Thursday, February 21, 2013

Galler v. Galler case brief

Galler v. Galler case brief summary
32 Ill. 2d 16

SYNOPSIS: Plaintiff challenged an order from the Appellate Court for the First District (Illinois) that reversed the trial court's order granting her request for specific performance of a shareholder agreement purporting to grant to plaintiff her husband's share of a close corporation following his death.

-Plaintiff and her late husband entered into an agreement with defendants, with whom husband had been a shareholder of a close corporation.
-The agreement granted plaintiff equal control of corporation with defendant upon the death of her husband, including the power to vote his shares and a support income.
-Defendants attempted to destroy copies of the agreement, and refused to honor the agreement upon the death of plaintiff's husband.
-The trial court granted specific performance, but the intermediate appellate court found that the agreement was unenforceable.

-On further appeal, the court found that, because the case involved a close corporation, public policy and statute preventing agreements granting non-board member management powers was inapplicable where enforcement harmed no one.

-Looking to the terms of the agreement, the court found them reasonable, and supplied a term that limited the duration of the agreement to plaintiff's life to effectuate the purpose of the agreement.

OUTCOME: The court affirmed the judgment of the intermediate appellate court in part as to fees, but reversed on the merits because public policy and statute preventing an agreement granting a non-board member management powers was inapplicable where enforcement harmed no one, and the corporation was closely held. The cause was remanded to the Circuit Court of Cook County with directions to proceed in accordance with the opinion.

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