Berwald v. Mission Development Company
Delaware Supreme Court
185 A.2d 480 (1962)
- Written by Eric Miller, JD
Facts
Mission Development Company (Mission) (defendant) was formed in 1948 to hold stock in Tidewater Oil Company (Tidewater), of which Mission acquired nearly seven million shares, partly through annual stock dividends. Both Mission and Tidewater were controlled by J. Paul Getty. In 1954 Tidewater began devoting significant expenditures to the expansion and modernization of its facilities. That same year, Tidewater ceased payment of its cash dividend. Six years later, Tidewater discontinued its stock dividend. The holders of 248 shares of Mission stock (the minority shareholders) (plaintiffs) brought suit in the Delaware Chancery Court, arguing that Getty’s objective was to avoid the taxes associated with receiving Tidewater dividends and to acquire shares of Mission stock at artificially depressed prices. Although the minority shareholders provided no proof of adverse effects on the price of Mission stock, they sought to compel the liquidation of Mission and the distribution of its assets. Mission moved for summary judgment, which was granted. The minority shareholders appealed. The Delaware Supreme Court granted certiorari.
Rule of Law
Issue
Holding and Reasoning (Southerland, C.J.)
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