TRUSTS-RESTRAINTS ON ALIENATION-INVALIDITY OF VOTING TRUST WHEREIN VOTING TRUST CERTIFICATES WERE MADE INALIENABLE

Two stockholders, controlling a majority of the class B stock of the X corporation, transferred their stock to themselves jointly as trustees for a ten-year period. The trustees were to vote the stock as a unit, and had full voting powers on all matters affecting the corporation. Trustees agreed not to transfer the stock without the approval of both holders, and the holders agreed not to sell their stock or the voting trust certificates. Moreover, on the death of one holder-trustee, the other had an option to purchase all his interest in the stock.

In an action in equity to prevent one of the holders from voting his own stock, the bill was dismissed. On appeal, held, affirmed. The restraint on alienation of the voting trust certificates was an invalid restraint and being inseparable from the rest of the agreement invalidated the entire trust. Tracey v. Franklin, (Del.

1949) 67 A. (2d) 56.