Corporations – Right of Shareholder Under Uniform Stock Transfer to Have Shares Transferred Contrary to Corporation By-Laws
The defendant, a Michigan corporation, adopted a “constitution” (by-laws) which contained the following provisions: ” … no member shall be allowed to own more than five shares of stock at any one time.” This restriction was not written into the articles of incorporation or printed upon the stock certificates. Plaintiff was at one time the president and director of the defendant corporation. While an officer, he acquired twenty-five shares of stock, having at the time full knowledge of the by-law provisions. When he was no longer an officer, plaintiff purchased an additional share of defendant’s capital stock and requested the secretary of the defendant to transfer this share on the corporation’s books. The request was refused. Plaintiff sought specific performance of an implied agreement to transfer such stock. On appeal from a judgment for defendant, held, reversed. The plaintiff was entitled to relief even though he had notice of the restrictive provisions; the defendant had not complied with provisions of Michigan law, which required any limitations on the right to transfer or acquire stock to be stated in the articles of incorporation and on the stock certificates. Sorrick v. Consolidated Telephone Co., 340 Mich. 463, 65 N.W. (2d) 713 (1954).