Corporations - De Facto Existence - Necessity of Good Faith Attempt to Incorporate Under and of Colorable Compliance with Incorporation Statute

Defendant, a purported holding corporation, was organized in 1922 before the enactment of a state statute authorizing such corporations. The articles of incorporation stated that the purpose of the corporation was to acquire, own and hold shares of stock in a realty company. There was actual user of corporate power by the defendant under this attempted incorporation until the time of this suit in 1954. The legislature in 1941 amended the incorporation statute to authorize incorporation of a holding company, but no action was taken by the defendant pursuant to this amended statute. In an action for a declaratory judgment, the minority stockholders of the realty company challenged the corporate existence of the defendant. The district court sustained a demurrer to the petition. On appeal, held, the defendant became a de facto corporation at the time of amendment of the incorporation statute in 1941 and its corporate existence was not now subject to collateral attack. Reversed on other grounds. Baum v. Baum Holding Co., (Neb. 1954) 62 N.W. (2d) 864

Who is the Attorney General\u27s Client

The article discusses a court case of Free Enterprise Fund v. Public Co. Accounting Oversight Board recently decided by the U.S. Supreme Court based on the role of the U.S. President in the faithful execution of laws. The role of the Attorney General, client relationship and its historical considerations are discussed. The obligations of executive branch, plausible alternative and the role of President in setting of legal policy are also discussed

Constitutional Law - Commerce Clause - Federal Jurisdiction in Trade-Mark Infringement Proceedings Under the Lanham Act

Plaintiff\u27s trade-mark, Minute Maid, had been registered under the Lanham Act in 1952 and had been used in interstate commerce in connection with the sale of frozen fruit juice concentrates since that time. Defendant\u27s trade-mark consisted in part of the words Minute Made. Defendant used its mark wholly within the State of Florida in the processing and sale of frozen meat products. Both plaintiff and defendant were Florida corporations. In a suit for trade-mark infringement, jurisdiction of the federal district court depended. on the provisions of the Lanham Act. The complaint alleged damage to plaintiff\u27s good will established in interstate commerce. The Lanham Act grants jurisdiction to the federal courts in suits for trade-mark infringement where the defendant has used the infringing mark in commerce.\u27\u27 The district court enjoined the defendant\u27s use of the words Minute Made.\u27\u27 On appeal, the defendant challenged the jurisdiction of the district court on the ground that the pleadings and proof did not establish that the alleged infringing mark had been used in commerce within the meaning of the Lanham Act. Held, affirmed. The complaint which alleged damage to plaintiff\u27s good will established in interstate commerce was sufficient to invoke the jurisdiction of the district court. Pure Foods, Inc. v. Minute Maid Corp., (5th Cir. 1954) 214 F. (2d) 792

Securities Regulation - Controlling Stockholders as Issuers Under the Securities Act of 1933

The Securities and Exchange Commission sought an injunction to restrain the corporate defendant, a brokerage company, and the individual defendant, its president and controlling stockholder, from selling stock in an oil company. At the time the stock was issued and sold, the individual defendant was also president and controlling stockholder of the oil company. No registration statement was in effect with reference to the stock,. which was sold through the mails in interstate commerce in violation of section 5 of the Securities Act of 1933. Section 5 of the act applies only to transactions by an issuer, underwriter, or dealer. Held, for the plaintiff. The corporate defendant and the individual defendant, as persons directly or indirectly in control of the oil company, were issuers of the stock of that company; therefore, their transactions were not exempt from the registration provisions of section 5. Securities & Exchange Commission v. Kaye, Real & Co., (D.C. N.Y. 1954) 122 F. Supp. 639

Criminal Procedure - Venue - Federal Offenses Committed Outside the Jurisdiction of Any State or District

The defendant, an army staff sergeant, was under custody at Fort Meade, Maryland, awaiting disposition of charges of sodomy lodged against him under the Articles of War. After a delay of four months, the charges were dropped and he was shipped by the Army to Fort Jay, New York, where he was separated from the service. Immediately upon his release, he was arrested by the Federal Bureau of Investigation under a commissioner\u27s warrant charging him with treason committed in Japan during a prior enlistment in the army. At the trial in the District Court for the Southern District of New York, the issue of venue was submitted to the jury and was found to be proper. Venue was governed by a federal statute which provides that the trial of all offenses begun or committed . . . out of the jurisdiction of any particular State or district, shall be in the district where the offender is found, or into which he is first brought. After conviction, with the cooperation of the Army, the defendant obtained confidential records not previously available; these records showed that the Army had brought the defendant to New York at the request of the Department of Justice for the purpose of turning him over to the FBI. On the basis of this newly discovered evidence, the defendant moved to vacate the conviction for improper venue. The district court denied the motion. · On appeal, held, reversed. Had the newly discovered evidence been before the jury, they could not have found that the defendant was found in the Southern District of New York; he was found in Maryland within the meaning of the federal venue statute. United States v. Provoo, (2d Cir. 1954) 215 F. (2d) 531

Who is the Attorney General\u27s Client

The article discusses a court case of Free Enterprise Fund v. Public Co. Accounting Oversight Board recently decided by the U.S. Supreme Court based on the role of the U.S. President in the faithful execution of laws. The role of the Attorney General, client relationship and its historical considerations are discussed. The obligations of executive branch, plausible alternative and the role of President in setting of legal policy are also discussed

Corporations - Personal Interst of Directors in Corporate Transactions

Serious dissension had developed between two factions of the seven member board of directors of defendant corporation. Group A, consisting of four members, represented a working majority of the outstanding stock recently acquired by a group of investors. Group B, consisting of three members, had constituted the active management of the corporation for a number of years. The resignation of group B was probable if group A continued to dominate the board. It was proposed that stock of the defendant be exchanged for stock in another corporation. Under the overall plan, group A was to resign and two members of this group were to sell their stock in the defendant corporation at a price one-third above the market price. Group B was to remain with the corporation as officers and directors. This plan was approved unanimously by the board, and was submitted in detail to a special meeting of the stockholders who approved the plan by a vote of 14 to 1 (84% of the issued and outstanding stock voting). Minority stockholders brought a derivative suit against the corporation and its officers to enjoin consummation of the plan. The district court granted the injunction. On appeal, held, affirmed. The personal interest of the directors in the plan was such as to deprive the stockholders of the unprejudiced judgment to which they were entitled. Seagrave Corp. v. Mount, Spain v. Mount, (6th Cir. 1954) 212 F. (2d) 389