Auer v. Dressel
306 N.Y. 427, 118 N.E.2d 590 (N.Y. 1954)

  • 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 elected.
    • 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 sued.
    • 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 do that.
  • 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.