Brief Fact Summary. Plaintiff, Morgan Stanley & Co., Inc., sought to enjoin Defendant, Archer Daniels Midland Co., from redeeming debentures supposedly contrary to an agreement between Defendant and the debt holders.
Synopsis of Rule of Law. Redemption provisions will be given their plain language meaning in order to encourage uniformity.
Unless a contract provides otherwise, the law in force at the time the agreement is entered into becomes as much a part of the agreement as though it were expressed or referred to therein, for it is presumed that the parties had such law in contemplation when the contract was made and the contract will be construed in the light of such law.View Full Point of Law
Issue. The issue is whether Plaintiff can enjoin Defendant from proceeding with the redemption.
Held. The court denied the injunction because several of the factors required for an injunction were not met. First, Plaintiff did not demonstrate irreparable harm because they could still calculate the damages if the merger went forward. Plaintiff did not demonstrate any hardship, and the court was not convinced of their likelihood of success. The court favored the plain-meaning interpretation, wherein there needed to be a direct link between the redemption and its financing with lower-interest debt, because they did not want the determination to be subjective. The court was concerned with uniformity, which was provided by Defendant’s interpretation. The court also was not convinced that Plaintiff would win on the securities violations argument because there was no evidence of the level of intent required by Defendant in their redemption.
Discussion. This case is consistent with other corporate debt cases in that the plain language of the lending agreement will be preferred over any arguments of implied or unwritten language.