Blount v. Taf

246 S.E.2d 763 (1978)

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Nature of the Case

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Facts

Blount (Ps) are the owners of 41% of Eastern Lumber. Taft (D) and McGowan (D1) own 41% and 18% respectively of Eastern. In 1969, Ps became concerned regarding the nepotism situation which existed at Eastern. P made a motion at a board meeting that in the future unanimous approval of the stockholders would be required before the relative of any stockholder could be employed by Eastern with unanimous approval required each year for continued employment. That motion was defeated by Ds. Another board meeting was held in 1971 to approve new bylaws and to conduct business on a more orderly basis as Eastern was negotiating for a $250,000 business expansion loan. The proposed new bylaws were read, article by article and then changes made and votes taken. The final draft that was approved regarding the employment issues of the executive committee. That final version was adopted which called for the executive committee having exclusive authority to employ all persons, but that unanimous consent was required. New bylaws were again considered on June 1974. The vote was 6-3 for them with the only dissents from Ps. The majority rule was approved in the prior 1971 meetings in Article VIII section 4. Ps stated their contention that the old bylaws remained in force. This lawsuit was taken to enforce the provisions adopted in 1971 regarding the executive committee employment power as a shareholders' agreement. The trial court ruled for D. The Court of Appeals overruled that and ruled for P.