By action of its board of directors, defendant corporation entered into a written extension of a lease of substantially all its assets. This action was not authorized by a majority vote at a shareholders' meeting or by the written consent of the holders of a majority of the shares. Plaintiff, a shareholder of record on the date the lease was made, had no knowledge of the transaction until about three months later, at which time he objected to the making of the lease and demanded payment for his shares as provided in section 44 of the Michigan general corporation act under which defendant was organized. Upon defendant's refusal to comply with this demand plaintiff brought suit, citing section 57 of the act but basing his right to recovery entirely on section 44. Plaintiff alleged that the lack of a shareholders' meeting and timely knowledge on his own part made it impossible for him to comply with the provisions of section 44 which required him to vote against the lease and to file written objection within twenty days of the time the action was taken. The trial court found that the directors owned or controlled voting rights of more than two-thirds of defendant's stock and that the lease divested defendant of substantially all its assets. An order was made for the appointment of appraisers, and defendant appealed. Held, reversed. The extension of the lease by action of the board of directors did not violate section 57, but was lawful and valid, since it was in furtherance of the purposes of the corporation as set out in the articles of incorporation. Since a shareholders' meeting was not necessary under section 57 and was never held, it was impossible for plaintiff to meet the statutory conditions precedent to appraisal and payment under section 44. Pollack v. Adwood Corporation, (Mich. 1948) 32 N.W. (2d) 62.
John C. Walker,
CORPORATIONS-POWER OF DIRECTORS TO TRANSFER ALL ASSETS-DISSENTERS' RIGHTS TO APPRAISAL AND PAYMENT,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol47/iss3/13