Donald L. Stroh, et al., Plaintiffs-Appellees, v. Blackhawk Holding Corporation, an Illinois Corporation, Ronald C. Vorhies, et al., and Mondo Corporation, an Illinois Corporation, Defendants-Appellants, 117 Ill. App. 2d 301

Summary

Plaintiff class A shareholders commenced an action alleging that the company's class B shares amounted to a permanent proxy in the hands of the class B shareholders and that such proxy violated the Illinois Business Corporation Act. The class A shareholders prayed for a decree cancelling all such stock certificates and restraining the class B shareholders from voting such shares at any meeting. The trial court ruled in favor of the class A shareholders based upon a restriction in the company's articles of incorporation that prohibited the class B shareholders from receiving dividends or distributions of any kind. In reversing and remanding the decree, the court held that it was error for the trial court to have concluded that the issuance of the class B shares was invalid where nothing under Illinois law prevented a limitation that certain shareholders were to receive no dividends.