Honigman v. Green Giant Co.
United States District Court for the District of Minnesota
208 F. Supp 754 (1961)
Edith Honigman (plaintiff) owned 1,570 shares of Class B stock in Green Giant Company (defendant). In 1960, a recapitalization plan was submitted to the voting Class A shareholder and to the nonvoting Class B shareholders. Pursuant to the plan, Class A and Class B shares would be exchanged for a new class of voting common stock. Each Class A share would be exchanged for 10 shares of convertible common stock, each of which would convert annually into 100 shares of the new voting stock. Each Class B share would be exchanged for one share. The recapitalization plan was approved by 100 percent of Class A shareholders and over 92 percent of Class B shareholders. Honigman filed suit on behalf of herself, all Class B shareholders, and derivatively on behalf of the corporation. Honigman argued that the issuance of the premium stock to Class A shareholders was unfair, illegal, and void because no consideration had been given by the Class A shareholders in return for the convertible shares and the allotment of shares to the Class A shareholders were unfair.
Rule of Law
Holding and Reasoning (Nordbye, J.)
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