Shareholders of a corporation
called R. Hoe & Co. (including Auer) wanted to hold a special
shareholders' meeting to remove some of the directors, demand that Auer be
reinstated as president, and amend the by-laws for how directors were
Auer used to be the
president of the corporation, but he had been removed by the directors.
The new president, Dressel,
refused to hold a shareholders' meeting. Auer and the other shareholders
Auer argued that there was a
by-law saying that the corporation was required to have meeting when
requested by the majority of the shareholders.
Dressel argued that what
Auer wanted was not a proper subject for a shareholder's meeting.
Typically, shareholders do
not get to directly say who the president can be, only the directors can
The Trial Court found for Auer
and ordered a shareholder meeting. Dressel appealed.
The Appellate Court affirmed.
The Appellate Court found
that there was nothing improper in having the shareholders make a
statement about who they thought the president should be.
The Court found that
shareholders do have an inherent power to elect and dismiss directors.
The Court found that there
was nothing wrong with having the shareholders amend the by-laws for how
directors were elected.