Stroh v. Blackhawk Holding Corp

272 N.E.2d 1 (1971)

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Nature of the Case

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Facts

Blackhawk (D) was organized under Illinois law. Its articles authorized the issuance of 3,000,000 shares of Class A stock with a par value of $1 and 500,000 shares of Class B stock with no par value. Subscription agreements were issued to 21 promoters who purchased 87,868 shares of Class A stock at $3.40 per share and 500,000 shares of Class B stock for 1/4 cent per share. D then registered the Class A shares for sale of 500,000 shares to the public at $4 per share. The prospectus that was issued gave all the details of the initial sale to the 21 promoters and described their control of the company and the fact that no Class B stock was being sold as it already had been sold. In August of 1964 there was a 2-1 split of the Class A stock increasing outstanding shares to 1,175,736. Additional Class A shares were sold for $4 in 1965 and by 1968 there were 1,237,681 Class A shares and 500,000 Class B shares. P sued to have the Class B shares declared as not being stock within the definition of that term. The trial court granted P summary judgment but the appeals court reversed. P appealed.