Tuesday, May 29, 2018

The Fall of Constantinople and the End of the “Middle Ages"

The Fall of Constantinople and the End of the “Middle Ages"

      On this day in 1453 the city of Constantinople, and with it the Byzantine Roman Empire, fell to the forces of the Ottoman Empire under Mehmed II.  Refounded as the Eastern capital of the Roman empire in the early years of the 4th Century, it had previously fallen only once, then in 1204 to an army of Western Crusaders. The strength of its walls, especially those on the land side, were legendary. The Hun army under Attila is reputed to have ridden up to the walls, taken a good look and ridden away, knowing they could not take the city.  Since the fall of the Western Roman Empire in the 5th Century, it was the Eastern “Byzantine” Empire that continued the traditions and namesake of the “Roman Empire.”

      Mehmed was able, however, to utilize the still relatively new cannon, but cast at sizes never before seen. A combination of the battering of the city’s walls, siege and the deprivation of supplies, and a city without the necessary military forces to patrol and protect the walls set the stage for its downfall. Only some 7,000 soldiers were availble in the city, many of them mercenaries from Italy. Those forces were stretched even more thinly after the Ottoman forces were able to bring ships into the "Golden Horn" which ran along a portion of the walls.  Now the Ottomans did not sail their ships into the Horn - it was protected by a large chain that blocked the entrance, the chain being supported by barrel floats.   Rather, the ships were beached and pulled up and over the surrounding hills, then relaunched in the Golden Horn. 

       Ultimately the Ottoman forces were able to force entry through a gate left open in the walls through which a wounded Byzantine commander (he himself was from Genoa) had been evacuated. The last of the Byzantine emperors, Constantine XI (who as well enjoyed the title as the Despot of Morea - very Tolkenish), died leading his troops in a final push against the enemy; or at least it is so assumed - the accounts record him leading the troops and his whereabouts are never again reported, his body was never recovered.

      Some scholars treat the Fall of Constantinople as the end of the Middle Ages. An interesting notion, but since scholars can’t agree as to what are the characteristics of the Middle Ages, it is hard to say the age ended as of one point in time or another. Maybe for that reason May 29, 1453 is as good a day as any.

Thursday, May 24, 2018

An Oral Contract Is Not Worth The Paper It Is (Not) Written On

An Oral Contract Is Not Worth The Paper It Is (Not) Written On

In a decision rendered in February of this year by a New York Court, there was again illuminated the rule that oral contracts are typically not worth the paper they are (not) written upon. In this instance, a shareholder asserted that a side oral agreement would permit him to significantly increase his holdings in the corporation. On the basis of the other agreements, they being written, precluded an oral contract, this assertion was rejected. Blobel v. Kopfli, 2018 NY Slip Op  30298(U), 2018 WL 984847 (N.Y. Sup. Feb. 20, 2018).
Dr. G√ľnter Blobel, a recipient of the Nobel Prize in medicine, was the cofounder of Chromocell, a biotechnology company based substantially upon technology code invented by Dr. Blobel. The other founders of Chromocell were Dr. Shekdar, Dr. Blobel’s research assistant, and Christian Kopfli, an attorney. Once formed, Kopfli served as the CEO of Chromocell and Dr. Shekdar served as its chief science officer.
At the time of Chromocell’s formation, Dr. Blobel was employed by the Rockefeller University Laboratory of Cell Biology and as well held the position of Investigator at the Howard Hughes Medical Institute (HHMI). HHMI’s rules limited Dr. Blobel to owning “more than a 5% ownership interest in a company.” In light of this limitation, Dr. Blobel agreed to accept a 3.9% equity interest in Chromocell, with the balance being split equally between Dr. Shekdar and Kopfli. In connection with the organization of Chromocell, the parties, including Dr. Blobel, entered into a variety of agreements including a stock agreement and an independent contractor services agreement. Dr. Blobel would assert that there was a unwritten agreement that, to the extent that the rules of the HHMI would allow him to subsequently hold a greater ownership interest in the company, his allocation of shares would be adjusted accordingly
In 2012, HHMI revised its rules, allowing persons such as Dr. Blobel to own “less than a controlling interest” in a company. Upon this change in HHMI rules, Blobel believed that the alleged oral agreement should allow him to increase his share ownership to one-third of Chronocell, thereby rendering himself, Kopfli and Dr. Shekdar equal shareholders. After exchanging numerous emails on the point and as well a dinner, it was clear that neither Kopfli nor Dr. Shekdar would agree to increase Blobel’s ownership in the company; they even offered to buy out his interest in the company for $10,000,000. Refusing those offers, Blobel filed suit seeking, amongst other relief, specific performance on the alleged oral reallocation agreement.
Responding to the complaint, the defendants filed a motion to dismiss on the basis that there were no grounds for relief. In this decision, that motion for relief would be granted.
Each of the stock and the consulting agreements signed by Blobel, the former otherwise providing for his 3.9% ownership interest, were “fully integrated agreements.” Being fully integrated, the “merger clause thereof indicated that the agreement ‘establishes the parties’ intent to finalize all negotiated terms in the agreement.” With respect to the consulting agreement, it provided that “it constitutes the ‘entire understanding between the parties and supersedes, replaces and takes precedence over any prior or contemporaneous understanding or oral or written agreement.’” With respect to the stock agreement, it provided that “there have existed or exist no agreements or understandings, written or oral, between the company and [Dr. Blobel] or entered into by [Dr. Blobel] for the benefit of the company.” The court found that these agreements “constitute a concerted effort by the parties to finalize the terms of their agreement.”
Ultimately, the court would find:
Additionally, by executing the Agreement, Dr. Blobel sought to be bound by each Agreement’s merger clause, which expressly repudiated all prior agreements. Dr. Blobel’s argument requires the court to accept that, despite agreeing to reject all prior agreements on the issue, Dr. Blobel nevertheless believed the Allocation Agreement was exempt from those clauses’ controlling reach, even if it misrepresents the Agreements’ stated terms. This the court declines to do, particularly, when enforcing the Allocation Agreement would uproot each written Agreement’s merger clause and recital of Dr. Blow Blobel’s 3.9% equity ownership.
Additional arguments based upon, for example, unjust enrichment and equitable estoppel were rejected on the basis that they were inconsistent with the express written agreements.
Once again, the rule is clear; if you want your contract to be enforceable, it needs to be in writing.

