Shevlin v. National Conservation Corp.
| Decision Date | 29 December 1993 |
| Parties | Bernard J. SHEVLIN and Thomas Mentley, Respondents, v. NATIONAL CONSERVATION CORPORATION, Respondent, Roland Veillette and John Long, Sr., Appellants. |
| Court | New York Supreme Court — Appellate Division |
Michael V. Maloney, Niagara Falls, for appellants.
Saperston & Day, P.C. by James Gresens, Buffalo, for respondents Bernard J. Shevlin and Thomas Mentley.
No brief or argument for National Conservation Corp.
Before PINE, J.P., and BALIO, DOERR and BOEHM, JJ.
Petitioners Shevlin and Mentley each hold 25% of the voting stock of National Conservation Corporation (Corporation). They commenced this special proceeding pursuant to Business Corporation Law § 619 for a determination of the validity of the election procedure employed at the June 10, 1992 meeting of shareholders and the validity of the election of officers at the subsequent meeting of the Corporation's Board of Directors. Supreme Court summarily determined that an Assignment of Right to Vote Stock, whereby Mentley and respondents Long and Veillette agreed to transfer to Shevlin the right to vote three shares of stock owned by each of them, was not terminated prior to the shareholders' meeting, implicitly invalidating the ruling made at that meeting by the Corporation's Inspector of Elections. The court also summarily determined that the meeting of the Board of Directors was properly convened, and it confirmed the election of officers.
The Corporation's By-Laws require that an annual meeting of shareholders be held on the first Wednesday of April of each year, and that, if an annual meeting is not held, a special meeting may be called for the election of directors. The By-Laws further provide for either regular or special meetings of the Board of Directors. Regular meetings may be held without prior notice to directors either immediately after the annual meeting of shareholders or at times fixed by the Board. Special meetings of the Board may be held only upon prior notice given in accordance with the By-Laws.
In April 1992, petitioners asked respondent Long, who was then the President, to call an "Annual and Special Meeting" of the shareholders. Long responded by sending written notice to all shareholders that a "Special Meeting" of shareholders would be held on June 10, 1992. During that meeting, Long repeatedly informed petitioners that the meeting was a special meeting, not the annual meeting. It is undisputed that an annual meeting was not held in April. The By-Laws further authorize the holders of 50% of the stock to call a special meeting of shareholders. That procedure for calling such a meeting was followed in this instance. Thus, we conclude that the June 10, 1992 meeting was a special meeting of shareholders, not an annual meeting. The June 10, 1992 Board meeting was held immediately after the special meeting of shareholders held on that same date. No prior notice of that Board meeting was given to the directors. Because prior notice was not given to the directors, that meeting of the Board of Directors was improperly convened and the election of officers and Chairman of the Board at that Board meeting was invalid, null and void.
With respect to the validity of the election process conducted at the meeting of shareholders, petitioners contend that the Inspector of Elections erroneously concluded that the Assignment of Right to Vote Stock (Assignment) was terminated; that the Inspector should have ruled that Shevlin had the right to vote Veillette's three shares of stock; and that, had the Inspector upheld Shevlin's right to vote those shares, petitioners' motions to reduce the number of directors and to elect themselves as directors would have passed by a majority vote. We conclude that the Inspector properly determined that the Assignment was terminated.
On June 2, 1988, Long, Veillette and Mentley each agreed to transfer to Shevlin the right to vote three shares of stock. The parties signed the Assignment, which identified Long, Veillette and Mentley collectively as the assignors and Shevlin as assignee. The Assignment also provided that Shevlin...
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