Pepper v. Litton

Table of Contents

Corporations Keyed to Hamilton

The Partnership
- Richert v. Handly
  53 Wn.2d 121, 330 P.2d 1079 (1958)
- Bane v. Ferguson
- National Biscuit Co. v. Stroud
  249 N.C. 467, 106 S.E.2d 692 (1959)
- Smith v. Dixon
- Rouse v. Pollard
  130 N.J. Eq. 204, 29 Backes 204, 21 A.2d 801 (1941)
- Roach v. Mead
  301 Or. 383, 722 P.2d 1229 (1986)
- Meinhard v. Salmon
  249 N.Y. 458, 164 N.E. 545 (1928)
- Collins v. Lewis
  314 S.W.3d 316 (Ky. Ct. App. 2010) [2010 BL 125988]
- Cauble v. Handler
  503 S.W.2d 362 (Tex. Civ. App. 1973)
- Adams v. Jarvis
  546 U.S. 1127, 126 S. Ct. 1112, 163 L. Ed. 2d 921 (2006)
- 8182 Maryland Associates, Limited Partnership v. Sheehan
  14 S.W.3d 576 (Mo. 2000)
- Lampert, Hausler & Rodman PC v. John F. Gallant, et al
  447 Mass. 1112, 856 N.E.2d 182 (2006)
- Gibbs v. Breed, Abbot & Morgan
  271 A.D.2d 180, 710 N.Y.S.2d 578 (App Div, 1st Dept 2000)
- Bohatch v. Butler & Binion
  977 S.W.2d 543 (Tex. 1998)
- Martin v. Peyton
- Smith v. Kelley
  510 U.S. 1168, 114 S. Ct. 1199, 127 L. Ed. 2d 547 (1994)
The Limited Partnership: With Special Reference to Federal Income Taxation
- In re USACafes, L.P. Litigation
  600 A.2d 43 (Del. Ch. 1991)
- In re Spree.com Corp
Limited Liability Companies
- Elf Atochem North America, Inc. v. Jaffari
  727 A.2d 286 (Del. 1999)
- Poore v. Fox Hollow Enterprises
The Development of Corporation Law in the United States
- Louis K. Liggett Co. v. Lee
  288 U.S. 517, 53 S. Ct. 481, 77 L. Ed. 929 (1933)
The Formation of a Closely Held Corporation
- 711 Kings Highway Corp. v. F.I.M.
  51 Misc. 2d 373, 273 N.Y.S.2d 299 (Sup. Ct. 1966)
- Sullivan v. Hammer
- Stanley J. How & Assoc., Inc. v. Boss
  222 F. Supp. 936 (S.D. Iowa 1963)
- Robertson v. Levy
- Frontier Refining Company v. Kunkel
  407 P.2d 880 (Wyo. 1965)
Disregard of the Corporate Entity
- Bartle v. Home Owners Coop
  309 N.Y. 103, 127 N.E.2d 832 (1955)
- Dewitt Truck Brokers v. W. Ray Flemming Fruity Co
  540 F.2d 681 (4th Cir. 1976)
- Baatz v. Arrow Bar
  452 N.W.2d 138 (S.D. 1990)
- Radaszewski v. Telecom Corp
  981 F.2d 305 (8th Cir. 1992)
- Fletcher v. Atex, Inc
  68 F.3d 1451 (2d Cir. 1995)
- United States v. Bestfoods
  528 U.S. 810, 120 S. Ct. 42, 145 L. Ed. 2d 38, 21 ITRD 1767 (1999)
- Stark v. Flemming
