After our study of agency, partnerships, and other unincorporated entities, we started coverage of corporations yesterday in business associations class. I wanted to “fill in” with some historical material about the very first multinational corporation – in Amsterdam, with the joint stock company, set up to monopolize the spice trade from the East. Rather than just lecture about it, however, I thought it would be fun to show them a short clip of Niall Ferguson’s Ascent of Money, in which he describes the form and how trading in the shares of the Dutch East India Company began, how the first market for shares was created, and how the liquidity of the shares ended up making its initial stockholders quite wealthy. (As I was searching for the clip to show the class, I ended up re-watching most of the four-hour series. Various clips could make for informative and entertaining classroom viewing).
At the same time, I have an (unanswered) question about the history of a case, which seems somewhat like an urban legend. Apart from discussing the critical corporate attributes yesterday, we also discussed the famous veil-piercing case, Walkovszky v. Carlton, 223 N.W.2d (1966). For those of you for who teach other subjects, this is the famous taxi-cab case, in which the controlling shareholder, Carlton, sets up ten different corporations, each of which holds two cabs and only the minimum insurance dictated by the New York statute for each. I was told a rather apocryphal story about this case when I was a law student, which was that there was a professor at Harvard Law, a proponent of corporate deregulation, who had loved the outcome of this case until he was (ironically) struck down by a taxi in New York City as he was walking in the crosswalk. As it would turn out, that taxi was part of an undercapitalized scheme much like that in Walkovszky, and faced with an injury and a judgment-proof defendant, the professor suddenly turned into a proponent of government regulation. I looked for Walkovszky in Corporate Law Stories (ed. J. Mark Ramseyer) for more information, but although there was plenty on the rest of the classics, i.e. Meinhard v. Salmon, Dodge v. Ford, Smith v. Van Gorkom, there was nothing on Walkovszky. Is this just some made-up story, or, like Ethan Leib, who actually does dress as a chicken to teach the Frigaliment case in contracts, does this have a basis in reality?
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