Kamin v. American Express Company
Supreme Court of New York, Special Term, New York County, 1976
383 N.Y.S.2d 807
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Brief Fact Summary
American Express Company purchased Donaldson, Luken and Jenrette, Inc. (DLJ) at a cost of $29.9 million. DLJ's market value at the time of litigation was $4.0 million. Instead of selling DLJ's shares on the market, where American Express would sustain a large loss, which could be offset against taxable capital gains on other investments, saving the company $8 million, American Express declared a special dividend to shareholders of record pursuant to which the shares of DLJ would be distributed in kind. The rationale was that reporting the loss would have an adverse effect on American Express stock. The plaintiffs brought suit alleging a waste of corporate assets.
Rule of Law and Holding
". . . The question of whether or not a dividend is to be declared or a distribution of some kind should be made is exclusively a matter of business judgment for the Board of Directors. . . . Courts will not interfere with such discetion unless it be first made to appear that the directors have acted or are about to act in bad faith . . ." The court dismissed the complaint.
Topics
Valuing Assets
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Cases and Materials on Corporations
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Choper, Coffee, Gilson
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- Cases and Materials on Corporations
- Choper, Coffee, Gilson
- 6th Edition
Coming Soon
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