Samiksha Jaiswal

AP Smith Manufacturing Co. v. Barlow

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Location  New Jersey, United States
AP Smith Manufacturing Co. v. Barlow httpsuploadwikimediaorgwikipediacommonsthu
Citation(s)  13 N.J. 145, 98 A.2d 581, 39 ALR 2d 1179 (1953)
Similar  Shlensky v Wrigley, Dodge v Ford Motor Co, Guth v Loft Inc, Keech v Sandford, In re Citigroup Inc Shar

AP Smith Manufacturing Co v Barlow, 98 A.2d 581 (N.J. 1953) is a US corporate law case, concerning the application of directors' duties in regard to balancing the interests of different stakeholders. It held that directors may make charitable donations, so long as their personal interests do not conflict, or there is a contravention of state law.

Contents

Facts

The directors of AP Smith Manufacturing, a New Jersey company, approved donation of $1500 to Princeton University. The shareholders disapproved of the gift and contended that it was a breach of a director’s duty to act in the corporation or shareholder interests. Specifically they argued that there was no express authority in the corporation’s certificate of incorporation. A New Jersey statute allowed corporations to make charitable donations, so long as the recipient did not own more than 10 per cent of a corporation’s stock, but the shareholders argued this was inapplicable if the corporation was incorporated beforehand.

Judgment

The Court held the gift was within the competence of the company and lauded it as a ‘long visioned… action in recognizing and voluntarily discharging its high obligations as a constituent of our modern society.’ It continued as follows.

References

AP Smith Manufacturing Co. v. Barlow Wikipedia


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