Zetlin v. Hanson Holdings, Inc.
Cases that cite this one
8 later published cases cite this decision.
- Mendel v. Carroll (Court of Chancery of Delaware 1994)
- Martin v. Marlin (Fla. Dist. Ct. App. 1988)
- General Edgar G. Doleman, U.S. Army (Retired), Lorrin Dolim, and Robert Rinker v. Meiji Mutual Life Insurance Company, a Japanese Corporation (9th Cir. 1984)
- Dixon v. Pro Image Inc. (Utah 1999)
- Cohen v. LeNoble (Appellate Division of the Supreme Court of New York 2008)
- Bill Butler Associates v. New England Savings Bank (Connecticut Superior Court 1991)
- Beaumont v. American Can Co. (Appellate Division of the Supreme Court of New York 1990)
- Beaumont v. American Can Co. (New York Supreme Court 1988)
This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.
Opinion of the Court
Memorandum.
The order of the Appellate Division should be affirmed, with costs.
Plaintiff Zetlin owned approximately 2% of the outstanding shares of Gable Industries, Inc., with defendants Hanson Holdings, Inc., and Sylvestri, together with members of the Sylvestri family, owning 44.4% of Gable’s shares. The defendants sold their interests to Flintkote Co. for a premium price of $15 per share, at a time when Gable stock was selling on the open market for $7.38 per share. It is undisputed that the 44.4% acquired by Flintkote represented effective control of Gable.
Recognizing that those who invest the capital necessary to acquire a dominant position in the ownership of a corporation have the right of controlling that corporation, it has long been settled law that, absent looting of corporate assets, conversion of a corporate opportunity, fraud or other acts of bad faith, a controlling stockholder is free to sell, and a purchaser is free to buy, that controlling interest at a premium price (see Barnes v Brown, 80 NY 527; Levy v American Beverage Corp., 265 App Div 208; Essex Universal Corp. v Yates, 305 F2d 572).
Certainly, minority shareholders are entitled to protection against such abuse by controlling shareholders. They are not entitled, however, to inhibit the legitimate interests of the other stockholders. It is for this reason that control shares usually command a premium price. The premium is the added amount an investor is willing to pay for the privilege of directly influencing the corporation’s affairs.
In this action plaintiff Zetlin contends that minority stockholders are entitled to an opportunity to share equally in any premium paid for a controlling interest in the corporation. This rule would profoundly affect the manner in which controlling stock interests are now transferred. It would require, essentially, that a controlling interest be transferred only by means of an offer to all stockholders, i.e., a tender offer. This would be contrary to existing law and if so radical a change is to be effected it would best be done by the Legislature.
Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur in memorandum.
Order affirmed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.