Opinion ID: 1799426
Heading Depth: 2
Heading Rank: 2

Heading: Gulf's Position.

Text: Gulf says that perhaps the single most important fact about the entire lawsuit is the fact that although its subsidiary G.A.L.C. Company acquired 46% of Fenestra's outstanding stock, it has never acquired control of Fenestra (it will be remembered that the events leading up to this lawsuit happened well in advance of the next scheduled annual meeting of stockholders). Gulf says, this being a civil conspiracy suit, that plaintiff Fenestra must satisfy the court that two or more of the defendants combined either to accomplish a lawful purpose through unlawful means or to accomplish an unlawful purpose, citing Veriden v. McLeod, 180 Mich 182, and Peoples Savings Bank v. Stoddard, 359 Mich 297 (83 ALR2d 344). Gulf says, first of all, that there was nothing unlawful in the means by which it obtained Fenestra's shares. Gulf concedes the obvious, that is, that it paid a price per share greater than the market value of Fenestra but says that there is no law which prevents a purchaser from paying a premium in connection with the purchase of shares. In addition, Gulf, in answering Fenestra's charge, says that the fact that it borrowed all of the money necessary to purchase the Fenestra shares is of no consequence because, in the first place, there is nothing wrong with borrowing money and, in the second place, that it put up substantial collateral, both personal and corporate, to assure repayment of the loans and other financing of the transaction. Anyway, Gulf says, when money is borrowed it becomes the borrower's money and the fact that it is borrowed money does not, in and of itself, taint the transaction in which it may be used. As to whether or not its purpose was unlawful in purchasing the Fenestra shares, Gulf says that the purchase of shares for control of a corporation is a normal everyday occurrence and has solid support in the law. Gulf says that the finding that it intended to misuse its control of Fenestra (assuming that it would have gained control at the next annual meeting of shareholders), is totally lacking in support from the evidence. Gulf readily concedes that prior to its purchase the possibility of a merger of Fenestra and Gulf was discussed and also the possibility that Fenestra might be asked to lend money to Gulf was discussed but never concluded. Gulf also readily concedes that it considered the possibility of changing the corporate direction of Fenestra because all parties, including Fenestra management, were in agreement that something ought to be done about the building products divisions which were steadily losing money for all Fenestra stockholders. Gulf argues that neither the possibility of merger, loans, or change in corporate direction is unlawful per se, but admits that they could be made unlawful, however depending upon the manner in which either might be accomplished. This, Gulf says, could only be determined when and if a specific proposal were made. It should be pointed out that neither side contends that any specific proposal has yet been made. Gulf points out that the trial court laid heavy stress upon the conclusion that Gulf intended to pay for its purchase of Fenestra shares out of Fenestra's own assets. Gulf says that the record will clearly show that both the down payment note made to the Atkinson Corporation of the Pritzker group is well secured by Gulf stock and that the balance due to the Brainin group is also secured by over $7,000,000 worth of Fenestra and Gulf stock. Gulf says that the only way Fenestra money could be used to discharge these obligations would be either by theft (which not even Fenestra claims is intended) or by borrowing from Fenestra or merger with Fenestra. In either a loan or a merger, Gulf asserts that the other shareholders of Fenestra would necessarily be protected as a matter of fact and of law. Gulf also strenuously objects to the judgment of divestiture which, it claims, is an extraordinarily harsh remedy, used almost exclusively in antitrust and antimonopoly cases where no other remedy will suffice. Without conceding that any of its actions was unlawful, Gulf suggested to the trial court before judgment that if the court deemed it necessary to protect Fenestra or its minority shareholders that it, Gulf, was agreeable to a judgment of injunction restraining it from acquiring any of the capital assets of Fenestra by merger, loan or otherwise, as well as other forms of relief.