Stroh v. Blackhawk Holding Corp. case brief summary
272 N.E.2d 1 (Ill. 1971)
CASE FACTS
The shareholders claimed that the term proprietary in the definition of shares in the Business Corporation Act, specifically Ill. Rev. Stat. ch. 32, para. 157.14 (1969), meant a property right and that the shares must represent some economic interest in the property or assets of the corporation. The corporation claimed that the word proprietary did not necessarily denote economic or asset rights.
DISCUSSION
CONCLUSION
The court affirmed the judgment of the appellate court and remanded the cause to the circuit court with directions to vacate its decree entered in this cause finding the Class B shares of the corporation to be invalid.
Recommended Supplements for Corporations and Business Associations Law
272 N.E.2d 1 (Ill. 1971)
CASE SYNOPSIS
Appellants shareholders sought recovery
from appellee corporation alleging that the Class B shares of stock
it issued were invalid because their principal attribute consisted
solely of the right to vote. The shareholders were granted a summary
judgment on their claim, but the Appellate Court of the Third
District (Illinois) reversed and remanded on the grounds that the
shares of stock were valid. The shareholders sought review.CASE FACTS
The shareholders claimed that the term proprietary in the definition of shares in the Business Corporation Act, specifically Ill. Rev. Stat. ch. 32, para. 157.14 (1969), meant a property right and that the shares must represent some economic interest in the property or assets of the corporation. The corporation claimed that the word proprietary did not necessarily denote economic or asset rights.
DISCUSSION
- The court agreed with the corporation's construction of ch. 32, para. 157.14.
- The court held that the word proprietary meant that the rights conferred by the ownership of stock could consist of one or more of the rights to participate in the control of the corporation, but did not require that the shares possess an economic interest in the corporation.
- The court found that Ill Const. art. XI, § 3 required only that the right to vote be proportionate to the number of shares owned and did not require shares to be an investment in a corporation.
- The court concluded that a shareholder could be deprived of an economic interest in the corporation but could not be deprived of his voice in management.
- Thus, the court held that the Class B shares were valid shares of stock in the corporation.
CONCLUSION
The court affirmed the judgment of the appellate court and remanded the cause to the circuit court with directions to vacate its decree entered in this cause finding the Class B shares of the corporation to be invalid.
Recommended Supplements for Corporations and Business Associations Law
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