McQuade v. Stoneham

Stoneham (defendant), majority owner of National Exhibition Company, sold stock to McGraw (defendant) and McQuade (plaintiff), who agreed by contract to use their best efforts to keep each other as directors; McQuade became treasurer while Stoneham controlled the board. After a falling out over the corporate treasury, the board voted McQuade out as treasurer and later removed him as a director entirely, not for any misconduct but because of his personal conflict with Stoneham. McQuade sued for breach of the contract, and the defendants argued the contract was void because it conflicted with directors' overriding duty to the corporation; the lower courts awarded McQuade damages without reinstating him.