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Roach & The Legal Center, Inc. v. Bynum

Alabama Supreme Court
403 So. 2d 187 (1981)


Facts

John Roach, Jr. (defendant) and two others formed The Legal Center, Inc. (Legal) (defendant). The others resigned all interest in the company. Roach, as the director and sole shareholder, held a meeting and adopted a set of bylaws. The bylaws vested management rights in the president. For most actions, the bylaws required 70 percent of shareholders to be present and agreement by 70 percent of those present for an action to be approved. James Forstman (plaintiff) was made a director. Roach was elected president/treasurer, and Forstman was chosen vice president/secretary. Roach and Forstman each contributed $14,000 and were issued 500 shares of stock. Later, Frank K. Bynum (plaintiff) was elected director and issued 500 shares of stock. Bynum also invested $14,000. The three directors began having problems. Forstman would not vote in favor of Roach as president. Roach remained holdover president. Roach also used the 70 percent requirement in the bylaws to block action by Frostman and Bynum. Bynum and Frostman sued for dissolution. The trial judge concluded that the directors were “hopelessly deadlocked” and ordered Legal’s dissolution. Roach appealed to the Alabama Supreme Court.

Rule of Law

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Issue

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Holding and Reasoning (Per Curiam)

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Concurrence (Torbert, C.J.)

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