Friday, November 22, 2013

Roach & The Legal Center, Inc. v. Bynum case brief

Roach & The Legal Center, Inc. v. Bynum case brief summary
403 So. 2D 187 (1981)


CASE SYNOPSIS
Defendant incorporator appealed from the judgment of the Jefferson Circuit Court (Alabama), which ordered a corporation dissolved, appointed a receiver to liquidate the corporation and disallowed the incorporator's claim for services rendered the corporation. The incorporator contended that the corporation was not hopelessly deadlocked because he continued to operate the corporation as its president.

CASE FACTS
The incorporator imposed super majority voting requirements through corporate by-laws, which in effect required unanimous action by the incorporator and plaintiff shareholders. The incorporator was also the corporation's president and the by-laws gave the authority to manage the corporation's business and affairs to the president. When the corporation began constructing a building to house its law practice, in order to cut construction costs the incorporator acted as general contractor. He later, as president, signed a note from the corporation to compensate himself for those services. The shareholders brought an action to dissolve the corporation, claiming that it was hopelessly deadlocked because of the super majority voting requirement.

DISCUSSION

  • The court held that the state corporation law required that such a requirement be in the certificate of incorporation instead of the by-laws and that it was therefore void. 
  • Thus the shareholders had the power to resolve the deadlock. 
  • The court held that the incorporator's claim on the note was void because there was no agreement that he would be compensated for his services as general contractor.

CONCLUSION
The court reversed the judgment of the trial court ordering dissolution of the corporation and appointing a receiver and affirmed its judgment disallowing the incorporator's claim on the note.

Recommended Supplements for Corporations and Business Associations Law

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