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Matter of Auer v. Dressel
Court of Appeals of New York
118 N.E.2d 590 (1954)
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.
Rule of Law
Holding and Reasoning (Desmond, J.)
Dissent (Van Voorhis, J.)
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