Theatre Amusement Co. v. Stone

Theatre Amusement Co. v. Stone

Directors who entered into prohibited contracts with the company under article 57 were thereby disqualified and accountable for profits; such prohibited contracts could not be ratified by a majority of shareholders and any shareholder may obtain a declaration of disqualification and an account of profits to enforce the articles.

Citation
(1914) 50 SCR 32
Parties
Appellant/defendant: Theatre Amusement Company; Appellant/defendant: Barney Allen; Appellant/defendant: Julius Allen; Appellant/defendant: Jay Junior Allen; Appellant/defendant: The Canadian Film Exchange (partnership); Respondent/plaintiff: Louis B. Stone
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
18 May 1914
Procedural Posture
Civil Appeal (company Law) / Appeal to the Supreme Court of Canada From the Supreme Court of Alberta
Outcome
Appeal dismissed with costs
Legal Topics
Directors' Disqualification, Conflict of Interest, Fiduciary Duty, Ratification, Minority Shareholder Remedies, Account of Profits, Illegal Contracts
Source Language
English
Commercial Law Company Law Corporate Governance Equity Directors' Disqualification Conflict of Interest Fiduciary Duty Ratification +3 more

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Parties

Theatre Amusement Company

Appellant/defendant

Barney Allen

Appellant/defendant

Julius Allen

Appellant/defendant

Jay Junior Allen

Appellant/defendant

The Canadian Film Exchange (partnership)

Appellant/defendant

Louis B. Stone

Respondent/plaintiff

Procedural Posture

Civil Appeal (company Law) / Appeal to the Supreme Court of Canada From the Supreme Court of Alberta

Legal Issues

  1. 1 Whether directors who entered into contracts with the company in which they had an interest and obtained profits were disqualified under article 57 of Table A of the Alberta Companies Ordinance
  2. 2 Whether such prohibited contracts could be ratified by a majority of shareholders or only unanimously
  3. 3 Whether an individual shareholder (minority) has standing to seek a declaration of disqualification and an account of profits rather than being limited to relief in the name of the company

Ratio Decidendi

Directors who entered into prohibited contracts with the company under article 57 were thereby disqualified and accountable for profits; such prohibited contracts could not be ratified by a majority of shareholders and any shareholder may obtain a declaration of disqualification and an account of profits to enforce the articles.

Court Disposition

Appeal dismissed with costs

Orders

  • Appeal dismissed with costs