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157:. 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.
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In the light of all of the foregoing we have no hesitancy in sustaining the validity of the donation by the plaintiff. There is no suggestion that it was made indiscriminately or to a pet charity of the corporate directors in furtherance of personal rather than corporate
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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.
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State legislation adopted in the public interest and applied to pre-existing corporations under the reserved power has repeatedly been sustained by the
Supreme Court.
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The directors of AP Smith
Manufacturing, a New Jersey company making
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has been acknowledged as an early instance of legal recognition of
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This article incorporates text from this source, which is in the
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125:in regard to balancing the interests of different
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325:In re Walt Disney Derivative Litigation
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388:Miles v Sydney Meat-Preserving Co Ltd
337:In re Citigroup Derivative Litigation
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497:AP Smith Manufacturing Co. v. Barlow
416:AP Smith Manufacturing Co. v. Barlow
279:Broz v. Cellular Information Systems
121:case, concerning the application of
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32:AP Smith Manufacturing Co. v. Barlow
475:Australian Journal of Corporate Law
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18:AP Smith Manufacturing Co v Barlow
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549:United States corporate case law
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314:Delaware General Corporation Law
219:AP Smith Manufacturing v. Barlow
397:corporate social responsibility
564:1953 in United States case law
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385:(1883) and Australian case of
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466:Baumfield, Victoria (2016).
291:The Charitable Corp v Sutton
210:Sources on directors' duties
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382:Hutton v West Cork Rly Co
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270:, 5 A2d 503 (Del 1939)
258:, 164 NE 545 (NY 1928)
234:, 237 NE 2d 776 (1968)
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222:39 ALR 2d 1179 (1953)
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282:, 637 A2d 148 (1996)
155:Princeton University
303:Smith v. Van Gorkom
231:Shlensky v. Wrigley
559:1953 in New Jersey
340:964 A2d 106 (2009)
306:488 A2d 858 (1985)
255:Meinhard v. Salmon
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Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
