FREEDMAN ET AL.
v.
FOX ET AL.
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The Florida Supreme Court quashed a chancellor's order denying a motion to dismiss in a shareholder dispute, holding that mere disagreement and animosity between co-stockholders of a 50-50 corporation does not justify drastic remedies like dissolution, receivership, or forced sale when the corporation remains a functioning going concern.
The court held that such allegations do not justify the requested relief. Dissolution of a corporation is warranted only when the corporation has practically discontinued business or is incapable of carrying out its corporate functions. Here, the corporation remained a functioning going concern with minimal discord that did not prevent it from operating.
“The liquidation of a corporation and the distribution of its assets cannot be accomplished unless the corporation has "practically discontinued all of its business, or is no longer capable of being made to carry out the corporate functions for which it was chartered."”
Establishes the strict standard required for corporate dissolution, citing Mills Development Corp. v. Shipp & Head, Inc.
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Join FLexlaw to unlock all legal intelligenceThe Foxes and Freedmans each owned 50% of F. G. F. Corporation, which operated a leasehold hotel. The corporation had no defaulted rental and minimal …
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THOMAS, Justice.
We are asked to quash the order of the chancellor denying the motion of the petitioners to dismiss the respondents’ bill of complaint.
In substance it was alleged that the respondents, the Foxes, owned half of the stock of F. G. F. Corporation and the petitioners, the Freedmans, owned half. A leasehold on a hotel owned by the Freed-mans was obtained by the corporation through intermediate assignments. No rental is now in default and outstanding debts of the corporation incurred in the operation of the hotel amount to little.
It was charged that the corporation could not function 'because no majority vote of the board of directors could be secured due to the strained relations between the respondents on the one part and the petitioners on the other which, according to the allegations, was the outgrowth of the petitioners’ failure to cooperate with the respondents. There follow in the bill certain illustrations of petitioners’ shortcomings in furthering the welfare of the corporation such as refusal to repair the television set, causing by their manner and actions guests to leave, creating animosity among guests by playing cards, failing to provide Christmas parties, delegating by Freedman, to his wife and son, his share of the work at the desk.
Such trivia indicating little more than disharmony between the two couples were offered to support prayers for the appointment of a receiver, establishment of the leasehold as a trust, dissolution of the corporation, sale of the leasehold to the highest bidder, accounting, and declaration of a lien on the property to secure the respondents’ interest when adjudicated.
We find no such averments in the bill as to justify the relief even if every word of them were proved. The liquidation of a corporation and the distribution of its assets cannot be accomplished unless the corporation has “practically discontinued all of its business, or is no longer capable of being made to carry out the corporate functions for which it was chartered * * *." Mills Development Corp. v. Shipp & Head, Inc., 126 Fla. 490, 171 So. 533, 534. This decision was cited with approval in News-Journal Corporation v. Gore, 147 Fla. 217, 2 So. 2d 741, where we held, in substance, that the drastic action of dissolving a corporation will not be justified unless its affairs have reached the sorry state where the purposes for which it was organized are no longer possible of attainment. See also Finn Bondholders, Inc., v. Dukes, 157 Fla. 642, 26 So. 2d 802.
And we find no such elements here as would place this controversy in the category of Tampa Water Works Co. v. Wood, 97 Fla. 493, 121 So. 789, and Wofford v. Wofford, 129 Fla. 445, 176 So. 499, for reasons that are obvious when a comparison of the facts in each is made with the facts now before us.
The animosity between the Foxes and the Freedmans is probably unpleasant but it is not of such serious proportions or degree that it results in a failure of the corporation to function.
There is no occasion, either, for holding that, after all, the corporation is only a partnership. From the bill itself it is plain that the corporation is in fact a corporation, operating fully as such, and that it is a going concern. Certainly at this late date the respondents cannot be successful in their contention that, after all, the arrangement is a partnership and therefore that a remedy is available to them as partners. The corporation was chartered by the State, contracted and incurred debts as a corporation and in all respects operated in that capacity. Apparently it is only when dissension arises that the respondents become dissatisfied with their position as stockholders.
We can only conclude that the amended bill is devoid of merit.
The certiorari is granted and the order denying the motion to dismiss is quashed with directions to dismiss the cause.
ROBERTS, C. J., and HOBSON and DREW, JJ., concur.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
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KAY v. Key W. Dev. Co., 72 So. 2d 786 (Fla. 1954)…h relief to dissolve the corporation. Neither do we feel that intervention by a court of equity under the circumstances revealed by this record is in any way meddling with the internal affairs of corporate management. See Freedman v. Fox, Fla. 1953, 67 So. 2d 692. The question involved here is much more substantial and real. The Legislature by the passage of Chapter 28170, Laws of Florida, Act of 1953, added Chapter 608 to the Florida Statutes, F.S.A., and, in Section 608.28 thereof, recognized the necessit…
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Koren Kreedian v. BCK Land, Inc., 145 So. 2d 550 (Fla. 2d DCA 1962)…d justify a reversal of the chancellor’s findings and accordingly no good purpose would be accomplished by further elaboration. See Curtis v. Briscoe, Fla.App.1961, 129 So. 2d 450; Jones v. Harvey, Fla.1955, 82 So. 2d 371; Freedman v. Fox, Fla.1953, 67 So. 2d 692; 7 Fla.Jur., Corporations, § 356. No corporate mismanagement having been demonstrated and, viewing the evidence in the light most favorable to the plaintiff, we conclude that there was no sufficient evidence upon which the chan [*551] cellor could…
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Corlett v. Merritt, 478 So. 2d 828 (Fla. 3d DCA 1985)…heir judgment for that of the parties thereto and rewrite a contract in order to relieve one of the parties from the apparent hardship of an improvident bargain.”), or interfere with the internal affairs of corporate management, see Freedman v. Fox, 67 So. 2d 692 (Fla.1953). Compare Mann v. Price, 434 So. 2d 943 (Fla.2d DCA 1983). In the present case, there is no provision for redemption to be found anywhere — none in a statute, none in any corporate document, none in any agreement. The appellees argue, how…1 / 2
Previewing 3 of 7 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Tampa Water Works Co. v. Wood, 97 Fla. 493 (Fla. 1929)
- News-Journal Corp. v. Gore, 147 Fla. 217 (Fla. 1941)
- Mills Dev. Corp. v. Shipp & Head, Inc., 126 Fla. 490 (Fla. 1936)
- Wofford v. Wofford, 129 Fla. 445 (Fla. 1937)
- Finn Bondholders, Inc. v. Gertrude Dukes, 157 Fla. 642 (Fla. 1946)