Plaintiff filed a petition in equity attacking his removal as a director and president of the defendant corporation on the grounds that such removal was brought about through the exercise of an alleged invalid voting trust agreement The plaintiff and another shareholder, each owning fifty per cent of the stock in the defendant corporation, had entered into a voting trust agreement by which they appointed themselves and a third party as voting trustees. At the time the trust agreement was executed, all of the stock was on deposit with an escrow agent subject to an existing escrow contract. Plaintiff challenged the validity of the voting trust agreement on the ground that the stock was not deposited with or transferred to the voting trustees as required by section 18 of the General Corporation Law. The lower court sustained the petition on the basis that the voting trust agreement was invalid. On appeal, held, affirmed. The provisions of the voting trust statute are mandatory and non-compliance is not excused by impossibility. Smith v. Biggs Boiler Works Co., (Del. Ch. 1951) 82 A. (2d) 872.
Peter Van Domelen,
CORPORATIONS--SHAREHOLDERS-EFFECT ON VOTING TRUST AGREEMENT OF INABILITY TO TRANSFER SHARES TO THE VOTING TRUSTEES,
Mich. L. Rev.
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