Tuesday, May 15, 2018

The Trial of Anne Boleyn

The Trial of Anne Boleyn

      On this day in 1536, Anne Boleyn, as well as her brother George, was tried on allegations of adultery and incest.  The conclusion of the “trial” was a foregone conclusion.  On May 12, four of the men with whom Anne was accused of having engaged in adultery, Mark Smeaton, Henry Norris, William Brereton and Francis Weston, had already been convicted, and, so goes the adage, it does take two to tango. 

      Although some incomplete notes of the trial do survive, sadly no transcript is available; it would no doubt make interesting reading.  It is clear that both Anne and then George (George’s trial was separate and held after that of Anne) denied all charges against them.  Those denials (as well as the expected denials of the other men charged with having committed adultery with Anne) must be accepted at face value.  As has been demonstrated by several scholars, most conclusively Eric Ives, Anne and her various co-conspirators could not have been guilty of the charges made – even with the incomplete records available to us today, it can be demonstrated that in numerous instances Anne and a particular gentleman were charged with having committed adultery at a particular time and place when, in fact, either or both of them were at a different place or even two difference places.  The truth, however, was not the issue; the outcome of the trial was a foregone conclusion before it ever started.  Henry was tired of Anne, and Cromwell had been charged to bring about her fall. End of story.

      On May 14, Cramner, Archbishop of Canterbury, had declared the marriage of Henry and Anne to have been invalid ab initio, possibly (the papers as to his determination have been lost) on the basis of her prior contract of marriage to Henry Percy the son of the then Fifth Earl of Northumberland (this Henry would be the Sixth Earl). An alternative basis was that Mary Boleyn, Anne's sister, had been Henry's mistress, and on that basis the marriage could have been invalid based upon consangruity. Regardless as to why, Anne would not die as the Queen of England, having never been validly married to Henry, and their daughter Elizabeth (the future Queen Elizabeth I) was rendered illegitimate.

      All of Mark Smeaton, Henry Norris, William Brereton and Francis Weston, along with George Boleyn, would be executed on May 17.  Anne’s death would not take place until May 19.

Friday, May 11, 2018

Waiving the Right to Bring a Derivative Action

Waiving the Right to Bring a Derivative Action

In a pair of recent cases involving, respectively, Delaware and Nevada LLCs, the courts were called upon to determine whether each LLC’s operating agreement waived the ability of the minority members to bring a derivative action.
Both suits were decided in New York.  In the case involving the Delaware LLC, Talking Capital LLC v. Omanoff, the court rejected the assertion that the structure of the operating agreement, which utilized a board with broad powers, was sufficient to eliminate the ability to bring a derivative action. It was noted as well that, were that argument accepted, it “would inherently immunize managing members who commit wrongdoing.” That decision as well noted that the provision of the Delaware LLC Act addressing derivative actions was not qualified by “unless otherwise provided in the operating agreement”, noting that this left open the question as to whether § 18-1001 of the Delaware LLC Act is mandatory or subject to modification by the members.
In the case involving the Nevada LLC, Human Nature Las Vegas Inc. v. Gildea, the New York Court was reviewing an operating agreement for a Nevada LLC. Under the Nevada LLC Act, the right to bring a derivative action is clearly subject to modification, the statute providing “unless otherwise prohibited by the… operating agreements.” In that instance, while the operating agreement required that at least a majority of the three members approve certain key decisions including whether to “commence or settle any litigation or arbitration or hire or terminate any counsel in connection with such litigation or arbitration,” that language was insufficient to eliminate the ability to bring a derivative action.
These two cases have been reviewed by Peter Mahler in his blog New York Business Divorce in an April 23, 2018 posting titled Can LLC Agreement Waive Right to Sue Derivatively? Not in these two cases; HERE IS A LINK to that posting.
While neither of these courts found it necessary to reach the ultimate question, namely can the right to bring a derivative action be waived, there is a Kentucky trial cout decision to that effect. In J & B Energy, Inc. v. Caldwell, the Kentucky Court of Appeals was focused upon whether or not one of the participants in a particular transaction was acting as the attorney for the other members. Unfortunately, not appealed in that case was a determination by the trial court that certain language in the operating agreement was sufficient to waive the right to bring a derivative action. I reviewed that issue in a blog posting on October 6, 2014 titled Waiver of the Right to Bring a Derivative Action? HERE IS A LINK to that discussion. I have otherwise taken the position that the capacity to bring a derivative action is not subject to modification in the operating agreement. For example, I blogged on that issue on May 19, 2015 in a posting On Further Reflection, “No”; HERE IS A LINK to that posting.