  283 F.2d 410 (9th Cir. 1960)
- Roccograndi v. Unemployment Comp. Bd. of Review
  197 Pa. Super. 372, 178 A.2d 786 (Super. Ct. 1962)
- Sweeney v. Kane
  6 A.D.3d 72, 773 N.Y.S.2d 420 (App Div, 2d Dept 2004)
- Pepper v. Litton
  308 U.S. 295, 60 S. Ct. 238, 84 L. Ed. 281 (1939)
- Nissen Corp. v. Miller
  323 Md. 613, 594 A.2d 564 (1991)
Financial Matters and the Corporation
- Hanewald v. Bryan
  429 N.W.2d 414 (N.D. 1988)
- Torres v. Speiser
- Securities and Exchange Comm
  346 U.S. 119, 73 S. Ct. 981, 97 L. Ed. 1494, 1 EXC 178 (1953)
- Smith v. Gross
  604 F.2d 639 (9th Cir. 1979)
- Stokes v. Continental Trust Co. of City of New York
  186 N.Y. 285, 78 N.E. 1090 (1906)
- Katzowitz v. Sidler
  24 N.Y.2d 512, 301 N.Y.S.2d 470, 249 N.E.2d 359 (1969)
- Lacos Land Company v. Arden Group, Inc
  517 A.2d 271 (Del. Ch. 1986)
- Gottfried v. Gottfried
  73 N.Y.S.2d 692 (Sup. Ct. 1947)
- Dodge v. Ford Motor Co
- Wilderman v. Wilderman
  315 A.2d 610 (Del. Ch. 1974)
Management and Control of Corporation
- McQuade v. Stoneham
  263 N.Y. 323, 189 N.E. 234 (1934)
- Galler v. Galler
- Zion v. Kurtz
  50 N.Y.2d 1060, 431 N.Y.S.2d 1032, 410 N.E.2d 760 (1980)
- Matter of Auer v. Dressel
  306 N.Y. 427, 118 N.E.2d 590 (1954)
- Salgo v. Mathews
  497 S.W.2d 620 (Tex. Civ. App. 1973)
- Humphrys v. Winous Co
  165 Ohio St. 45, 133 N.E.2d 780 (1956)
- Ringling Bros.-Barnum & Bailey Combined Shows v. Ringling
  528 U.S. 923, 120 S. Ct. 286, 145 L. Ed. 2d 239 (1999)
- Brown v. McLanahan
  148 F.2d 703 (4th Cir. 1945)
- Lehrman v. Cohen
- Ling & Co. v. Trinity Sav. and Loan Ass
  482 S.W.2d 841 (Tex. 1972)
- Davis v. Sheerin
  3 F.3d 113 (5th Cir. 1993)
- Abreu v. Unica Industrial Sales, Inc., La Preferida, Inc., Ralph Steinbarth, William Steinbarth, and Ebro Foods, Inc.,
  224 Ill. App. 3d 439, 166 Ill. Dec. 703, 586 N.E.2d 661 (App. Ct. 1991)
- In The Matter of Drive-In Development Corp
  371 F.2d 215 (7th Cir. 1966)
- Lee v. Jenkins Bros
  268 F.2d 357 (2d Cir. 1959)
- DeBaun v. First Western Bank and Trust Co
  46 Cal.App.3d 686, 120 Cal.Rptr. 354 (Ct. App. 1975)
- Perlman v. Feldmann
  219 F.2d 173 (2d Cir. 1955)
Control and Management in the Publicly Held Corporation
- Studebaker Corp. v. Gittlin
  360 F.2d 692 (2d Cir. 1966)
- J.I. Case Co. v. Borak
