## Facts

- R. Hoe & Co., Inc., a New York corporation, allocated director-election power between common and Class A shareholders; Class A shareholders elected nine of eleven directors.
- The corporate by-laws required: “It shall be the duty of the President to call a special meeting whenever requested in writing … by stockholders owning a majority of the capital stock entitled to vote at such meeting.”
- Class A shareholders delivered written requests to the corporation’s president, Arthur Dressel, seeking a special meeting; the demands were signed in the names of record holders of slightly more than 55% of Class A stock.
- The requested meeting stated four purposes: (1) adopt a resolution demanding reinstatement of Joseph Auer as president after board removal; (2) consider amendments concerning how board vacancies would be filled after director removal; (3) hear charges against four directors, vote on their removal, and elect successors if removed; and (4) amend by-laws to change director quorum requirements.
- Dressel did not call the meeting and, in response to an Article 78 mandamus petition, asserted a lack of knowledge or information sufficient to form a belief about whether the signers held the required shares.
- The trial court ordered Dressel to call the meeting; the Appellate Division affirmed.

## Issues

1. Whether the by-laws imposed a non-discretionary, ministerial duty on the president to call a special meeting upon written demand by a voting majority, and whether the president’s pleading created a triable fact dispute on that requirement.
2. Whether the stated purposes for the proposed Class A special meeting were legally proper subjects for shareholder action such that mandamus could compel the meeting to be called.

## Decision

- The Court of Appeals affirmed the order compelling the president to call the special meeting.
- The court held the by-law imposed a mandatory, ministerial duty to call the meeting once a majority demand was presented; the president had no discretion to refuse.
- The court held the president’s asserted lack of knowledge about the share majority was perfunctory and did not raise a genuine factual issue.
- The court held the meeting purposes were not improper as a matter of law: shareholders could express views on officer changes by resolution, seek removal of directors for cause and election of successors, and propose by-law amendments affecting corporate governance.

## Legal Principles

- When corporate by-laws impose a clear duty on an officer to call a shareholder meeting upon a qualifying written demand, the duty is ministerial and enforceable by mandamus.
- A formal or evasive denial that does not meaningfully controvert the demanded majority may be treated as insufficient to create a factual issue barring mandamus relief.
- Shareholders may use duly called meetings to adopt non-binding resolutions communicating preferences to directors, including regarding corporate officers, even if the board holds formal appointment power.
- Shareholders’ power to elect directors includes authority to seek director removal for cause through shareholder meeting action, subject to later judicial review if removal is unlawful.
- Proposed by-law amendments concerning governance procedures, including quorum and vacancy-filling rules, are proper subjects for shareholder consideration unless facially invalid under controlling statutes or the certificate of incorporation.

## Conclusion

The court enforced the by-law right of a voting majority of Class A shareholders to compel a special meeting, ruling that the president’s role in calling the meeting was purely ministerial and that the shareholders’ stated objectives—expressing views on management, pursuing director removal and replacement, and proposing governance by-law changes—were proper meeting subjects.


Matter of Auer v. Dressel, 306 N.Y. 427 (N.Y. 1954)