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Farris v. Glen Alden Corporation
Supreme Court of Pennsylvania
143 A.2d 25 (Pa. 1958)
Glen Alden Corporation (Glen Alden) (defendant), a coal mining company, and List Industries Corporation (List), a holding company with interests ranging from theatres to textile companies to real estate, entered into a “reorganization agreement” which was subject to stockholder approval and provided that (1) Glen Alden would acquire List’s assets; (2) Glen Alden would issue over 3 million shares of stock to List’s shareholders; (3) Glen Alden would assume all of List’s debt; (4) Glen Alden would change its name to List Alden; (5) List would be dissolved; and (6) List Alden would carry on the business of both corporations. Under the agreement, stock in List Alden would only be worth $21 per share, as opposed to $38 per share, the value of Glen Alden stock. The agreement was approved at the next Glen Alden annual meeting. Farris (plaintiff), a Glen Alden shareholder, brought suit, seeking to enjoin the “reorganization” on the grounds that notice of the meeting was insufficient in that it did not disclose a merger as the true purpose of the meeting, did not give shareholders notice of their right to dissent and invoke their appraisal rights, and did not contain a copy of certain parts of the Business Corporation Law as was required. Glen Alden admitted to all of the claims and moved for summary judgment on the theory that the transaction was merely a purchase of corporate assets and so Farris did not state a claim on which relief could be granted. The trial court denied the motion, found that the transaction was a de facto merger, and therefore found that the notice was insufficient and granted Farris injunctive relief. Glen Alden appealed.
Rule of Law
Holding and Reasoning (Cohen, J.)
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