course material

1. Can the corporation enforce Jordan’s stock subscription against Jordan’s
estate?
ASSIGNMENT1. In April, Cranson was asked to invest in a new business corporation that
was about to be created. He agreed to purchase stock and to become an officer and
director.After his attorney advised him that the corporation had been formed under the
laws of Maryland, Cranson paid for and received a stock certificate evidencing his
ownership of shares. The business of the new venture was conducted as if it were a
corporation. Cranson was elected president, and he conducted all of his corporate actions,
including those with IBM, as an officer of the corporation. At no time did he assume any
personal obligation or pledge his individual credit to IBM. As a result of an oversight of the
attorney, of which Cranson was unaware, the certificate of incorporation, which had been
signed and acknowledged prior to May 1, was not filed until November 24. Between May 1
and November 8, the “corporation” purchased eight computers from IBM. The corporation
made only partial payment. Can IBM hold Cranson personally liable for the balance due?
Explain.2. Berger was planning to produce a fashion show in Las Vegas. In April 1965,
Berger entered into a written licensing agreement with CBS Films, Inc., a wholly owned
subsidiary of CBS, for presentation of the show. In 1966, Stewart Cowley decided to produce
a fashion show similar to Berger’s and entered into a contract with CBS. CBS broadcast
Cowley’s show but not Berger’s, and Berger brought an action against CBS to recover
damages for breach of his contract with CBS Films. Berger claimed that CBS was liable
because CBS Films was not operated as a separate entity and that the court should
disregard the parent-subsidiary form. In support of this claim, Berger showed that the
directors of CBS Films were employees of CBS, that CBS’s organizational chart included CBS
Films, and that all lines of employee authority from CBS Films passed through CBS
employees to the CBS chairman of the board. CBS, in turn, argued that Berger had failed to
justify piercing the corporate veil and disregarding the corporate identity of CBS Films in
order to hold CBS liable. Decision?3. Frank McAnarney and Joseph Lemon entered into an
agreement to promote a corporation to engage in the manufacture of farm implements.
Before the corporation was organized, McAnarney and Lemon solicited subscriptions to the
stock of the corporation and presented a written agreement for the subscribers to sign. The
agreement provided that the subscribers would pay $100 per share for stock in the
corporation in consideration of McAnarney and Lemon’s agreement to organize the
corporation and advance the preincorporation expenses. Thomas Jordan signed the

2. agreement, making application for one hundred shares of stock. After the articles of
incorporation were filed with the Secretary of State but before the charter was issued to the
corporation, Jordan died. The administrator of Jordan’s estate notified McAnarney and
Lemon that the estate would not honor Jordan’s subscription.After the formation of the
corporation, Franklin Adams signed a subscription agreement making application for one
hundred shares of stock. Before the corporation accepted the subscription, Adams informed
the corporation that he was canceling it.a. Can the corporation enforce Jordan’s stock
subscription against Jordan’s estate? Explain.b. Can the corporation enforce Adams’s stock
subscription? Explain.4. Green & Freedman Baking Company (Green & Freedman) was a
corporation owned by the Elmans that produced and sold baked goods. The terms of a
collective bargaining agreement required Green & Freedman Baking Company to make
periodic payments on behalf ofits unionized drivers to the New England Teamsters and
Baking Industry Health Benefits and Insurance Fund (Health Fund). After sixty years of
operation, Green & Freedman experienced financial difficulties and ceased to make the
agreed-upon contributions. The Elmans mixed their own finances with those of Green &
Freedman’s. The Elmans, through their domination of Green & Freedman, caused the
corporation to make payments to themselves and their relatives at a time when the
corporation was known to be failing and could be expected to default or was already in
default on its obligations to the Health Fund. It then transferred all remaining assets to a
successor entity named Boston Bakers, Inc. (Boston Bakers). Boston Bakers operated
essentially the same business as Green & Freedman until its demise two years later. The
Health Fund sued Green & Freedman, Boston Bakers, and the two corporations’ principals,
Richard Elman and Stanley Elman, to recover the payments owed by Green & Freedman
with interest, costs, and penalties. There was no evidence of financial self-dealing in the case
of Boston Bakers. Both corporate defendants conceded liability for the delinquent
contributions owed by Green & Freedman to the Health Fund. The suit against the Elmans
was based on piercing the corporate veil with respect to Green & Freedman and Boston
Bakers. The Elmans, however, denied they were personally liable for these corporate debts.
Are the Elmans liable? Explain.5. Ronald Nadler was a resident of Maryland and the CEO of
Glenmar Cinestate, Inc., a Maryland corporation, as well as its principal stockholder.
Glenmar leased certain space in the Westridge Square Shopping Center, located in
Frederick, Maryland, and in Cranberry Mall, located in Westminster, Maryland. Tiller
Construction Corporation and Nadler entered into two contracts for the construction of
movie theaters at these locations, one calling for Tiller to do “the work” for Nadler at
Westridge for $637,000 and the other for Tiller to do “the work” for Nadler at Cranberry for
$688,800. Ronald Nadler requested that Tiller send all bills to Glenmar, the lessee at both
shopping malls, but agreed to be personally liable to Tiller for the payment of both
contracts. All inventory was bought and paid for locally, and Tiller paid sales tax in
Maryland. Although there was no formal office in the state, Tiller leased a motel room for a
considerable period of time, posted a sign at the job site, and maintained telephone
numbers listed in information. In addition, Tiller engaged in fairly pervasive management
functions, and the value of the projects comprised a substantial part of Tiller’s revenues
during the period. At the time of the suit, there was a net balance due for the Cranberry

3. project in the amount of $229,799.46 and on the Westridge project for the sum of
$264,273.85, which Nadler refused to pay even though he had approved all work and the
work had been performed in a timely, good, and workmanlike manner. Tiller Construction
Corporation sued Ronald Nadler and Glenmar Cinestate, Inc., for breach of contract. Nadler
filed a motion to dismiss based on Maryland’s business corporation statute, which prohibits
a foreign corporation that conducts intrastate business in Maryland from maintaining a suit
in Maryland courts if the corporation fails to register or qualify under Maryland law. Nadler
asserted that Tiller was a New York corporation that had never qualified to transact
business in the state of Maryland. Tiller conceded that the corporation had not qualified to
do business in Maryland but argued that Tiller was not required to qualify because its
activities did not constitute, in the contemplation of the statute, doing business in the state
as Tiller just had occasional business in Maryland. Discuss whether Tiller could bring suit in
Maryland.6. Harold Lang Jewelers, Inc. (Lang), a Florida corporation, through its single
employee, had sold and consigned merchandise to jewelry stores in western North Carolina
for almost thirty years. Lang’s employee came frequently to North Carolina for the purpose
of transacting business. When the employee came to North Carolina, he always brought
jewelry with him for delivery. When he visited jewelry stores in the State, he would
either(a) make a direct sale on the spot without any confirmation from any other person or
(b) consign the jewelry, also without any further confirmation or approval from any other
person. When the employee took orders, he either shipped the ordered items to the
business in North Carolina or personally delivered the merchandise. He also took returns of
merchandise from customers in the State. Lang filed suit against Johnson, alleging that
Johnson owed Lang $160,322.90 plus interest for jewelry sold or consigned. Johnson
asserted as one of its defenses that Lang could not sue in a North Carolina court because
Lang had failed to obtain a certificate of authority to transact business in the State. Explain
whether the court should dismiss Lang’s action.