Question 3 ( 10 points) Case #3 - Ford Motor Company was formed in 1903. Henry Ford, the president and owner of most of the firm's stock, attempted to run the corporation as if it were a one-person operation. The firm expanded rapidly and, in addition to regular quarterly dividends, often paid special dividends. Originally, the Ford car sold for more than $900. From time to time, the price was reduced, and in 1916 it sold for $440. For the year beginning August 1, 1916, the price was reduced again to $360. In the interest of setting aside money for future investment and expansion, the firm announced that it would pay no special dividends after October 1915, even though surplus capital in 1916 exceeded $110,000,000. The minority stockholders, who owned one-tenth of the shares of the corporation, petitioned the court to compel the directors to declare a dividend. The lower trial court held for the minority stockholders, and the other stockholders appealed to the higher court. What should the higher court hold as to the legal issue here? Does a corporation have to declare a dividend? If so, what is the legal basis for this requirement? Substantiate your answer by legal reasoning. What is the legal basis for the majority stockholders decision not to pay a dividend? Explain this defense. Dodge v. Ford Motor Co., Supreme Court of Michigan, 170 N.W. 668 (1919)