Quimbee logo
DMCA.com Protection Status
From our private database of 18,800+ case briefs...

Baron v. Allied Artists Pictures Corporation

Delaware Court of Chancery
337 A.2d 653 (1975)


With the invention of television, Allied Artists Pictures Corporation (Allied) (defendant) began to struggle financially. In 1954, Allied amended its certificate of incorporation to provide that preferred shareholders were entitled to cash dividends “as and when declared by the Board of Directors, out of funds legally available for the purpose.” The amended certificate also stated that if dividends were six or more quarters in arrearages, the preferred shareholders would have the right to elect a majority of the board. In 1963, Allied was forced to stop paying dividends. The next year, after the sixth quarter of nonpayment, the preferred shareholders began electing a majority of the board. In conjunction with its financial woes, Allied was assessed a tax deficiency in 1964. Because of Allied’s poor financial state, the Internal Revenue Service (IRS) agreed to allow Allied to repay its tax debt in installments over several years, so long as Allied would not pay any dividends without IRS consent. Subsequently, Allied had some successful years (e.g., in 1970 a preferred capital surplus of $1,300,000 with a preferred dividend arrearage of only $146,500) mixed in with some unsuccessful years (e.g., the following year, 1971, a net loss of over $3,000,000). Baron (plaintiff), a shareholder, brought suit in the Delaware Court of Chancery, arguing that in at least one year since Allied was behind on its dividend payments, there were sufficient funds for Allied to pay those dividends. Baron argued that by not doing so, the Allied board of directors incorrectly permitted the preferred shareholders to continue electing a majority of the board. Baron did not seek repayment of the dividends arrearages, but sought a mandated new election for the 1974 board of directors, under which common shareholders would be permitted to elect the board. Allied filed a motion for summary judgment.

Rule of Law


Holding and Reasoning (Brown, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 498,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.

  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.

Here's why 498,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 18,800 briefs, keyed to 985 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Questions & Answers

Have a question about this case?

Sign up for a free 7-day trial and ask it

Sign up for a FREE 7-day trial