51. With reference to the fraud allegations of the complaint,
defendants have sustained their burden of proving that the
transaction was a good faith and entirely fair effort by
defendants and their officers and directors to relieve all the
shareholders of Peoria from the consequences of its impending
failure and to enable all such shareholders to participate
equitably and ratably in the exploitation of the cold storage
market available in the area. Defendants have further sustained
their burden of proving that ACI paid the fair market value for
52. Any of the following Conclusions of Law which might more
properly be considered Findings of Fact.
CONCLUSIONS OF LAW
1. Any of the foregoing Findings of Fact which might more
properly be considered Conclusions of Law.
2. The court has jurisdiction of the parties and the subject
matter of this cause.
3. Plaintiff has the burden of proving his right to redress for
any violation of Section 10(b) of the Act, 15 U.S.C. § 78j(b).
4. The proxy statement was deceptive as a matter of law, as the
Court of Appeals has held in its prior decision herein, but to
sustain his burden of proof under Section 10(b), plaintiff must
(a) a causal relationship between the deceptive material and
the sale, or that there was reliance upon the deceptive material.
Janigan v. Taylor, 344 F.2d 781, 785-786 (1st Cir. 1965), cert.
denied, 382 U.S. 879, 86 S.Ct. 163, 15 L.Ed.2d 120 (1965); List
v. Fashion Park, Inc., 340 F.2d 457, 462 (2d Cir. 1965);
Ruszkowski v. Hugh Johnson & Co., 302 F. Supp. 1371, 1374
(W.D.N.Y. 1969); and
(b) that the corporation and/or its shareholders were injured
as a proximate result of the material. Globus v. Law Research
Service, Inc., 418 F.2d 1276, 1291-1292 (2d Cir. 1969).
5. There is a total failure by plaintiff to prove the fact of
reliance by anyone, any causal relationship between any defects
in the proxy material and the Peoria sale, or that either Peoria
or its shareholders sustained any injury.
6. Defendants and their officers and directors stood in a
fiduciary relationship to Peoria and its shareholders as a matter
of law, and the burden thus rests upon defendants to prove that
they acted in good faith and did not breach their fiduciary duty.
7. Defendants did act in utmost good faith toward Peoria and
its minority shareholders. They sustained their burden of proving
the fair market value of Peoria's assets and that ACI paid full
reasonable value therefor.
8. A parent corporation has no legal duty to guarantee the
credit of any subsidiary.
9. The alleged corporate opportunity of Peoria to own and
operate the new cold storage facility did not exist as a matter
of law. The evidence conclusively proves that Peoria never
possessed that corporate opportunity because it was at all times
financially unable to embrace the same. 19 Am.Jur.2d § 1313, p.
10. The plan of reorganization was legally adopted by the
boards of directors of both Peoria and ACI and by the
shareholders of Peoria.
11. The exchange ratio of five shares of Peoria stock for one
share of ACI stock, which was established in the plan, was fair
and reasonable to Peoria, to ACI, and to the shareholders of
12. There is no wrong here requiring or deserving
rectification. To require "unscrambling" or some payment or
further issue of stock to plaintiff or anyone he represents, or
to his counsel, because of harmless deficiencies in the notice of
meeting, would be a grave injustice to the other shareholders of
13. Plaintiff is entitled to take nothing on his own behalf, on
behalf of Peoria, or on behalf of any member of the class of
persons heretofore held to be similarly situated.
14. Defendants are entitled to judgment upon the complaint and
for their costs of suit.