Sutton v. Sutton

Bag Bazaar, Ltd.'s certificate of incorporation was amended in 1963 to require unanimous shareholder consent for any corporate business, including amending the certificate itself. By 1987, three shareholders remained: Solomon Sutton and Yvette Sutton (plaintiffs), holding 30 percent and 40 percent, and David Sutton (defendant), holding 30 percent; management disputes caused deadlock, and in 1992 Solomon and Yvette voted their combined 70 percent to eliminate the unanimity requirement, which David refused to certify as a director. Solomon and Yvette sued for a declaration that the resolution was valid, arguing that BCL § 616(b)'s 1962 amendment permits a two-thirds vote to eliminate a unanimity provision unless the certificate specifically addresses amending the unanimity provision itself; the trial court agreed, but the appellate court reversed, and Solomon and Yvette appealed.