Fliegler v. Lawrence

361 A.2d 218 (Del.1976)

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Nature of the Case

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Facts

Lawrence (D), president of Agau, a publicly traded corporation engaged in gold and silver exploration, acquired certain properties in 1969 under a lease option for $60,000. D offered to transfer the properties to Agau, but after discussions, it was agreed by Agau that its legal and financial position would not allow its acquisition and development of the properties. It was thus decided to transfer the properties to USAC, a closely held corporation formed just for the purpose. The majority of stock in USAC was owed by the individual Ds. It was reasoned that the opportunity could be had by raising money from the sale of USAC stock, but it was also decided to grant Agau a long-term option to acquire USAC if the properties proved to be of commercial value. In January 1970, the option agreement was exercised by Agau. P sued on behalf of Agau to recover the 800,000 shares given to USAC for the option and an accounting.