The Fairchild Engine and Airplane Corporation (Fairchild) was a privately held corporation whose management proposed the incumbent slate of directors for election at its annual shareholders’ meeting. An insurgent slate of directors challenged the incumbents for elections to the board. After the solicitation of proxies and a hard-fought proxy contest, the insurgent slate of directors was elected. Evidence showed that the proxy contest was waged over matters of corporate policy and for personal reasons. The old board of directors had spent $134,000 out of corporate funds to wage the proxy contest. The insurgents had spent $127,000 of their personal funds in their successful proxy contest and sought reimbursement from Fairchild for this amount. The payment of these expenses was ratified by a 16-to-1 majority vote of the shareholders. Mr. Rosenfield, an attorney who owned 25 of the 2,300,000 outstanding shares of the corporation, filed an action to recover the amounts already paid by the corporation and to prevent any further payments of these expenses. Who wins? 

Rosenfield v. Fairchild Engine & Airplane Corp., 128 N.E.2d 291 (N.Y. 1955).

Answer rating: 100% (QA)

For this situation Mr Rosenfield will lose The instance of Rosenfield V Fairchild Engine and Airplan... View the full answer