Sutton v. Sutton

637 N.E.2d 260 (1994)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

In 1963, the certificate of incorporation of Bag Bazaar, Ltd. was amended to provide that a unanimous vote or consent of the holders of all common stock issued was necessary for the transaction of the business of the corporation, including the amendment to the certificate of incorporation. Initially, only Abraham was a shareholder, but in 1971 Abraham's brother purchased 30 shares, and then Abraham's son purchased 30 shares, and on Abraham's death, his widow inherited the remaining 40 shares. Petitioners, the widow, and Abraham's son owned 70% of the shares. This incident resulted from Petitioners (P) voting to strike the unanimity provision with Respondent, Abraham's brother voting against. Respondent (R) as director of the corporation refused to sign a certificate to amend thereby preventing the amendment from taking effect. P filed suit for a declaration of rights in that the amendment was valid. The court granted P's request, and the Appellate Division reversed. The dispute centered around section 616(b) of the Business Corporation Law which states that supermajority provisions in a certificate of incorporation may be amended by 2/3rds vote unless the certificate specifically provides otherwise.