Court of Appeals of New York
405 N.E.2d 681 (1980)
Harold Kurtz (defendant) formed Lombard-Wall Group, Inc., and was initially its sole stockholder. In a transaction with Abraham Zion (plaintiff), Zion acquired all of the Group’s Class A stock, and Kurtz retained all of the Class B stock. Zion and Kurtz entered into a shareholders’ agreement, which provided that the company would not engage in any business or activities without the consent of the holders of the Class A stock. The agreement states that it is to be construed, enforced, and governed according to the General Corporation Law of Delaware. The Group’s articles of incorporation do not refer to the veto power of the Class A stockholders. Kurtz agreed in the stockholders’ agreement to take any further actions necessary to give effect to the provisions and intent of the agreement. While Kurtz was the sole stockholder and director of the Group, and as part of the transaction in which Zion became a stockholder, Kurtz also agreed in writing that he was authorized and empowered to take any further actions necessary to give effect to the stockholders’ agreement. The board of directors approved two agreements over Zion’s objection. Zion brought suit to have the two agreements canceled as violating the shareholders’ agreement.
Rule of Law
Holding and Reasoning (Meyer, J.)
Dissent (Gabrielli, J.)
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