  376 U.S. 960, 84 S. Ct. 1121 (1964)
- TSC Industries, Inc. v. Northway, Inc
  429 U.S. 810, 97 S. Ct. 48, 50 L. Ed. 2d 70 (1976)
- Rauchman v. Mobil Corp
  739 F.2d 205 (6th Cir. 1984)
Duty of Care and the Business Judgment Rule
- Litwin v. Allen
- Smith v. Van Gorkom
  488 A.2d 858, 3 EXC 112 (Del. 1985)
- In re Caremark Intern. Inc. Derivative Litigation
  698 A.2d 959, 2 EXC 21 (Del. Ch. 1996)
- Malone v. Brincat
  722 A.2d 5 (Del. 1998)
- Gall v. Exxon Corp
  418 F. Supp. 508 (S.D.N.Y. 1976)
- Zapata Corp. v. Maldonado
  430 A.2d 779, 1 EXC 392 (Del. 1981)
- Aronson v Lewis
  473 A.2d 805, 2 EXC 28 (Del. 1984)
Duty of Loyalty and Conflict of Interest
- Marciano v. Nakash
  535 A.2d 400 (Del. 1987)
- Heller v. Boylan
  29 N.Y.S.2d 653 (Sup. Ct. 1941)
- Brehm v. Eisner
  746 A.2d 244, 1 EXC 381 (Del. 2000)
- Sinclair Oil Corp. v. Levien
  280 A.2d 717 (Del. 1971)
- Weinberger v. UOP, Inc
  457 A.2d 701 (Del. 1983)
- Northeast Harbor Golf Club, Inc. v. Harris
  661 A.2d 1146 (Me. 1995)
Transactions in Shares: Rule 10b-5, Insider Trading and Securities Fraud
- In re Enron Corporation Securities, Derivative & Erisa Litigation
  235 F. Supp. 2d 549 (S.D. Tex. 2002) [2002 BL 100]
- Securities and Exchange Commission v. Texas Gulf Sulphur Co
  401 F.2d 833, 1 EXC 210 (2d Cir. 1968)
- Chiarella v. United States
  445 U.S. 222, 100 S. Ct. 1108, 63 L. Ed. 2d 348 (1980)
- United States v. O
  521 U.S. 642, 117 S. Ct. 2199, 138 L. Ed. 2d 724 (1997)
- Dirks v. Securities and Exchange Commission
  681 F.2d 824, 220 U.S. App. D.C. 309 (D.C. Cir. 1982)
- United States v. Chestman
  947 F.2d 551 (2d Cir. 1991)
- Basic Inc. v. Levinson
  485 U.S. 224, 108 S. Ct. 978, 99 L. Ed. 2d 194, 4 EXC 10 (1988)
- MCDM Holdings Inc. v. Credit Suisse First Boston Corp
  216 F. Supp. 2d 251 (S.D.N.Y. 2002)
Indemnification and Insurance
- Merritt
  321 A.2d 138 (Del. Super. Ct. 1974)
- McCullough v. Fidelity & Deposit Co
  2 F.3d 110 (5th Cir. 1993)
Takeovers
- CTS Corp. v. Dynamics Corp. of America
  481 U.S. 69, 107 S. Ct. 1637, 95 L. Ed. 2d 67 (1987)
- Moran v. Household Int
  500 A.2d 1346 (Del. 1985)
- Mentor Graphics Corporation v. Quickturn Design Systems Inc
  728 A.2d 25 (Del. Ch. 1998)
Corporate Books and Records
- Saito v. McKesson HBOC, Inc
  806 A.2d 113 (Del. 2002)

