269 N.Y. 410
SYNOPSIS: Plaintiff shareholder appealed an order reversing a dismissal in favor of enforcing a voting agreement from the Appellate Division of the Supreme Court in the second judicial department (New York), asserting that such a contract would not sterilize the board of directors.
-A written agreement existed between plaintiff and defendant shareholders in which both parties agreed to exercise voting rights in an effort to maintain benefits from the corporation's success. -Litigation ensued in which plaintiff shareholder sued defendant for not exercising his voting power in keeping plaintiff in an officer role.
-As a result, plaintiff sought reinstatement.
-The trial court denied defendant's motion to dismiss, and the appellate court reversed the ruling claiming the voting agreement was invalid.
Upon final determination, the Court of Appeals reversed, holding that the voting agreement did not sterilize the board of directors and that any subsequent damage to the shareholders was negligible. Enforcement of the agreement was thus required.
OUTCOME: Reversed the appellate court on the grounds that a voting agreement between defendant and plaintiff was valid in that it did not impair any exercise of judgment among the board of directors.
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