## Facts

- Chris-Craft Industries, Inc., a Delaware corporation, had bylaws fixing the annual stockholders’ meeting for January 11, 1972.
- Dissident stockholders organized to run a proxy contest and filed notice of their intention to solicit proxies on October 16, 1971.
- Shortly after learning of the proxy fight, the incumbent board expanded the agenda of its October 18, 1971 meeting to amend the bylaws to move the annual meeting up to December 8, 1971.
- Management resisted producing a stockholder list to the dissidents and retained proxy solicitors, while the shortened schedule reduced the time available for dissidents to prepare and clear solicitation materials.
- The Court of Chancery found the meeting-date change was adopted to reduce the dissidents’ available time and that the combined tactics left dissidents little practical chance to wage a successful proxy contest.
- Despite those findings, the Court of Chancery denied injunctive relief; the dissidents appealed.

## Issues

1. Whether directors may use otherwise authorized statutory and bylaw powers to advance an annual meeting date for the purpose and effect of obstructing dissident stockholders’ proxy contest and perpetuating themselves in office.
2. Whether a court of equity may enjoin technically lawful corporate action when it is undertaken for inequitable entrenchment purposes affecting the stockholder franchise.
3. Whether the dissidents’ request for injunctive relief was barred by delay (laches).

## Decision

- The Delaware Supreme Court reversed the denial of injunctive relief and remanded with directions to grant appropriate equitable relief.
- The Court held that management attempted to use corporate machinery and Delaware law to perpetuate itself in office by obstructing dissidents’ legitimate proxy efforts.
- The Court enjoined the advanced meeting date, effectively restoring the annual meeting to the original bylaw date.
- The Court rejected the argument that the dissidents acted too late, concluding they proceeded promptly after learning of the advancement.

## Legal Principles

- Inequitable action does not become permissible simply because it is legally possible.
- Director action compliant with statute and bylaws remains subject to equitable review when used to interfere with stockholders’ voting and proxy rights.
- Equity will restrain manipulative use of corporate processes designed to entrench incumbents and deny dissidents a fair opportunity to present their case to the electorate.
- Injunctive relief is appropriate to prevent consummation of an inequitable interference with the stockholder franchise; prompt pursuit of relief defeats a laches defense in this context.

## Conclusion

The Delaware Supreme Court required injunctive relief because the board’s technically authorized advancement of the annual meeting date was employed as an entrenchment device that impaired a fair proxy contest, and equity will not permit directors to shield such interference with stockholder voting rights behind formal legal compliance.


Schnell v. Chris-Craft Indus., Inc., 285 A.2d 437 (Del. 1971)