Law School Case Brief
Shanken v. Lee Wolfman, Inc. - 370 S.W.2d 197 (Tex. Civ. App. 1963)
Both the charter of a corporation and the Business Corporation Act become a part of the contract between the shareholders. One of the cardinal rules of statutory construction is to ascertain the legislative intent and to give effect to every express declaration thereof. In a case of conflict between a general and a special provision of a statute, the special provision prevails.
Plaintiff, James I. Shanken, individually and as a representative and registered shareholder of Lee Wolfman, Inc., which merchandises ladies' ready-to-wear from its store on Kirby Drive in Houston under the name of "Wolfman's," brought this suit against Defendants Lee Wolfman and wife, Margaret Wolfman, Charles Ford and wife, Irene Ford, sometimes referred to collectively as individual defendants, Wolfman's Inc. -- Spring Branch, sometimes referred to as the "Spring Branch store," and Wolfman's Inc. Shanken alleged that Lee Wolfman failed and refused to institute suit to protect its corporate property and save the property from damage or loss when its officers opened the branch store under a separate corporation. The trial court granted defendants' motion for summary judgment and dismissed Shanken’s suit.
Was the affirmative vote of two-thirds of all of the issued stock required in order to amend the corporate charter?
The appellate court affirmed, holding that the Texas Business Corporation Act, Tex. Rev. Civ. Stat. Ann. art. 4.02, did not require the affirmative vote of two-thirds of all the issued stock in order to amend the charter. The amendment did not change the shares of stock into a different number of shares of the same class but merely increased the aggregate number of authorized shares of such classes, as provided in Tex. Rev. Civ. Stat. Ann. art. 4.03 B(1). Because the quality and relative rights of the shares in each class remained identical, the court held that the trial court did not err when it granted summary judgment.
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