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137. Moreover, the flow of dividends from the corporations would
be subject to economic vicissitudes, retained earnings policies,
and business needs. Id. at 139-140. In this regard, the Court
explained:
There is no reason to suppose that the three
corporations controlled by Byrum were other than
typical small businesses. The customary vicissitudes
of such enterprises--bad years; product obsolescence;
new competition; disastrous litigation; new, inhibiting
Government regulations; even bankruptcy--prevent any
certainty or predictability as to earnings or
dividends. There is no assurance that a small
corporation will have a flow of net earnings or that
income earned will in fact be available for dividends.
Thus, Byrum’s alleged de facto “power to control the
flow of dividends” to the trust was subject to business
and economic variables over which he had little or no
control. [Id. at 249.]
Furthermore, the Supreme Court stressed that “A majority
shareholder has a fiduciary duty not to misuse his power by
promoting his personal interests at the expense of corporate
interests” and the directors of a corporation “have a fiduciary
duty to promote the interests of the corporation.” Id. at 137-
138. Such duties were legally enforceable by means of, for
example, a derivative suit. Id. at 141-142.
With respect to the case at bar, the estate asserts that
decedent retained no legally enforceable rights of the genre
required by United States v. Byrum, supra. The estate emphasizes
that management powers are insufficient to warrant inclusion and
points out that, under the SFLP agreement, the limited partner
was without even the right to exercise any managerial authority.
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