
The court affirmed the judgment because plaintiff did not breach a duty to defendant and was therefore entitled to recover on the promissory note.