Stroh v. Blackhawk Holding Corp. case brief summary
272 N.E.2d 1 (Ill. 1971)
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.
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.
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.
concluded that a shareholder could be deprived of an economic
interest in the corporation but could not be deprived of his voice in
Thus, the court held that the Class B shares were valid
shares of stock in the corporation.
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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