## Facts

- Bag Bazaar, Ltd., a closely held New York corporation, amended its certificate of incorporation in 1963 to require the “unanimous vote or consent” of all outstanding shares for “the transaction of any business,” expressly “including amendment to the certificate of incorporation.”
- The shareholders were family members: Yvette Sutton (40%), Solomon A. Sutton (30%), and David S. Sutton (30%).
- After management conflict and deadlock, Solomon and Yvette used their combined 70% to adopt a 1992 resolution purporting to amend the certificate to eliminate the unanimity requirement.
- David opposed the change and, as a director, refused to sign and deliver the certificate of amendment for filing.

## Issues

1. Whether the certificate’s unanimity clause, expressly requiring unanimity for “any business” including “amendment to the certificate,” “specifically provides otherwise” under N.Y. Business Corporation Law § 616(b), thereby requiring unanimous approval to remove the unanimity provision.
2. If the amendment was invalid, whether an Article 78 proceeding could compel David to execute the certificate of amendment.

## Decision

- The Court of Appeals affirmed the Appellate Division.
- The certificate’s unanimity clause was sufficiently specific under BCL § 616(b) to require unanimous shareholder approval for amendments to the certificate, including an amendment eliminating the unanimity requirement.
- Because unanimity was not obtained, the 1992 amendment adopted by a 70% vote was invalid.
- Mandamus relief was unavailable because David had no ministerial duty to sign and effectuate an invalid amendment.

## Legal Principles

- Under BCL § 616(b), the statutory default allowing amendment of supermajority charter provisions by a two-thirds vote yields when the certificate “specifically provides otherwise.”
- A charter provision is “specific” for § 616(b) when it clearly and expressly states that unanimous (or other non-default) approval is required for amendments to the certificate itself.
- In closely held corporations, courts will enforce clear charter voting arrangements as part of the shareholders’ agreed governance terms, and will not use default statutory rules to negate explicit protections relied upon by minority shareholders.
- Article 78 mandamus compels only a clear, ministerial duty; it cannot be used to force execution of documents implementing a void corporate action.

## Conclusion

The court held that an express charter requirement of unanimous shareholder consent for all corporate business, including amendments to the certificate, is specific enough under BCL § 616(b) to bar a two-thirds (or other non-unanimous) vote from removing that unanimity requirement, and therefore the dissenting director could not be compelled to sign the invalid amendment.


Matter of Sutton v. Sutton, 84 N.Y.2d 37 (N.Y. 1994)