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Matter of Auer v. Dressel

Court of Appeals of New York
118 N.E.2d 590 (1954)


Facts

R. Hoe & Co., Inc.’s bylaws require its president to call a special meeting whenever requested in writing to do so by a majority of its voting stockholders. The company’s certificate of incorporation provides for eleven directors, nine of whom are elected by the class A stockholders, and two by the common stockholders. The certificate also authorizes the board of directors to remove their own directors. R. Hoe’s class A stockholders (plaintiffs) submitted a written request for a special meeting to the corporation’s president, which was signed by a majority of the stockholders. The stated purposes for the meeting were: (1) to vote on a resolution demanding the reinstatement of Joseph Auer as president, who had been removed by the directors; (2) to vote on a proposal to amend the charter and by-laws to allow vacancies on the board of directors caused by a director’s removal to be filled only by the stockholders of the class represented by the removed director; (3) to vote on a proposal to hear the charges against four of the directors, to vote on their removal, and to vote for their potential successors; and (4) to vote on a proposal to amend the by-laws so that half of the directors, or at least one-third of the total authorized number of directors, would constitute a quorum. The president failed to call a meeting. The stockholders then brought suit against R. Hoe and its president (defendants), seeking an order compelling the president to comply with the by-laws. The answer to the complaint simply denied that the corporation or president had any knowledge or information sufficient to form a belief as to the adequacy of the number of signatures on the request. The trial court granted summary judgment for the stockholders.

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Holding and Reasoning (Desmond, J.)

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Dissent (Van Voorhis, J.)

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