biz org class 3

best way to max shareholder profits is to take a communitarian approach: consider the needs of the community.

dodge v. ford - what ford says on the stand makes good biz sense: most leaders probably believe that the best way to max growth is to take care of the employees, creditors, etc. ford said i don't care about shareholders -- which was the problem because the purpose of the corp is to max shareholder profits.

but from wrigley, we know that the executives don't have to be tunneled visioned. they should also consider non-shareholder interests when it also does what's best for shareholders (communitarian).

there is a direct link to helping the community and the shareholder.

see p. 279:
if shelensky was unhappy with wrigley operations, why didn't he just sell his shares? there are several aspects which define corps, and one fund characteristic is that interests are fully transferable and you can sell if unhappy

the point of a corp is not just to make money for shareholders but to *maximize* the growth. the shareholder won't want to sell because any money made is going to reflect lowered value of the shares, when the company can be more profitable and shelensky could sell for more.

could shelensky have prevailed? the court wanted him to be more specific in his complaint (the court calls his assertion "a mere conclusion") and to have given more concrete proof that nighttime games would have created more profit for the shareholders.

suppose you represent shelensky and called wrigley as a witness. what would you ask him/ what strategy would you adopt in questioning? other baseball companies have played night games and installed lights and the shareholders have made much more money, where mr. wrigley, the majority controlling shareholder at 80%, has denied the installation.

do we look at objective or subjective reality? the ford court looked at subjective state of mind of henry ford. the shelensky court instead looks at the objective operations in the way that the company might disturb the neighbors and the potential effect this could have on shareholders.

see p. 278, which illustrates the approach of objective reality and the controlling shareholder's state of mind.

when does a corporation exist?


how do we pierce the corporate veil?

what's the reason that barrett is not liable? when a promoter contracts with a 3d party on behalf of a corp not yet formed, who is liable? the corp wasn't de jure

walkowsky and sea-land were corporations. they were de jure (organized under laws of a jurisdiction and able to operate as a corporate entity) but they were organized for non-corporate intentions.

if the promoter forms the corporation later, can the corporation become a party to a contract? yes

can the initial agent avoid liability?
if the promoter later forms the corp, can s/he avoid liability? no
absent an agreement to the contrary, an agent for a not yet formed corp is liable and can avoid liability only if the other party to the contract agrees.

who is liable if the corp is never formed? what is the issue in so-gulf marine? the agent/promoter is liable if the corp is never formed.

agency principle. the court estops camcraft from saying that it can't do business with so-gulf because the fact that so-gulf's legal status (the fact it isn't a corp) doesn't effect camcraft's legal status.

the court has two doctrines to mitigate the potential liability:
1. corp by estoppel, where the court will treat a firm as though it was a corp because the parties dealing with the firm (1) thought it was a corp all along and (2) one party will earn a windfall if the firm is not treated as a corp.
2. de facto corp doctrine: instead of looking at the postiion of the party dealing with the corp, the court looks at the position of the promoters/organizers. the court may treat a firm not properly incorp as though it were a de jure corp if the organizers (1) in good faith tried to incorp, (2) had a legal right to inc and (3) acted as a corp.

did barrett make a good faith effort to incorporate?

walcovsky v. carlton.