43. During the period from July 20, 1954 to and including the
commencement of the trial of this action, the management headed
by Lichtenstein has accomplished a considerable growth on the
part of Liberty in its outstandings or accounts receivable (which
are the backbone of the company's business), its lines of credit,
its scope and size of operations, its earnings and its position
in the industry. Also, since July 20, 1954 the market value of
the Class A common stock and, since November 3, 1954, of the
common stock of the surviving corporation has steadily increased,
and in the first eleven days of June, 1956, it was quoted from 32
high to 31½ low on the bid side and 32½ high to 32¼ low on the
44. Specifically, during this period the outstandings or
accounts receivable of Liberty increased from approximately
$20,000,000 to $36,500,000, or better than 75%; its number of
accounts increased during the same period about 71%; the entire
industry increased during said period about 26% whereas Liberty
increased about 67%. The earnings of Liberty for the first five
months of 1956 have been at the rate of in excess of $100,000 per
month, which was fifty per cent higher than Liberty's earnings
had ever been.
45. During the same period Liberty increased its bank lines of
credit, which are vital to the success and growth of finance
companies, from approximately $20,000,000 to $29,000,000.
Additionally, Liberty has obtained $6,500,000 of funds from
insurance company loans, and at the time of trial had commitments
for an additional $8,500,000 of such funds.
46. Also, during the same period, the company increased its
offices from 66 to 127, and increased the scope of its business
activities from seven states to fifteen at the present time. In
1954 Liberty was about thirtieth in the small loan industry, and
at the time of the trial it had increased its position to
substantially in the area of tenth.
47. From the evidence it does not appear that any of the
defendants entered into a scheme to defraud the former Class A
stockholders or Liberty, itself; nor does it appear from the
evidence that any of the defendants, singly or in concert,
committed any fraud against the Class A stockholders or Liberty.
Conclusions of Law.
1. This Court has jurisdiction of the parties to and the
subject matter of this action.
2. Since Liberty Loan Corporation is a Delaware corporation,
the issues presented in this action are governed by the law of
the State of Delaware.
3. Under the Delaware law, a minority shareholder has a
statutory right to object to any proposed merger of his
corporation with any other corporation, and to have his stock
appraised and the appraised value paid to him by the surviving
4. Under the law of the State of Delaware where, as here, both
the Employees' Stock Purchase Plan and the Plan and Agreement of
Merger have received the favorable vote of more than two-thirds
of the stockholders, such Employees' Stock Purchase Plan and such
Plan and Agreement of Merger are presumed to be fair and cannot
be successfully attacked by dissident stockholders except upon a
showing of actual or constructive fraud.
5. Neither the Employees' Stock Purchase Plan nor the Plan and
Agreement of Merger, nor any of the terms and provisions of
either, nor any action by any of the defendants herein as shown
by the evidence herein constituted actual fraud or amounted to
6. Although the Employees' Stock Purchase Plan was by the Board
of Directors of Liberty submitted to the stockholders for
termination or rescission, under the law of the State of Delaware
the board of directors of Liberty had power and authority to
adopt the Employees' Stock Purchase Plan and to issue shares
thereunder and to fix the
consideration to be received therefor without submitting the
matter to a vote of the stockholders.
7. The plaintiff has failed to establish by the evidence
adduced that she or the Class A stockholders whom she represented
or Liberty was entitled to any relief against any of the
8. The equities of this action are with the defendants and
against the plaintiff.
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