Nature of the Case
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Facts
American Independent Oil was a close corporation organized by Abercrombie and Davies and nine major oil companies to develop an oil concession in the Middle East. Each shareholder was permitted to elect at least one of the 15 directors through cumulative voting. Phillips Petroleum was the largest shareholder, and it got to elect four directors. In 1950 in order to prevent Phillips from acquisition of control, Davies and five of the oil companies with a total of 54% of the shares and the right to elect eight directors executed an agents' agreement. They transferred their shares endorsed in blank to the Agents for ten years. The shareholders got a receipt and deposited the shares in escrow. An irrevocable proxy was delivered good for the life of the agreement. The shares were required to be voted as a unit in accordance with 7 of 8 Agents. The failure to agree would invoke an arbitrator solution by an arbitrator chosen by 7 of 8. The agreement could be terminated by 7 of 8 Agents and convert it to a formal voting trust. In 1954, two of the Agents refused to abide by the Agreement. This suit ensued, and the agreement was upheld by the lower court. Ps claim that the agreement is invalid on its face as in substance it is a voting trust that does not comply with the voting trust statute. Ds argue that it is a mere pooling agreement.
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