## Facts

- Loew’s, Inc., a Delaware corporation, was divided between two factions competing for corporate control: a group aligned with director-stockholder Joseph Tomlinson and a group aligned with president-director Joseph R. Vogel.
- A prior compromise produced a 13-member board split evenly between the factions with one “neutral” director.
- The neutral director and two Vogel-aligned directors resigned, creating vacancies and leaving the board unable to achieve a quorum for certain actions.
- Vogel, acting as president, noticed a special stockholders’ meeting for September 27, 1957, to (i) fill vacancies, (ii) increase the number of directors, and (iii) remove two directors (Tomlinson and Meyer) “for cause” and fill resulting vacancies.
- Proxy materials included a letter from Vogel accusing the targeted directors of conduct amounting to harassment and obstruction of corporate management.
- Corporate funds and company machinery were used to prepare and distribute the solicitation supporting Vogel’s position, while access to the stockholder list was withheld from opposing directors, impairing their ability to solicit competing proxies.
- A stockholder sued seeking a preliminary injunction to stop the meeting, or to bar consideration of specified agenda items, or to prevent voting/counting proxies obtained through the challenged solicitation; the court postponed the meeting pending decision.

## Issues

1. Whether the corporation’s by-laws authorized the president to call a special stockholders’ meeting for the stated purposes without prior board action.
2. Whether stockholders have authority under Delaware law to remove directors for cause despite cumulative voting provisions and absent an express statutory removal grant.
3. What equitable procedures are required before stockholders may vote to remove directors “for cause.”
4. Whether, and to what extent, corporate funds, personnel, and facilities may be used in a proxy contest connected to director removal.

## Decision

- The court held the president had by-law authority to call the special stockholders’ meeting for the purposes stated.
- The court held stockholders possess an inherent power to remove directors for cause, and cumulative voting does not bar removal for cause.
- The court declined to enjoin the meeting or to bar consideration of director removal.
- The court found the pre-vote process inequitable because the accused directors lacked a fair opportunity to answer the charges to stockholders before proxies were solicited and cast.
- The court granted targeted injunctive relief prohibiting the corporation from counting proxies procured through the challenged one-sided solicitation, unless corrective steps were taken to provide procedural fairness.

## Legal Principles

- Corporate by-laws may confer authority on the president to call special stockholders’ meetings, and such a call is valid when within by-law terms.
- Delaware stockholders retain an inherent right to remove directors for cause unless clearly restricted; the absence of an express statutory removal provision does not, by implication, eliminate removal for cause.
- Cumulative voting protects minority participation in elections but does not create immunity from removal where cause is established through a fair process.
- Removal “for cause” requires equitable safeguards: sufficiently specific charges, fair notice, and a meaningful opportunity for the accused directors to present their position to stockholders before a vote.
- Incumbent management may use reasonable corporate expenditures to communicate with stockholders in a control dispute, but the court may restrain use of corporate machinery and proxy solicitations that are unfairly one-sided or that deprive opponents of a fair chance to communicate.

## Conclusion

The Court of Chancery allowed a president-called special meeting and recognized stockholders’ inherent authority to remove directors for cause despite cumulative voting, but imposed equitable limits by enjoining the counting of proxies obtained through an unfair, one-sided solicitation that denied the targeted directors a meaningful chance to respond.


Campbell v. Loew’s, Inc., 134 A.2d 852 (Del. Ch. 1957)