Smith and Roberson’s Business Law
17th Edition
ISBN: 9781337094757
Author: Richard A. Mann, Barry S. Roberts
Publisher: Cengage Learning
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The Cutler Company was duly merged into the Stone Company. Yetta, a shareholder of the former Cutler Company, having paid only one-half of her subscription, is now sued by the Stone Company for the balance of the subscription. Yetta, who took no part in the merger proceedings, denies liability on the ground that, inasmuch as the Cutler Company no longer exists, all her rights and obligations in connection with the Cutler Company have been terminated. Explain whether she is correct.
Anthony and Karen were partners doing business as the Petite Garment Company. Leroy owned a dye plant that did much of the processing for the company. Anthony and Karen decided to offer Leroy an interest in their company, in consideration for which Leroy would contribute his dye plant to the partnership. Leroy accepted the offer and was duly admitted as a partner. At the time he was admitted as a partner, Leroy did not know that the partnership was on the verge of insolvency. About three months after Leroy was admitted to the partnership, a textile firm obtained a judgment against the partnership in the amount of $50,000. This debt represented an unpaid balance that had existed before Leroy was admitted as a partner.The textile firm brought an action to subject the partnership property, including the dye plant, to the satisfaction of its judgment. The complaint also requested that, in the event the judgment was unsatisfied by sale of the partnership property, Leroy’s home be sold and…
Glenn refuses an invitation to become a partner of Dorothy and Cynthia in a retail grocery business. Nevertheless, Dorothy inserts an advertisement in the local newspaper representing Glenn as their partner. Glenn takes no steps to deny the existence of a partnership between them. Ron, who extended credit to the firm, seeks to hold Glenn liable as a partner. Is Glenn liable? Explain.
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- Madison and Tilson agree to form a limited partnership with Madison as general partner and Tilson as the limited partner, each to contribute $12,500 as capital. No papers are ever filed, and after ten months the enterprise fails, its liabilities exceeding its assets by $30,000. Creditors of the partnership seek to hold Madison and Tilson personally liable for the $30,000. Explain whether the creditors will prevail.arrow_forwardCharles and L. W. Clement were brothers who had formed a partnership that lasted forty years until Charles discovered that his brother, who kept the partnership’s books, had made several substantial personal investments with funds improperly withdrawn from the partnership. He then brought an action in equity seeking dissolution of the partnership, appointment of a receiver, and an accounting. Should Charles succeed? Explain.arrow_forwardDavid E. Ross, his two brothers, and their families operated and owned the entire stock of five businesses. Ross had three children: Rod, David II, and Betsy. David II and Betsy were not involved in the operation of the companies, but Rod began working for one of the firms, Equitable Life and Casualty Insurance Company, in 2007. Between 2009 and 2013, the elder Ross informed a number of persons of his desire to reward Rod for his work with Equitable Life by giving him stock in addition to the stock he would inherit. He subsequently executed several stock transfers to Rod, representing shares in various family businesses, which were reflected by appropriate entries on the corporate books. Certificates were issued in Rod’s name and placed in an envelope identified with the name Rod Ross, but they were kept with the other family stock certificates in an office safe to which Rod did not have access. In all, one-fourth of the stock holdings of David E. Ross were transferred to Rod in this…arrow_forward
- On June 30, 2005, Martin Hendrickson and Solveig Hendrickson were married, and on January 3, 2006, a home previously owned by Martin was conveyed to them as joint tenants and not as tenants in common. Solveig Hendrickson paid no part of the consideration for the premises. On August 3, 2013, Martin Hendrickson duly executed a Declaration of Election to Sever Survivorship of Joint Tenancy by which he endeavored to preserve an interest in the premises for Ruth Halbert, his daughter by a previous marriage. On the same day, he executed his last will and testament, by the terms of which he directed that his wife, Solveig Hendrickson, receive the minimum amount to which she was entitled under the laws of the State of Minnesota. Martin Hendrickson died with a valid will on October 9, 2013. a. What are the arguments that the joint ownership was severed by Martin Hendrickson’s declaration thus creating a tenancy in common? b. What are the arguments that the joint tenancy was not severed by…arrow_forwardAnderson and Tallstrom are partners in Rancho Murieta Investors (RMI). Anderson owns 80 percent of RMI; Tallstrom owns the other 20 percent and is the managing partner of RMI. Hellman obtained judgments against Anderson in his individual capacity for more than $440,000. After various unsuccessful attempts to enforce the judgments, Hellman obtained an “Order Charging Debtor John B. Anderson’s Partnership Interest” in RMI. Despite the charging order, Hellman has not received any monies in satisfaction of the judgments because RMI had not generated profits and was not expected to do so in the near future. Explain what Hellman’s rights are with respect to the unsatisfied charging order.arrow_forwardTheo, a member of TGI partnership, withdrew from the partnership and duly notified the other members. The firm was an at-will partnership and the parties parted amicably, posting a notice in the local newspaper of the dissolution of their firm. Cosmo, a customer who had conducted business with Theo several times, did not see the newspaper notice and was not informed of the dissolution. Later, Theo approached Cosmo concerning a transaction similar to those Cosmo had engaged in before with Theo acting on behalf of TGI. Cosmo placed an order, gave a substantial down payment to Theo, and received a receipt on TGI stationery from him. Theo thereafter absconded with the down payment, and TGI failed to honor the contract. Cosmo sued the other members of TGI partnership. Discuss their potential liability.arrow_forward
- The Johnson Company, a corporation organized under the laws of State X, after proper authorization by the shareholders, sold its entire assets to the Samson Company, also a State X corporation. Ellen, an unpaid creditor of the Johnson Company, sues the Samson Company upon her claim. Is Samson liable? Explain.arrow_forwardRafferty was the principal shareholder in Continental Corporation, and, as a result, he received the lion’s share of Continental’s dividends. Continental Corporation was eager to close an important deal for iron ore products to use in its business. A written contract was on the desk of Stage Corporation for the sale of the iron ore to Continental. Stage Corporation, however, was cautious about signing the contract; and it did not sign until Rafferty called Stage Corporation on the telephone and stated that if Continental Corporation did not pay for the ore, he would. Business reversals struck Continental Corporation, and it failed. Stage Corporation sues Rafferty. What defense, if any, has Rafferty?arrow_forwardAlbert, Betty, and Carol own and operate the Roy Lumber Company, a limited liability partnership (LLP). Each contributed one-third of the capital, and they share equally in the profits and losses. Their LLP agreement provides that all purchases exceeding $2,500 must be authorized in advance by two partners and that only Albert is authorized to draw checks. Unknown to Albert or Carol, Betty purchases on the firm’s account a $5,500 diamond bracelet and a $5,000 forklift and orders $5,000 worth of logs, all from Doug, who operates a jewelry store and is engaged in various activities connected with the lumber business. Before Betty made these purchases, Albert told Doug that Betty is not the log buyer. Albert refuses to pay Doug for Betty’s purchases. Doug calls at the mill to collect, and Albert again refuses to pay him. Doug calls Albert an unprintable name, and Albert then punches Doug in the nose, knocking him out. While Doug is lying unconscious on the ground, an employee of Roy…arrow_forward
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