Dodge V. Ford Motor Co. 170 N.W. 668

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Dodge v. Ford Motor Co. 170 N.W. 668
The Ford Motor Company is an American multinational automaker that was incorporated on June 16, 1903 by Henry Ford. In today’s world Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010. Henry Ford became famous for his methods of large scale manufacturing, management and the use of the assembly lines in his factories. Another very important event in the history of Ford Motor Company, and also a very important case in legal terms, was Dodge v. Ford Motor Company, 170 N.W. 668, Michigan Supreme Court 1919. This case was very important to the legal system because it reinforced the idea that corporations are accountable to making a profit for the stockholders. On November 2, 1916, a day after his son Edsel’s wedding, Henry Ford received notice of a complaint that would eventually lead to one of the most famous lawsuits in the history of American corporate law (Henderson). The plaintiffs were John and Horace Dodge and they owned ten percent of common shares of Ford Motor Company. At the time Henry Ford owned 58 percent of the outstanding shares and controlled the company and board of directors. This at the time most likely was strange to Ford, because in fact John and Horace Dodge were business partners with Ford and also on the board of directors of the Ford Motor Company. Beginning in 1911, Ford started paying an annual dividend of $1.2 million. At that time it was 60 percent of its capital stock of $2 million, but only around 1 percent of its total equity of $114 million. Between 1911 and 1915 Ford paid special dividends totaling $41 million. It was the policy of Ford Motor Company to reduce the selling price of its cars each year. Later in 1915, they increased production by constructing new plants worth $10 million, buying land for $3 million, and erecting an $11 million smelter. To finance these expenditures, Ford did not reduce the selling...
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