Zahn v. Transamerica Corp.,

3d Cir. Ct. of App., 162 F.2d 36 (1947)

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Nature of the Case

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Facts

Zahn (P) owned class A common stock of the Axton-Fisher Tobacco Co. Axton's stock was divided into three groups: preferred, class A and class B. The corporate charter provided that, upon liquidation of the corporation, a set amount was to be paid to the preferred shareholders, with the remainder of the assets to be divided between the class A and class B shareholders as set by the directors. The charter also provided a right of redemption of the class A stock by the board at any time for $60 per share plus accrued dividends. Over a period of time, Transamerica (D) acquired 80% of the class B stock and two-thirds of the overall voting stock of Axton. When the value of Axton's assets increased, the board, now controlled by D, redeemed the class A stock and then sold the assets of the corporation, thereby liquidating the company. They gave no disclosure to the class A holders. P alleges that if the Class A stockholders had been allowed to participate in the assets on liquidation of Axton-Fisher and had received their respective shares of the assets, he and the other Class A stockholders would have received $240 per share instead of $80.80.