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Corporations Keyed to Hamilton

The Partnership
- Richert v. Handly
  53 Wn.2d 121, 330 P.2d 1079 (1958)
- Bane v. Ferguson
- National Biscuit Co. v. Stroud
  249 N.C. 467, 106 S.E.2d 692 (1959)
- Smith v. Dixon
- Rouse v. Pollard
  130 N.J. Eq. 204, 29 Backes 204, 21 A.2d 801 (1941)
- Roach v. Mead
  301 Or. 383, 722 P.2d 1229 (1986)
- Meinhard v. Salmon
  249 N.Y. 458, 164 N.E. 545 (1928)
- Collins v. Lewis
  314 S.W.3d 316 (Ky. Ct. App. 2010) [2010 BL 125988]
- Cauble v. Handler
  503 S.W.2d 362 (Tex. Civ. App. 1973)
- Adams v. Jarvis
  546 U.S. 1127, 126 S. Ct. 1112, 163 L. Ed. 2d 921 (2006)
- 8182 Maryland Associates, Limited Partnership v. Sheehan
  14 S.W.3d 576 (Mo. 2000)
- Lampert, Hausler & Rodman PC v. John F. Gallant, et al
  447 Mass. 1112, 856 N.E.2d 182 (2006)
- Gibbs v. Breed, Abbot & Morgan
  271 A.D.2d 180, 710 N.Y.S.2d 578 (App Div, 1st Dept 2000)
- Bohatch v. Butler & Binion
  977 S.W.2d 543 (Tex. 1998)
- Martin v. Peyton
- Smith v. Kelley
  510 U.S. 1168, 114 S. Ct. 1199, 127 L. Ed. 2d 547 (1994)
The Limited Partnership: With Special Reference to Federal Income Taxation
- In re USACafes, L.P. Litigation
  600 A.2d 43 (Del. Ch. 1991)
- In re Spree.com Corp
Limited Liability Companies
- Elf Atochem North America, Inc. v. Jaffari
  727 A.2d 286 (Del. 1999)
- Poore v. Fox Hollow Enterprises
The Development of Corporation Law in the United States
- Louis K. Liggett Co. v. Lee
  288 U.S. 517, 53 S. Ct. 481, 77 L. Ed. 929 (1933)
The Formation of a Closely Held Corporation
- 711 Kings Highway Corp. v. F.I.M.
  51 Misc. 2d 373, 273 N.Y.S.2d 299 (Sup. Ct. 1966)
- Sullivan v. Hammer
- Stanley J. How & Assoc., Inc. v. Boss
  222 F. Supp. 936 (S.D. Iowa 1963)
- Robertson v. Levy
- Frontier Refining Company v. Kunkel
  407 P.2d 880 (Wyo. 1965)
Disregard of the Corporate Entity
- Bartle v. Home Owners Coop
  309 N.Y. 103, 127 N.E.2d 832 (1955)
- Dewitt Truck Brokers v. W. Ray Flemming Fruity Co
  540 F.2d 681 (4th Cir. 1976)
- Baatz v. Arrow Bar
  452 N.W.2d 138 (S.D. 1990)
- Radaszewski v. Telecom Corp
  981 F.2d 305 (8th Cir. 1992)
- Fletcher v. Atex, Inc
  68 F.3d 1451 (2d Cir. 1995)
- United States v. Bestfoods
  528 U.S. 810, 120 S. Ct. 42, 145 L. Ed. 2d 38, 21 ITRD 1767 (1999)
- Stark v. Flemming
  283 F.2d 410 (9th Cir. 1960)
- Roccograndi v. Unemployment Comp. Bd. of Review
  197 Pa. Super. 372, 178 A.2d 786 (Super. Ct. 1962)
- Sweeney v. Kane
  6 A.D.3d 72, 773 N.Y.S.2d 420 (App Div, 2d Dept 2004)
- Pepper v. Litton
  308 U.S. 295, 60 S. Ct. 238, 84 L. Ed. 281 (1939)
- Nissen Corp. v. Miller
  323 Md. 613, 594 A.2d 564 (1991)
Financial Matters and the Corporation
- Hanewald v. Bryan
  429 N.W.2d 414 (N.D. 1988)
- Torres v. Speiser
- Securities and Exchange Comm
  346 U.S. 119, 73 S. Ct. 981, 97 L. Ed. 1494, 1 EXC 178 (1953)
- Smith v. Gross
  604 F.2d 639 (9th Cir. 1979)
- Stokes v. Continental Trust Co. of City of New York
  186 N.Y. 285, 78 N.E. 1090 (1906)
- Katzowitz v. Sidler
  24 N.Y.2d 512, 301 N.Y.S.2d 470, 249 N.E.2d 359 (1969)
- Lacos Land Company v. Arden Group, Inc
  517 A.2d 271 (Del. Ch. 1986)
- Gottfried v. Gottfried
  73 N.Y.S.2d 692 (Sup. Ct. 1947)
- Dodge v. Ford Motor Co
- Wilderman v. Wilderman
  315 A.2d 610 (Del. Ch. 1974)
Management and Control of Corporation
- McQuade v. Stoneham
  263 N.Y. 323, 189 N.E. 234 (1934)
- Galler v. Galler
- Zion v. Kurtz
  50 N.Y.2d 1060, 431 N.Y.S.2d 1032, 410 N.E.2d 760 (1980)
