Goldman v. Postal Telegraph

52 F. Supp. 763 (1943)

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Goldman v. Postal Telegraph

United States District Court for the District of Delaware
52 F. Supp. 763 (1943)

Facts

In its certificate of incorporation, Postal Telegraph, Inc. (Postal) (defendant) provided that its preferred stockholders would be entitled to payment of $60 per share upon liquidation before any distribution could be made to the common stockholders. Postal later amended the certificate to provide that the sale of all assets to Western Union Telegraph Company (Western Union) would instead entitle the preferred stockholders to one share of Western Union stock for each share of Postal preferred stock—a lesser value than $60 per share. The amendment was proposed ahead of a planned merger with Western Union, at which time the value of Postal’s equity was so low that the common stockholders would have received nothing in a distribution under the original liquidation provision. With the approval of its common stockholders, the amendment passed. Goldman, a preferred stockholder, brought suit in federal district court to challenge the validity of the amendment. Postal moved to dismiss.

Rule of Law

Issue

Holding and Reasoning (Leahy, J.)

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