428 A.2d 1
SYNOPSIS: Defendant corporation appealed from an interlocutory order of the Court of Chancery (Delaware) granting a motion for partial summary filed by plaintiffs, stockholders and a trustee, in which the vice-chancellor held that a stock voting trust holding plaintiff stockholders' shares of defendant's stock was an invalid stock voting trust under Del. Code Ann. tit. 8, §§ 218(a) and 218(b).
-Plaintiffs, stockholders and a trustee, entered into an voting trust agreement under which plaintiff stockholders' shares of defendant corporation would be deposited into a voting trust.
-In an attempt to regain control of defendant corporation, plaintiffs brought a civil action against defendant in which plaintiffs sought to have the trust voided under Del. Code Ann. tit. 8, §§ 218(a) and (b).
-Plaintiffs' filed a motion for partial summary judgment.
-The chancery court granted plaintiffs' motion and held that the trust was an invalid voting trust under §§ 218(a) and (b).
-Defendant brought an interlocutory appeal and the court reversed and remanded.
The court held that the trust created by the agreement was not a voting trust within the meaning of §§ 218(a) and (b) and was therefore not invalid under Delaware law because the agreement included a stock purchase agreement and under the agreement stock voting rights may not have been separated from plaintiff stockholders' other retained attributes of ownership.
-There was no evil or improper purpose underlying the agreement and no public policy prohibiting enforcement of the agreement as a matter of law.
-The agreement was basically an enforcement provision for a purchase option and was "open and notorious" within the corp. Thus, it did not contravene the policy against secret agreements. Further, voting trusts are no longer in such disfavor.
OUTCOME: The court reversed and remanded an interlocutory order of the chancery court that granted a motion for partial summary judgment filed by plaintiffs, stockholders and a trustee, in which the chancery court held that a voting trust that held plaintiff stockholders' shares of defendant corporation was an invalid voting trust under Delaware law. The court held that the trust was not a voting trust within the meaning of Delaware law.
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