Also known as: private corporations · privately held corporation · private corp
Written by attorneys — see sources below.
A legal entity organized under state law that possesses rights and liabilities separate from its shareholders and that pursues private business or charitable purposes rather than governmental functions.
Pacific Bank receives a notice of deposition that lists topics about its loan approval practices. The bank designates its compliance officer to testify on those topics after conferring with the serving party. The officer appears and answers questions based on information known or reasonably available to the bank.
Phoebe Park enrolls her son at a private academy organized as a corporation under state law. The academy sets its own curriculum and tuition without state funding. Parents later challenge a state statute that would force closure of the academy.
In November 1922, voters in Oregon adopted the Compulsory Education Act under the initiative provision of the state constitution. The Act, effective September 1, 1926, requires every parent, guardian, or other person having control or charge or custody of a child between eight and sixteen years to send him to a public school for the period of time a public school shall be held during the current year in the district where the child resides, with failure to do so declared a misdemeanor. Exemptions exist for children who are not normal, have completed the eighth grade, reside at considerable distances from any public school, or whose parents or guardians hold special permits from the County Superintendent. The Society of the Sisters of the Holy Names of Jesus and Mary is an Oregon corporation organized in 1880 with power to care for orphans, educate and instruct the youth, establish and maintain academies or schools, and acquire necessary real and personal property. It has long devoted its property and effort to the secular and religious education and care of children, and has acquired the valuable good will of many parents and guardians. It conducts interdependent primary and high schools and junior colleges, and maintains orphanages for the custody and control of children between eight and sixteen. In its primary schools many children between those ages are taught the subjects usually pursued in Oregon public schools during the first eight years. Systematic religious instruction and moral training according to the tenets of the Roman Catholic Church are also regularly provided. The corporation owns valuable buildings, especially constructed and equipped, for school purposes. The business is remunerative—the annual income from primary schools exceeds thirty thousand dollars—and the successful conduct of this requires long time contracts with teachers and parents. The Compulsory Education Act of 1922 has already caused the withdrawal from its schools of children who would otherwise continue, and their income has steadily declined. Hill Military Academy is a private corporation organized in 1908 under the laws of Oregon, engaged in owning, operating and conducting for profit an elementary, college preparatory and military training school for boys between the ages of five and twenty-one years. The average attendance is one hundred, and the annual fees received for each student amount to some eight hundred dollars. The elementary department is divided into eight grades, as in the public schools. The college preparatory department has four grades, similar to those of the public high schools. The courses of study conform to the requirements of the State Board of Education. Military instruction and training are also given, under the supervision of an Army officer. It owns considerable real and personal property; some useful only for school purposes. The business and incident good will are very valuable. To conduct its affairs long time contracts must be made for supplies, equipment, teachers and pupils. Parents and guardians are refusing to make contracts for the future instruction of their sons, and some are being withdrawn. The Society of the Sisters and Hill Military Academy each filed bills in federal district court setting out the foregoing facts and alleging that the enactment conflicts with rights guaranteed by the Fourteenth Amendment. No answer was interposed in either cause, and after proper notices the causes were heard by three judges on motions for preliminary injunctions upon the specifically alleged facts. The court granted decrees based upon the undenied allegations restraining appellants from threatening or attempting to enforce the Act. Appeals from those decrees were taken to the Supreme Court of the United States.
View casePioneer Energy owns track and stations as a private corporation. The city initiates eminent domain proceedings to acquire a strip of land for a street widening project. The corporation demands compensation measured by the fair market value of the taken property.
The City of Chicago, acting under an 1872 Illinois statute that became part of its charter in 1875, passed an ordinance on October 9, 1880, to open and widen Rockwell Street from West 18th Street to West 19th Street by condemning parcels of land owned by individuals and parts of the right of way of the Chicago, Burlington and Quincy Railroad Company within the city limits. On November 12, 1890, the city filed a petition in the Circuit Court of Cook County seeking condemnation of the property and asking that just compensation be ascertained by a jury, with the railroad company admitted as a defendant along with other interested parties. The jury awarded one dollar as just compensation to the railroad company for the parts of its right of way to be used for the street, while awarding compensation to individual owners for their parcels. The railroad moved for a new trial, which was overruled, and final judgment was entered in execution of the award. The judgment was affirmed by the Supreme Court of Illinois in 149 Illinois 457. After affirmance the railroad company sued out a writ of error to the United States Supreme Court. The railroad had raised claims under the Fourteenth Amendment in its motion for new trial and in its assignment of errors filed in the state supreme court. The Illinois statute provided no provision for an answer by defendants in condemnation proceedings, but the railroad asserted its federal claims in the written motion to set aside the verdict and grant a new trial.
View casePhoenix Technologies compiles a proprietary earnings forecast for internal use. An employee leaks the forecast to a competitor. The corporation sues to enjoin further disclosure and to recover damages for the loss of exclusive use.
