Paulek v. Isgar
Colorado Court of Appeals
551 P.2d 213 (1976)
H.H. Ditch Co.'s shareholders approved merging with Short Line Ditch Co. and issued new D series stock as compensation, even though the company's bylaws only listed A, B, and C series stock (while the articles of incorporation permitted D series stock) and bylaw amendments required a two-thirds shareholder vote (while the articles vested bylaw authority in the board); Paulek and other shareholders (plaintiffs) sued to block the consolidation, arguing the D series issuance and related actions violated the bylaws, and the trial court ruled for the defendants.
Whether a corporation may take an action permitted by its articles of incorporation but arguably forbidden or unaddressed by its corporate bylaws.