CORPORATIONS-VALIDITY OF BY-LAW REQUIRING ASSENT OF ALL OR PROPORTION OF SHAREHOLDERS GREATER THAN MAJORITY FOR ACTION

The defendants, employees of the plaintiff corporation, were discharged by the president, who was empowered under the by-laws to appoint, remove, employ and discharge, and fix the compensation of, all employees of the corporation, subject to the approval of the board of directors. A majority of the directors and the holders of a majority of the shares were in agreement that the defendants should be discharged. The defendants refused to leave the premises, took possession of certain of the corporate books and records, and otherwise interfered with the conduct of the business, claiming that their discharge was ineffective because it was in violation of a by-law requiring assent of holders of ninety per cent of the outstanding shares for corporate action of any character. On motion for an order to restrain them from entering the plaintiff's place of business and from interfering in any way with its business, held, motion granted.

A by-law requiring unanimous action of shareholders to pass any resolution or take action of any kind is obnoxious to the statutory rule of stock corporation management. A provision requiring action by the holders of ninety per cent of the shares is substantially the same as one requiring unanimous consent. Eisenstadt Bros., Inc. v. Eisenstadt, (N.Y. 1949) 89 N.Y.S. (2d) 12.