Ch45Q6
Siebrecht organized Siebrecht Realty Co., a corporation, and then transferred his building to the corporation in exchange for its stock. The corporation rented different parts of the building to different tenants. Elenkrieg, an employee of one of the tenants, fell and was injured because of the defective condition of a stairway. She sued Siebrecht individually on the ground that the corporation had been formed by him for the purpose of securing limited liability. Decide. [Elenkrieg v. Siebrecht, 144 N.E. 519 (N.Y.)]
Ch46Q3
Business Week magazine is sent to a national distributor of magazines, Curtis Circulations Co., which sells the magazines to various wholesalers, including Hudson News. Business Week publishes a column entitled "Inside Wall Street," and the evidence shows that stocks discussed favorably in the column tend to increase in value after release to the public. Business Week has a strict confidentiality policy prior to release of the magazine to the public applicable to all employees involved in production and distribution. This policy also applies to Hudson News. Gregory Savage, an employee of Hudson News, and the "top person" in the delivery room area, arranged to have the "Inside Wall Street" column faxed to his neighbor, a stockbroker named Larry Strath, prior to the close of the market on Thursday and prior to release to the public that evening. Strath traded on the information and passed it on to Joseph Falcone, who likewise traded on the basis of this information. While Falcone paid Strath $200 for a copy of the column each week, he contends that the information he received was too remote from the Business Week confidentiality policy to be actionable by the SEC. What theory do you believe the SEC pursued against Falcone? What are the elements of the theory? How would you decide this case? [United States v. Falcone. 257 F.3d 226 (2d Cir.)]
Ch47q9
Hicks, the president and manager of Intermountain Merchandising, wanted to sell the business to Montana Merchandising, Inc. To provide a basis for the transaction, he retained Bloomgren, an accountant, to conduct an audit of Intermountain. Bloomgren knew that Montana would use the audit report in making the purchase of the business from Intermountain.
Bloomgren's audit report showed the Intermountain business as profitable. Thayer, Montana's president, relied on this report in agreeing to purchase the business of Intermountain and in agreeing to the terms of the purchase. Sometime later, it was discovered that the accountant had made a number of mistakes and that the business that was sold was actually insolvent. Thayer and Montana Merchandising sued Hicks and Bloomgren for damages. The suit claimed that the accountant had negligently misrepresented the facts. The accountant defended on the basis that Thayer was not in privity of contract with him and therefore could not sue him. Was he right? [Thayer v. Hicks, 793 P.2d 784 (Mont.)]