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Hariton v. Arco Electronics, Inc., (1963)

1. Hariton v. Arco Electronics, Inc., (1963); pg. 405, briefed 2/24/97

 

2. Facts: Plaintiff is a stockholder in the Arco corporation.  Arco entered into an exchange of stock for assets with Loral corporation whereby Arco (target) would transfer all of its assets and liabilities to Loral (parent) in exchange for shares of Loral common stock, pursuant to a Delaware exchange of stock for assets statute.  Thereafter, Arco was dissolved.  Under the Delaware statute, such a transaction does not allow a stockholder in the acquired corporation (the target corporation) to have dissenterís appraisal rights.

 

3. Procedural Posture:  Hariton sued to have the transaction declared a de facto merger, and therefore unlawful because the merger statute (a different statute) had not been complied with.

4. Issue: Whether the transaction in question is a de facto merger, therefore vesting dissenterís appraisal rights in the plaintiff.

 

5.  Holding: No.

 

6. Reasoning: Although the doctrine of de facto merger has some equitable merit, the fact that a separate statute exists in Delaware to allow an exchange of assets for stock defeats that argument.  It would be up to the legislature to change the statute if desired.  The various statutes of the Delaware corporation law are independent of each other and a given result may be accomplished under one section which is not possible, or is even forbidden under another.