Ringling Bros. v. Ringling, 53 A.2d 441 (1947) p.343
A voting agreement existed between the parties. Mrs. Haley (one of the defendants) contends that she was not so bound for reason that the agreement was invalid or at least revocable. The agreement said 1. neither party will sell shares without first making a written offer to the other party; 2. in exercising voting rights each party will consult and confer with the other and the parties will act jointly in exercising such voting rights; 3. in the event the parties fail to agree, the question in disagreement shall be submitted for arbitration and the decision of the arbitrator shall be binding. Cummulative voting was allowed.
The court was called upon to review an attempted aelection of directors at the 1946 annual stockholders meeting of the corporate defendant. The lower court came out with a different view: the arbitrator's agreement was not binding and therefore could not be enforced. The agreement should have been upheld and allowed the arbitrator to vote their stock.
The pivital questions concern an agreement between two of the three present stockholders, particularly the effect of this agreement with relation to the exercise of voting rights by these two stockholders. Whether the voting provisions are illegal and revocable.
We think the particular agreement before us does not violate Section 18 or constitute an attempted evasion of its requirements, and is not illegal for any other reason. Because you breached your contract, all your votes you cast are null and void.
Generally speaking, a shareholder may exercise a wide liberality of judgment in the matter of voting, and it is not objectionable that his motives may be for personal profit, r determined by whims or caprice, so long as he violates no duty owed his fellow shareholders. No mechanism to have the stock actually voted as agreed. This was a problem.
Baum thinks this holding was a bad holding. This is not controlling law.
Created on: Friday, October 08, 1999 at 12:32:06 (PDT)