Paulek v. Isgar

551 P.2d 213 (1976)

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Nature of the Case

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Facts

At a special meeting of the shareholders of Ditch, 56% of the shares represented at the meeting voted to consolidate Ditch with Short under the existing articles of incorporation and bylaws of Ditch. At the next annual meeting of the shareholders, an amendment to the minutes of the special meeting was approved, by a majority vote. The amendment provided that as part of the consolidation Short was to pay a proportionate share of any indebtedness of Ditch and that all property of Short was to become the property of Ditch. Ditch bylaws stated that: 'The capital stock of this company shall be classed in three series as follows: A series, B series, and C series, and shall be assessable for the purposes stated in the Articles of Incorporation and these By-Laws.' The articles of incorporation authorized the issuance of 8,000 shares of par value stock divided into four series: A, B, C, and D. The D series of stock was to be placed in the treasury to be issued at the ratio of 80 shares for each cubic foot of water per second of time. . . upon conveyance of such water to this Company by the owner thereof . . . .' P sued to stop the consolidation with Short. The court recognized the conflict between the bylaws and the articles and concluded that the articles controlled. P appealed. P claims that the series D stock could not be issued until the bylaws were amended, pursuant to the bylaw provision permitting amendment, by a two-thirds vote of the stock represented at a meeting of the shareholders held to authorize the issuance of the series D stock.