Court Opinion

ID: 9519266
Source: CourtListenerOpinion
Date Created: 2023-08-07 01:12:40.135486+00
Date Added: 2024-06-11T12:44:11.929274
License: Public Domain

LANSING, Judge
(dissenting)
I respectfully dissent from the majority’s decision that shareholders holding 72.96 percent of the common stock are unable to compel the bank president to call a special shareholders’ meeting. I believe, for three reasons, that the district court properly issued the peremptory writ compelling the bank president to act on the shareholders’ special meeting request.
First, the Minnesota Supreme Court has previously interpreted the phrase “majority of .all stockholders” to mean “the vote of the holders of the majority of all shares of stock.” Muller v. Theo. Hamm Brewing Co., 197 Minn. 608, 612, 268 N.W. 204, 207 (1936) (vote by majority of all stockholders “we take to mean the vote of the holders of the majority of all shares of stock”).
Second, the majority’s plain-meaning analysis fails to take into account the use of the phrase “majority of the stockholders” in the document as a whole. See Art Goebel, Inc. v. North Suburban Agencies, Inc., 567 N.W.2d 511, 515 (Minn.1997) (whether a phrase is ambiguous depends not upon phrase read in isolation, but rather upon the meaning assigned to the phrase in the document as a whole). The bylaws use the phrase “majority of the stockholders” in two places. Section 3 uses the phrase to define what is necessary to demand a special meeting of the stockholders; section 22 uses the phrase to define what is necessary to amend or change the bylaws. Bylaws can be changed or amended on the approval of the superintendent of banks and the vote of “a majority of the stockholders” at any meeting.
To ascribe the majority’s plain meaning to the phrase would create an apparent contradiction between the votes necessary to transact business and the votes necessary to determine the bylaws. Both the annual meeting and special meeting sections require a “majority of the outstanding stock” to transact business, which would be inconsistent with the provision that allows bylaws to be amended or changed “by the vote of a majority of the stockholders at any meeting.”
The majority’s ascribed plain meaning would also result in an absurdity. See Carl Bolander & Sons, Inc. v. United Stockyards Corp., 298 Minn. 428, 215 N.W.2d 473, 476 (Minn.1974) (plain language governs if it is clear and does not “involve an absurdity”). *517To allow the bylaws to be amended by the vote of a majority of people who own stock would mean that five owners, each with one share of stock, could outvote four owners holding 95 percent of the stock. The absurdity is further confirmed by this five-percent voting power (that has the power to govern the corporation through its control of the bylaws) not being able to conduct a meeting to transact business because that would require a majority of the outstanding shares, which they do not have.
Finally, I reject the majority’s plain-meaning analysis because, under this interpretation, the bylaws would have violated the nonvariable statutory requirements for corporations, including banking corporations, to call a meeting and to amend bylaws at the time of the bylaws’ adoption.
The bylaws document consists of four pages, preprinted with blanks for the corporation to fill in specific information. The form is structured for use by banks, which suggests that it may have been drafted and made commercially available in states in addition to Minnesota. In any event, at the time the bank adopted the bylaws in April 1936, Minnesota law required that a special meeting of a corporation (including a banking corporation) must be called “forthwith” when the president receives a request in writing by “one or more shareholders holding not less than one-tenth of the voting power of the shareholders.” Minn.Stat. § 7492-24(III) (Supp.1934). As this dispute demonstrates, over seven-tenths of the ownership of the corporation has been denied a meeting. A corporation does not have power to adopt bylaws that violate existing law. See Minn.Stat. § 300.08, subd. 1(6) (1996) (corporation may provide bylaws for governance of its affairs, but only if consistent with law).
For these reasons, the district court properly ruled that a written request by the ownership of 72.96 percent of the common stock was sufficient to compel the president to call a special shareholders’ meeting. A peremptory or conclusive writ was the proper method of compelling a meeting when the president had refused to call it even after advice of the bank’s counsel that the request by the shareholders required that a meeting be called. See State ex rel. Lake Shore Tel. Co. v. DeGroat, 109 Minn. 168, 176, 123 N.W. 417, 419 (1909) (providing that trial courts may issue writ of mandamus to require a corporation’s director to call shareholders’ meeting). Although any writ power should be used sparingly, the cases cited by the majority to suggest restriction on mandamus do not relate to requiring a corporation president to comply with authorized direction from stockholders. The district court properly followed the law and should be affirmed.