Rose v. Schantz
Wisconsin Supreme Court
56 Wis. 2d 222, 201 N.W.2d 593 (1972)
- Written by Douglas Halasz, JD
Facts
Robert H. Rose (plaintiff) was a stockholder of U.S. Controls Corporation (U.S. Controls). Rose sued Spencer C. Schantz and Erwin Nemmers (directors) (defendants), who were officers and directors of U.S. Controls. In the two-count complaint, Rose pleaded a stockholder’s derivative claim brought on behalf of U.S. Controls, as well as a direct claim brought in the alternative on his own behalf as a stockholder. Rose alleged that the directors threatened to act in violation of their duties. Specifically, Rose alleged that the directors were engaged in a scheme to exhaust U.S. Controls’ cash reserves to render it incapable of continuing business and allow Schantz to engage in a competing business. The complaint stated that the directors threatened to pay corporate debentures before they became due, redeem U.S. Controls stock, and permit Schantz to resign as president of U.S. Controls. The directors filed a demurrer challenging the derivative claim and the direct claim. The trial court overruled the demurrer and entered an injunction preventing the directors from paying the debentures before due, redeeming U.S. Controls stock, and releasing Schantz from his role as president and any liability he may have to U.S. Controls. The directors appealed.
Rule of Law
Issue
Holding and Reasoning (Hansen, J.)
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