- Matter of Auer v. Dressel
  306 N.Y. 427, 118 N.E.2d 590 (1954)
- Salgo v. Mathews
  497 S.W.2d 620 (Tex. Civ. App. 1973)
- Humphrys v. Winous Co
  165 Ohio St. 45, 133 N.E.2d 780 (1956)
- Ringling Bros.-Barnum & Bailey Combined Shows v. Ringling
  528 U.S. 923, 120 S. Ct. 286, 145 L. Ed. 2d 239 (1999)
- Brown v. McLanahan
  148 F.2d 703 (4th Cir. 1945)
- Lehrman v. Cohen
- Ling & Co. v. Trinity Sav. and Loan Ass
  482 S.W.2d 841 (Tex. 1972)
- Davis v. Sheerin
  3 F.3d 113 (5th Cir. 1993)
- Abreu v. Unica Industrial Sales, Inc., La Preferida, Inc., Ralph Steinbarth, William Steinbarth, and Ebro Foods, Inc.,
  224 Ill. App. 3d 439, 166 Ill. Dec. 703, 586 N.E.2d 661 (App. Ct. 1991)
- In The Matter of Drive-In Development Corp
  371 F.2d 215 (7th Cir. 1966)
- Lee v. Jenkins Bros
  268 F.2d 357 (2d Cir. 1959)
- DeBaun v. First Western Bank and Trust Co
  46 Cal.App.3d 686, 120 Cal.Rptr. 354 (Ct. App. 1975)
- Perlman v. Feldmann
  219 F.2d 173 (2d Cir. 1955)
Control and Management in the Publicly Held Corporation
- Studebaker Corp. v. Gittlin
  360 F.2d 692 (2d Cir. 1966)
- J.I. Case Co. v. Borak
  376 U.S. 960, 84 S. Ct. 1121 (1964)
- TSC Industries, Inc. v. Northway, Inc
  429 U.S. 810, 97 S. Ct. 48, 50 L. Ed. 2d 70 (1976)
- Rauchman v. Mobil Corp
  739 F.2d 205 (6th Cir. 1984)
Duty of Care and the Business Judgment Rule
- Litwin v. Allen
- Smith v. Van Gorkom
  488 A.2d 858, 3 EXC 112 (Del. 1985)
- In re Caremark Intern. Inc. Derivative Litigation
  698 A.2d 959, 2 EXC 21 (Del. Ch. 1996)
- Malone v. Brincat
  722 A.2d 5 (Del. 1998)
- Gall v. Exxon Corp
  418 F. Supp. 508 (S.D.N.Y. 1976)
- Zapata Corp. v. Maldonado
  430 A.2d 779, 1 EXC 392 (Del. 1981)
- Aronson v Lewis
  473 A.2d 805, 2 EXC 28 (Del. 1984)
Duty of Loyalty and Conflict of Interest
- Marciano v. Nakash
  535 A.2d 400 (Del. 1987)
- Heller v. Boylan
  29 N.Y.S.2d 653 (Sup. Ct. 1941)
- Brehm v. Eisner
  746 A.2d 244, 1 EXC 381 (Del. 2000)
- Sinclair Oil Corp. v. Levien
  280 A.2d 717 (Del. 1971)
- Weinberger v. UOP, Inc
  457 A.2d 701 (Del. 1983)
- Northeast Harbor Golf Club, Inc. v. Harris
  661 A.2d 1146 (Me. 1995)
Transactions in Shares: Rule 10b-5, Insider Trading and Securities Fraud
- In re Enron Corporation Securities, Derivative & Erisa Litigation
  235 F. Supp. 2d 549 (S.D. Tex. 2002) [2002 BL 100]
- Securities and Exchange Commission v. Texas Gulf Sulphur Co
  401 F.2d 833, 1 EXC 210 (2d Cir. 1968)
- Chiarella v. United States
  445 U.S. 222, 100 S. Ct. 1108, 63 L. Ed. 2d 348 (1980)
- United States v. O
  521 U.S. 642, 117 S. Ct. 2199, 138 L. Ed. 2d 724 (1997)
- Dirks v. Securities and Exchange Commission
  681 F.2d 824, 220 U.S. App. D.C. 309 (D.C. Cir. 1982)
- United States v. Chestman
  947 F.2d 551 (2d Cir. 1991)
- Basic Inc. v. Levinson
  485 U.S. 224, 108 S. Ct. 978, 99 L. Ed. 2d 194, 4 EXC 10 (1988)
- MCDM Holdings Inc. v. Credit Suisse First Boston Corp
  216 F. Supp. 2d 251 (S.D.N.Y. 2002)
Indemnification and Insurance
- Merritt
  321 A.2d 138 (Del. Super. Ct. 1974)
- McCullough v. Fidelity & Deposit Co
  2 F.3d 110 (5th Cir. 1993)
Takeovers
- CTS Corp. v. Dynamics Corp. of America
  481 U.S. 69, 107 S. Ct. 1637, 95 L. Ed. 2d 67 (1987)
- Moran v. Household Int
  500 A.2d 1346 (Del. 1985)
- Mentor Graphics Corporation v. Quickturn Design Systems Inc
  728 A.2d 25 (Del. Ch. 1998)
Corporate Books and Records
- Saito v. McKesson HBOC, Inc
  806 A.2d 113 (Del. 2002)

