Thursday, November 21, 2013

Jones v. Wallace case brief

Jones v. Wallace case brief summary
628 P.2d 388 (1981)


CASE SYNOPSIS
Petitioners, a majority shareholder and other individuals, sought review of the decision of the Court of Appeals (Oregon), which reversed the circuit court's grant of summary judgment against respondent minority shareholders, in the minority shareholders' suit for a declaratory judgment that the minority shareholders remained directors of a closed corporation although the majority shareholder voted to replace them at a shareholders' meeting.

CASE FACTS
At a shareholders' meeting, the majority shareholder voted to remove both minority shareholders as directors of a closed corporation and replaced them with other individuals. One minority shareholder was absent. The minority shareholders filed a action for a declaratory judgment that they remained directors. Under Or. Rev. Stat. § 57.165, a shareholders' meeting required a quorum of a majority of the voting shares unless a different quorum was provided in the articles of incorporation. A by-law required a 100 percent quorum requirement, but this requirement was not in the corporate articles.

PROCEDURAL HISTORY
The circuit court entered summary judgment against the minority shareholders on the basis that the shareholders' meeting satisfied the statute and that this requirement could not be overridden by the bylaw. The court of appeals reversed, finding that the by-law could be enforced as a contract against the majority shareholder who assented to the by-law.

DISCUSSION
On review, the court reversed and affirmed the circuit court's decision, holding that the minority shareholders could not employ a contract theory to set aside corporate action taken in accordance with the statute and corporate articles.

CONCLUSION
The court reversed decision of the court of appeals and affirmed the circuit court's grant of summary judgment to the majority shareholder and other individuals, in the minority shareholders' action for a declaratory judgment that the minority shareholders had not been removed as directors of a closed corporation at a shareholders' meeting.

Recommended Supplements for Corporations and Business Associations Law

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