Thursday, May 10, 2018

Distinguishing a Written Operating Agreement from a Signed Operating Agreement

Distinguishing a Written Operating Agreement from a Signed Operating Agreement
Under the Kentucky LLC Act, numerous of the default rules may be modified only if done in a written operating agreement. Put another way, while oral and course of conduct operating agreements are permitted under the LLC Act, those agreements are not effective to modify a default rule that the Act requires be modified only by means of a written instrument. There is not, however, a general requirement that a written operating agreement be signed by the members. While there are a few very narrow exceptions to the rule, such as with respect to the obligation to contribute additional capital to the company, a member is bound by the written operating agreement irrespective of whether they have ever signed it. Indeed, they may be bound by an agreement they have never seen.
These rules can become quite important when there is disagreement as to whether the terms of a written operating agreement have ever been approved.
These principles were recently applied in a decision in New York, a state whose LLC Act is in many respects similar to that of Kentucky. Therein, in 223 Sam, LLC v. 223 15th St., LLC, there existed a dispute as to whether a document that was exchanged by email constituted the final agreed upon operating agreement for the company. Peter Mahler, in his blog New York Business Divorce, has reviewed the 223 Sam, LLC decision; HERE IS A LINK to that posting.

Sunday, May 6, 2018

The Sack of Rome and the Papal Swiss Guard

The Sack of Rome and the Papal Swiss Guard

        Today marks the anniversary of the Sack of Rome in 1527 by troops of Charles V,  Holy Roman Emperor.

        Since the late 15th Century Italy (or at least the region we today identify as Italy – the notion of the region as a nation was long in the future) had been repeatedly invaded by forces from Northern Europe, each seeking to claim dominion over one area or another. Rival claimants to the crown of Naples caused as much trouble as did anything, but economic rivalry between for example Genoa and Venice did nothing to calm the waters.  Pope Alexander VI gave command of the papal army to his son/nephew (which is a matter of dispute) Cesare in order to bring some order, and Pope Julius II would actually don armor and lead his army into battle, again in an effort to bring some stability to the situation.  While Erasmus would condemn Julius for doing so, he did ignore the fact that the targeted cities surrendered to him.

        But back to the Sack of Rome.  Charles’ forces were at this point battling the League of Cognac, it being comprised of France, Milan, Venice, Florence and the Papal States .  Keeping track of the various Leagues through the Italian Wars is a troubling task; the League of Cambrai was initially formed against Venice by the Papacy, France, Spain and the Holy Roman Empire. Later the initial members would be allied against France with Venice as an ally. Later Venice and France would be against the Papacy, Spain and the Holy Roman Empire. After a significant victory over the French army the troops were restive in that they had not been paid – most were mercenary. Pillaging Rome would be a way of paying the troops. The city was not well defended, although its formidable walls did need to be and were breached.  Their commander having fallen in the course of the attack, discipline immediately broke down among the troops, and a sack of over three days began.

        The Pontifical Swiss Guard, created only in 1506 under Pope Julius II, rose to the occasion. Of its then number of 189, 147 would fall defending Pope Clement VII, affording him time to take refuge in the Castel Sant’Angelo (Hadrian’s Mausoleum). In recognition of this event, new members of the Pontifical Swiss Guard are sworn in on May 6.  Earlier today, in the continuation of that tradition, Pope Francis I officiated at the swearing in of a number of new Swiss Guards.

           There was in 2013 an event unique to the Guard, namely the recognition of a Pope’s retirement. Benedict XVI left the Vatican as Pope, flying to the Castle Gandolfo. The Swiss Guard accompanied him to the castle and there stood guard. When the moment his resignation became effective, and Benedict became not Pope but Pope Emeritus, the Guards left their station at the castle and returned to Rome. While the Vatican has its security forces, and they no doubt continued to provide protection for Benedict, the Swiss Guard serve the Pope.

        Of course this was not the only sack of Rome – it had fallen many times in its long history. It fell to the Normans in 1084, in 546 by the Ostrogoths, in 455 by the Vandals, in 410 by the Visigoths and in 387 BC by the Gauls.