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4) C’s AOI:
a) guarantees to the holders of PS “cumulative dividends at the rate of
6% for each and every fiscal year of the company”
HELD: Holders of PS were entitled to vote for the BOD and for all other
purposes at the annual SH’s meeting in 1943.
2) Holders of the PS received the par value from the liquidating trustee.
HELD: Holders of PS are entitled to both the par value of their stock, and
to the dividends w/c have not been declared or paid but w/c would have been
declared and paid if there had been surplus or net profits of the C wisely
applicable to such dividends during the periods when no dividends have been
paid. This appears to be the sense obvious to the common understanding for the
words used.
ISSUE: WON the holders of these Preferred Stocks have the right to share
in the proceeds on the sale of the mortgaged property?
2) Lim Chu Sing is a SH of the Bank (in the amount of P10, 000).
4) The proceeds from the sale of the mortgaged chattel and the payment left
were applied to Lim Chu Sing’s debt to the Bank.
5) Lim Chu Sing had a remaining debt of P9, 105 to the Bank.
6) Lim Chu Sing wants to compensate his P9, 105 debt to the Bank w/ the
P10, 000 amount of his Stocks.
HELD: Lim Chu Sing is not a creditor of the Bank, hence there is no
ground to justify a compensation.
Not only did the C have notice of Wallace’s right through its
incorporators and agents, but all of the SHs of the C participating in the 1st
meeting of SHs, including Stover (SH who intervened and questioned the
binding effect of the contract on the C), had notice that Wallace had at least
some interest, or claim, and Perkins and Griffith knew the extent of it, and if
not, on inquiry of him all would have easily have discovered the full extent
thereof.
HELD 1: contract was one of purchase of stock (BAD LAW already. No need
to distinguish)
The contract did not expressly provide that the failure of the purchaser to
pay any installments would give rise to forfeiture and cancellation w/o necessity
of any demand from the seller.
2) 8,058 shares worth P80,580 were subscribed and fully paid for.
The C increase its capital stock from $500,000 to $1M, so that the
additional stocks will be delivered to the firm and its associates at $450
per share ($100 par value), it being understood that the firm may
nominate 10 out of 21 trustees to be elected.
ISSUE: WON Plaintiff had the legal right to subscribe for and take the same
number of the new stock that he held of the old?
TRUST C would issue 15,000 shares of its stock ($112/ share) for the
purpose of acquiring the 10,000 shares of another bank (National Union
Bank of Maryland).
2) AOI was amended in such a way that the pre-emptive right was denied to
such extent as the BOD may deem, to additional stock for the purpose of
accomplishing the merger with or acquiring any other bank or trust
company
3) Plaintiff (as owner of 6,416 out of 70,000 shares) voted and protested
against the merger agreement.
ISSUE: WON the SHs of the C were entitled to exercise the right to
purchase a due proportion of a supplemental issue of its capital stock?
In the present case, every SH of the Trust C, for each of his shares of the
stock of that institution, was to receive 1 ½ shares of the other Bank. It would not
be feasible to consummate a transfer based upon such consideration if the pre-
emptive right asserted in this suit were to be held enforceable with respect to
every new issue of stock regardless of the object of its disposition.
5) 365 shares of stock were issued to the wife and the daughter of the
Director/President (Williams) and to another Director (William Ross).
7) Pres/Director Williams testified that all the stock were sold by him
personally under the Ds’ resolution.
8) Pres/Director Williams admitted that he never called any other meeting
to authorize any of the sales made after the original subscriptions and
none of the other SHs were given an opportunity to buy.
HELD: The sale must be set aside as a constructive fraud upon the other
SHs.
No evidence was shown that the C needed the money so badly and was
in such a financial condition that the sale of the additional stock to themselves
was the only way the money could be obtained. On the contrary, the C appears
to have been in a very good condition. Nor is there corroboration of Ross’
statement that it was all arranged in the beginning who was to get this additional
stock.
Where the stocks are issued in favor of Ds, the burden is on them to
prove not only good faith, but also the equity of the transaction.
Finally, and of utmost significance, is the question of maturity date and the
right to enforce payment of the principal sum by some appropriate legal
remedy. In this case, the obligation set forth in the DSC clearly had no
maturity date. There was no time set forth in the Certificate or prescribed in
the charter of by-laws at w/c the holders could demand payment of the
principal sum. Nor was there any method provided by w/c such payment
could be enforced.
Empowering the bondholders of not less than 2/3 principal amount of the
bonds, by agreement with the C to modify and extend the payment of
said bonds provided such extension affected all bonds alike
5) She alleged that the majority owner of the C’s stock and controlling
members of its BOD (Jones family) were also the owners and holder
of the more than 2/3 of the principal amount of said bonds, and:
Notice was not also required in the provision of the bond agreement.
The changes were also made before the plaintiff acquired her bonds.