CORPORATIONS-AMENDMENT OF CHARTER - FUNDAMENTAL CHANGE OF PURPOSE

Authors

Michigan Law Review, University of Michigan Law School

Abstract

Plaintiff, a cooperative association incorporated under the laws of Minnesota as a wholesaler of oil, sued defendant, a member of the cooperative, for goods sold and delivered. Pursuant to the statute which provided that such cooperatives may amend their articles by a vote of the majority of the membership "in respect to any other matter which the original articles of incorporation of the same kind might lawfully have contained," plaintiff's articles of incorporation had been amended, adding to the original purposes "any mercantile, jobbing, wholesale and retail, mining, manufacturing and mechanical business on the cooperative plan." These were all objects authorized by the statute of incorporation. Defendant counterclaimed for the value of his membership on the theory that the amendment was illegal because it attempted to effect fundamental and radical changes in the nature and scope of the corporation. Held, the defendant was entitled to recover; the amendment was illegal because it was not authorized by the statute. Even if authorized by the statute, however, it was illegal because corporate articles constitute a contract which cannot be altered by any amendment effecting so fundamental a change in the scope and objects of the corporation without the consent of all the incorporators; and this is true even if such an amendment is authorized by a statute under the state's reserved power to alter, amend or repeal corporate charters. Midland Co-operative Wholesale v. Range Cooperative Oil Assn., (Minn. 1937) 274 N. W. 624.

Recommended Citation

Michigan Law Review, CORPORATIONS-AMENDMENT OF CHARTER - FUNDAMENTAL CHANGE OF PURPOSE, 36 Mich. L. Rev. 660 (1938).
Available at: https://repository.law.umich.edu/mlr/vol36/iss4/12