In 1981, R. Foster Winans joined the Wall Street Journal as a reporter. In the summer of 1982, he became one of the two writers of its daily “Heard on the Street” column, which discussed selected stocks or groups of stocks and offered investment perspectives. The column had the potential to affect the price of the stocks it examined, although the columns at issue contained no corporate inside information. The Journal maintained an official policy that the contents and timing of the column were confidential prior to publication. In October 1983, Winans entered into a scheme with Peter Brant and Kenneth Felis, both connected with the Kidder Peabody brokerage firm, and with David Clark, a client of Brant, to supply advance information about the column’s timing and contents. The group bought or sold securities based on the probable market impact of the column. The group agreed to share the profits. Over a four-month period the brokers executed prepublication trades tied to 27 columns, generating net profits of about $690,000. Kidder Peabody noticed correlations between the “Heard” articles and trading in the Clark and Felis accounts in November 1983 and began inquiries. The Securities and Exchange Commission later opened an investigation. After the conspirators quarreled, Winans and petitioner David Carpenter, Winans’ roommate, disclosed the entire scheme to the SEC on March 29, 1984. Brant, who had pleaded guilty under a plea agreement, testified for the government at the subsequent bench trial. Winans, Felis, and Carpenter were convicted of violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, the federal mail and wire fraud statutes, and the conspiracy statute. Carpenter was convicted as an aider and abettor. With a minor exception the Court of Appeals for the Second Circuit affirmed the convictions. The Supreme Court granted certiorari.
View casePinnacle Holdings shareholders file suit on behalf of the corporation alleging that directors wasted corporate assets. The complaint demands that any recovery be paid to the corporation rather than to the individual plaintiffs.
Petitioners, who were stockholders in the Lehman Corporation, a closed-end investment company, brought a derivative action in federal district court against the corporation's directors and its brokers, Lehman Brothers. They alleged that Lehman Brothers had obtained control through an illegally large representation on the board in violation of the Investment Company Act of 1940 and used that control to extract excessive brokerage fees from the corporation. The complaint charged the directors with converting corporate assets and with gross abuse of trust, gross misconduct, willful misfeasance, bad faith, and gross negligence. It also accused both the directors and Lehman Brothers of breaching fiduciary duties, committing waste and spoliation, and violating the brokerage contract. Petitioners requested that the defendants account for and pay to the corporation their profits and gains and its losses. They demanded a jury trial on the corporation’s claims. The district court denied the motion to strike the jury demand in part. It held that only the shareholder’s initial claim to speak for the corporation would be tried to the judge while the corporation’s underlying claims would be tried to a jury if the corporation itself had brought suit. Finding substantial grounds for difference of opinion, the district court certified the question for interlocutory appeal under 28 U.S.C. § 1292(b). The Court of Appeals for the Second Circuit reversed, holding that a derivative action is entirely equitable in nature and that no jury is available to try any part of it. Because of the conflict among the circuits, the Supreme Court granted certiorari.
View casePerry Pratt learns of an impending acquisition while working at a target corporation. He purchases shares before the announcement and sells after the price rises. The corporation's shareholders later bring claims based on the misuse of nonpublic information.
In 1975 and 1976 Vincent Chiarella worked as a markup man in the New York composing room of Pandick Press, a financial printer. Among the documents he handled were five announcements of corporate takeover bids. The identities of the acquiring and target corporations were concealed by blank spaces or false names. The true names were sent to the printer on the night of the final printing. Chiarella deduced the names of the target companies from other information contained in the documents. Without disclosing his knowledge, Chiarella purchased stock in the target companies. He sold the shares immediately after the takeover attempts were made public. By this method he realized a gain of slightly more than $30,000 in the course of fourteen months. The Securities and Exchange Commission subsequently began an investigation of his trading activities. In May 1977 Chiarella entered into a consent decree with the Commission in which he agreed to return his profits to the sellers of the shares. On the same day he was discharged by Pandick Press. In January 1978 he was indicted on seventeen counts of violating § 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. After he unsuccessfully moved to dismiss the indictment, he was tried and convicted on all counts in the District Court. The Court of Appeals for the Second Circuit affirmed the conviction. The Supreme Court granted certiorari.
View caseA party may name a private corporation as the deponent and must describe the matters for examination with reasonable particularity. The corporation must then designate one or more officers or other persons to testify on its behalf about information known or reasonably available to the organization.
A private corporation holds its property in a proprietary capacity similar to a natural person. The Fourteenth Amendment therefore requires just compensation when the state takes that property for public use.
A private corporation becomes a state actor only when its conduct is so intertwined with government that it constitutes state action. Mere regulation or receipt of a state-granted monopoly does not convert the corporation into a government actor.
Corporate statutes prohibit indemnification for liability arising from an intentional violation of criminal law even when the bylaws contain broad indemnification language. A convicted officer therefore cannot compel the corporation to pay criminal fines or related penalties.