- 14 -
an arm’s-length transaction that was the “functional equivalent”
of an actual arm’s-length sale. Id. at 373 n.9. We disagreed,
stating that “it is against the economic interest of a charitable
organization to look a gift horse in the mouth.” Id. The facts
in this case are not analogous to those of McCord because here
actual sales took place. The nonprofit organizations that
acquired Huber shares without compulsion to sell sold them for
the price that the E&Y appraisal suggested. Unlike McCord, this
is not a situation where having been designated to receive a
gift, the charity would have taken whatever it could get.
Therefore, McCord is distinguishable on its facts.
The parties’ analytical framework corresponds to the factors
discussed in Morrissey. The parties base their conclusions about
the arm’s-length nature of the sales on their view of the Huber
family relationships, the presence or lack of compulsion on the
part of the seller, the reasonableness of the shareholders’
reliance on the E&Y value, and the intent of the parties with
respect to the sales. We shall therefore generally follow this
framework and address any collateral arguments that the parties
raise.
III. Relationship of Shareholders in Huber
Respondent brings to our attention that this Court has
consistently closely scrutinized purported transactions between
related parties, such as family members, and often concluded that
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011