Roach And The Legal Center, Inc. v. Bynum

403 So.2d 187 (1981)

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Nature of the Case

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Facts

The Legal Center, Inc., was formed by D, his wife, and Hjalma Johnson. After some time, D's wife and Johnson surrendered their holdings and resigned their positions as directors. D as the sole shareholder and director adopted new bylaws which required holders of 70 percent of the shares of stock issued and outstanding and entitled to vote, represented in person or by proxy, a quorum at all meetings of the shareholders for the transaction of business. D also elected himself and Forstman (P) to serve as Legal's directors. A meeting of the board of directors was held during which d was elected to serve as President/Treasurer, and P was elected to serve as Vice President/Secretary. The ownership of the corporation was then realigned so that D and P each owned 500 shares of Legal's stock. D and P contributed $14,000.00 towards the construction costs of a building in which they intended to maintain their separate law offices. In an effort to reduce those costs, D offered to and did, act as the general contractor for the project. A special shareholder meeting was held on September 24, 1975, and Bynum (P), another practicing attorney, was elected to serve as Legal's third director. The directors then issued Bynum (P) 500 shares of Legal stock and elected him to the position of Secretary. The issuance of stock to Bynum brought the total number of issued and outstanding Legal shares to 1500, with each of the stockholders owning one-third. Bynum (P) contributed $ 14,000.00 toward the building fund and executed a shareholder agreement similar to that signed by P and D. All three men, signed an agreement to (1) vote for each other as directors; (2) vote for D as President/Treasurer, P as Vice President, and Bynum (P) as Secretary; (3) requires the other shareholders or directors to either rescind their vote or cause the corporation to purchase the dissenting shareholder's stock in the event action was taken or authorized by a vote of less than seventy percent of the shareholders or directors; and (4) provide one-third of the cost associated with the construction and maintenance of the building. Soon after the building was completed a dispute occurred over their respective financial obligations to the corporation. D used the 70% supermajority requirement to block proposals from Ps. Ps sued for dissolution. The court ordered dissolution as the parties were hopelessly deadlocked. D appealed.