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Mead v. McCullough

Mead v. McCullough involved a dispute over the sale of assets from a corporation called the Philippine Engineering & Construction Co. (PECC) to McCullough. Mead was the general manager of PECC but resigned. Several contracts entered into by Mead as general manager failed. The board then voted to sell PECC's rights and interests in a wrecking contract to McCullough, along with some of Mead's personal effects. Mead alleged this was done in bad faith. The court held that as a private corporation, PECC had an absolute right to sell its property in good faith, which this transaction achieved.

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47 views1 page

Mead v. McCullough

Mead v. McCullough involved a dispute over the sale of assets from a corporation called the Philippine Engineering & Construction Co. (PECC) to McCullough. Mead was the general manager of PECC but resigned. Several contracts entered into by Mead as general manager failed. The board then voted to sell PECC's rights and interests in a wrecking contract to McCullough, along with some of Mead's personal effects. Mead alleged this was done in bad faith. The court held that as a private corporation, PECC had an absolute right to sell its property in good faith, which this transaction achieved.

Uploaded by

Junelyn T. Ella
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Mead v.

McCullough

The complaint contains three causes of action one of which is for the value of the
personal effects alleged to have been left by Mead and sold by the defendants. The
parties organized the Philippine Engineering & Construction Co. (PECC) by giving $2000
Mexican currency cash each, except for Mead who contributed property. Mead was also
the general manager until he resigned to accept employment with the Canton &
Shanghai Railway Co.
Several contracts entered by Mead as general manager failed,
specifically a wrecking contract with the navy. Because of these failures,
the board voted to sell all the rights and interests of PECC to the
wrecking contract in favor of McCullough (along with some of Mead’s
personal effects). McCullough then incorporated a new company,
Manila Salvage Association, and transferred all his rights and interests to
the contract to MSA. Mead alleges that these were done in bad faith.

Issue:
W/N the sale or transfer to McCullough of the assets of said corporation was done
within the laws and powers of the corporation.

Held:
YES. A private corporation, which owes no special duty to the
public and which has not been given the right of eminent domain, has
absolute right and power as against the whole world except the state, to
sell and dispose of all of its property. A transaction done in good faith which achieves
substantial justice cannot be disturbed based on mere suspicions.
Doctrine: Generally speaking, the voice of a majority of the stockholders
is the law of the corporation, but there are exceptions to this rule. There
must necessarily be a limit upon the power of the majority. Without
such a limit the will of the majority would be absolute and irresistible
and might easily degenerate into an arbitrary tyranny. Notwithstanding
these limitations upon the power of the majority of the stockholders,
their (the majority’s) resolutions, when passed in good faith and for a
just cause, deserve careful consideration and are generally binding upon
the minority.

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