Citation. Pepper v. Litton, 308 U.S. 295, 60 S. Ct. 238, 84 L. Ed. 281, 1939 U.S. LEXIS 971 (U.S. Dec. 4, 1939)

Brief Fact Summary. Litton, the sole shareholder of the Dixie Splint Coal Company, filed a claim in the bankruptcy court to recover the balance of a judgment obtained for back salary. The District Court disallowed the claim and directed that the trustee should recover for the benefit of the bankrupt’s estate the property purchased by Litton at the execution sale.

Synopsis of Rule of Law. Subordination may be necessitated by certain cardinal principles of equity jurisprudence. A director or stockholder is a fiduciary and carries the burden to prove that under all the circumstance the transaction carries the earmarks of an arm’s length bargain. If it does not equity will set it aside.

Facts. Pepper sued the Dixie Splint Coal Company, (Dixie), for royalties due under a lease and obtained a judgment. Meanwhile, Litton, the sole shareholder of Dixie, obtained a judgment against it for back salary. Litton then caused an execution to be issued on his judgment and at the resulting sale, purchased all the corporate assets. Litton then caused Dixie to file a voluntary petition in bankruptcy. The trustee brought suit to have the judgment set aside and the execution sale quashed but was unsuccessful. Litton then filed a claim in the bankruptcy court to recover the balance of the judgment. The district court disallowed Litton’s claim and held that the trustee should recover the assets purchased by Litton at the execution sale. The Court of Appeals reversed on the grounds of res judicata.

Issue.
Whether res judicata prevents the District Court from examining into the Litton judgment and disallowing or subordinating it a claim.

Whether the District Court may properly disallow or subordinate a stockholder’s judgment.

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Pepper v. Litton

Corporations Keyed to Hamilton

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