Smith and Roberson’s Business Law
17th Edition
ISBN: 9781337094757
Author: Richard A. Mann, Barry S. Roberts
Publisher: Cengage Learning
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Anderson 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.
Walker, the CEO of Memphis Mini Golf and Go Carts (MMGGC), wanted to sell the business to Go Carts, Golf & Games. To provide a basis for the transaction, Walker retained Blanchard, an accountant, to conduct an audit of MMGGC. Blanchard was aware that Go Carts, Golf & Games would likely use the audit report in consideration of the purchase of the business from MMGGC. Blanchard's audit report showed that MMGGC’s business was profitable. William, Go Cart’s president, relied on this report in agreeing to purchase the business of MMGGC and in agreeing to the terms of the purchase. Sometime later, it was discovered that the accountant made a number of mistakes and that the business that was sold was actually insolvent. William and Go Carts sued Walker and Blanchard for damages. The suit claimed that the accountant had negligently misrepresented the facts.
Discuss the arguments for each party, determine which party should win, and provide legal support for your decision.
Hutchins and O’Neil, as general partners in the Haddon View Investment Co., became limited partners in Car Wash Investments. The general partner in Car Wash was the Minit Man Development Company. Coopers and Lybrand accountants handled the accounting work for both Minit Man and Car Wash. They performed audits and prepared financial statements that allegedly revealed two healthy companies. Nevertheless, both Car Wash and Minit Man went out of business. As a result, Hutchins and O’Neil lost a total of $252,000. They sued Coopers and Lybrand, alleging malpractice, breach of contract, concealment, fraud, and deceit in the accountants’ work for Car Wash and Minit Man. Coopers and Lybrand argued that Hutchins and O’Neil could not sue the firm because Car Wash and Minit Man were the clients, not Hutchins and O’Neil. Were the accountants correct?
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- Zenith Steel Company operates a prosperous business. In January, Zenith’s chief executive officer (CEO) and president, Roe, who is also a member of the board, was voted a $1 million bonus by the board of directors for the valuable services he provided to the company during the previous year. Roe receives an annual salary of $850,000 from the company. Black, Inc., a minority shareholder in Zenith Steel Company, brings an appropriate action to enjoin the company from paying the $1 million bonus. Explain whether Black will succeed in its attempt.arrow_forwardWells Fargo Credit Corporation (Wells Fargo) obtained a judgment of foreclosure on a house owned by Mr. and Mrs. Clevenger. The total indebtedness stated in the judgment was $207,141. The foreclosure sale was scheduled for 11:00 A.M. on a specified day at the west front door of the Hillsborough County Courthouse. Wells Fargo was represented by a paralegal, who had attended more than 1,000 similar sales. Wells Fargo’s handwritten instruction sheet informed the paralegal to make one bid at $115,000, the tax-appraised value of the property. Because the first “1” in the number was close to the “$,” the paralegal misread the bid instruction as $15,000 and opened the bidding at that amount.Harley Martin, who was attending his first judicial sale, bid $20,000. The county clerk gave ample time for another bid and then announced, “$20,000 going once, $20,000 going twice, sold to Harley… .” The paralegal screamed, “Stop, I’m sorry. I made a mistake!” The certificate of sale was issued to Martin.…arrow_forwardVogel filed for Chapter 7 bankruptcy in March 2007. Vogel’s debts consisted of $11,000 in secured debt represented by his automobile and $35,925 in unsecured debt. Vogel’s assets on the petition dated totaled approximately $2800.00 all of which he claimed as exempted property. Vogel also reported monthly expenses of $1600. Vogel was unemployed at the time of filing and reported past earnings of $18,000 annually. In April 2007, Vogel won $130,000 in the lottery from which he received approximately $90,500.00 after taxes. The bankruptcy Trustee instructed him not to spend it but he did; the entire amount on new vehicles and nonemergency personal expenses. Vogel continued his bankruptcy proceeding and requested discharge of his pre-petition debts. The trustee seeks dismissal of the petition based on bad faith conduct given the totality of the circumstances. Should the Court grant the trustee’s motion to dismiss? Does it make a difference that the lottery proceeds were…arrow_forward
- Quincy forms a manufacturing corporation, the Fabri-Q Co. (Fabri-Q). He is the sole shareholder. He does not keep records of any dividends and very little records of the corporation's accounts. Ten months after the formation and incorporation of Fabri-Q, one of Fabri-Q's products injures a user and Fabri-Q is sued. Which of the following ordinarily is a reason for a court to hold Quincy personally liable? O If Quincy is not held liable, creditors would not be fully compensated. O Fabri-Q's headquarters was at the same address as another business that Quincy. O The corporation did not elect any directors. O Quincy decides to use some of the profits from Fabri-Q - paid to him as a dividend to pay his personal debts. O Quincy served as the CEO and CTO (Chief Technology Officer) of Fabri-Q.arrow_forwardPaul Bunyan is the owner of noncumulative 8 percent preferred stock in the Broadview Corporation, which had no earnings or profits in 2012. In 2013, the corporation had large profits and a surplus from which it might properly have declared dividends. The directors refused to do so, however, instead using the surplus to purchase goods necessary for the corporation’s expanding business. The corporation earned a small profit in 2014. The directors at the end of 2014 declared a 10 percent dividend on the common stock and an 8 percent dividend on the preferred stock without paying preferred dividends for 2013. a. Is Bunyan entitled to dividends for 2012? For 2013? b. Is Bunyan entitled to a dividend of 10 percent rather than 8 percent in 2014?arrow_forwarda. Benson goes into bankruptcy. His estate is not sufficient to pay all taxes owed. Explain whether Benson’s taxes are discharged by the proceedings. b. Benson obtained property from Anderson on credit by representing that he was solvent when in fact he knew he was insolvent. Explain whether Benson’s debt to Anderson is discharged by Benson’s discharge in bankruptcy.arrow_forward
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