## Facts

- Ringling Bros.-Barnum & Bailey Combined Shows, Inc. had 1,000 outstanding shares: Edith Conway Ringling owned 315, Aubrey B. Ringling Haley owned 315, and John Ringling North owned 370.
- The corporation elected a seven-member board by cumulative voting.
- In 1941, Ringling and Haley entered a stockholders’ agreement to vote jointly for directors: each would select two nominees, and their remaining votes would be combined to elect an additional director acceptable to both.
- The agreement provided that, if Ringling and Haley disagreed, Karl D. Loos would decide how their shares would be voted in order to resolve the deadlock.
- Although the parties later terminated portions of the 1941 contract, they expressly kept the Loos deadlock-resolution provision in force.
- At the 1946 annual meeting, Ringling and Haley disagreed; the dispute was submitted to Loos under the agreement.
- Loos directed that their shares be voted first for an adjournment and, if the adjournment failed, then for a specified slate of directors.
- Haley voted by proxy, and the proxy did not follow Loos’s directions, instead voting in a manner aligned with North.
- The resulting election produced, on its face, a board favored by Haley and North.
- Ringling filed a statutory election contest seeking to invalidate the election to the extent it depended on votes cast contrary to the voting agreement.

## Issues

1. Whether a stockholders’ voting-pool agreement that requires joint voting and uses a third-party decisionmaker to resolve voting deadlocks is valid under Delaware law.
2. If valid, whether the third party’s voting directions can be specifically enforced as the corporate act of voting, or instead only enforced through contract-based remedies.
3. Whether the 1946 director election was valid when votes were cast in breach of the voting agreement.

## Decision

- The court upheld the 1941 stockholders’ agreement as a valid voting-pool arrangement not contrary to statute or public policy.
- The court held that Loos’s directions were binding as between the contracting stockholders, but the court would not compel a particular vote or treat the arbitrator’s directions as the votes themselves.
- The court concluded that votes cast in violation of the agreement should be disregarded when determining the validity of the election.
- Because excluding the nonconforming votes affected the election outcome, the court ordered a new election under the governing election-contest statute and affirmed the decree ordering that relief.

## Legal Principles

- Stockholders may contract to coordinate and pool their voting power, including by providing a mechanism for resolving internal disagreement, absent statutory prohibition, fraud, or injury to other stockholders or the public.
- Shareholder voting rights are incidents of stock ownership that may be arranged by contract among owners, so long as the arrangement does not unlawfully separate voting power from ownership.
- A deadlock-breaking decision by a contractually selected third party establishes contractual duties between the stockholders; it does not become a corporate vote enforceable by specific performance as the act of voting.
- In an election contest, a court may give effect to a valid voting agreement by disregarding votes cast in breach and ordering corrective election relief.

## Conclusion

Delaware recognized the enforceability of a shareholder voting-pool agreement with an arbitration-like deadlock provision, while limiting enforcement to contract-consistent election remedies—such as disregarding breaching votes and ordering a new election—rather than judicially compelling how shares must be voted.


Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Ringling, 29 Del. Ch. 610, 53 A.2d 441 (Del. 1947)