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Most Worshipful Prince Hall Grand Lodge of Free and Accepted Masons of Delaware, Inc. v. Hiram Grand Lodge Masonic Temple, Inc.

Court of Chancery of Delaware, New Castle County

April 19, 1951

MOST WORSHIPFUL PRINCE HALL GRAND LODGE OF FREE AND ACCEPTED MASONS OF DELAWARE, Inc.
v.
HIRAM GRAND LODGE MASONIC TEMPLE, Inc., et al.

Proceeding by the Most Worshipful Prince Hall Grand Lodge of Free and Accepted Masons of the State of Delaware, Incorporated, a corporation of the State of Delaware against Hiram Grand Lodge Masonic Temple, Inc., a corporation of the State of Delaware, and others for review of an election of directors by stockholders of defendant corporation. The Court of Chancery, in and for New Castle County, Seitz, Vice Chancellor, held that agreement suspending voting rights of common stock held by plaintiff except in cases of misgovernment or for anything that would work harm to plaintiff or to defendant corporation was not reasonably definite and was incapable of being made definite by reference to any standard and was consequently invalid.

Election reviewed, set aside, and new election ordered.

Page 295

[32 Del.Ch. 86] Louis L. Redding, Wilmington, for plaintiff.

H. Albert Young, and Stephen E. Hamilton, Jr. (of Young and Wood), Wilmington, for defendants.

SEITZ, Vice Chancellor.

Plaintiff seeks a review of an election of directors by the stockholders of the defendant corporation.

Plaintiff, as the holder of a majority of the defendant corporation's common stock, sought and was refused the right to vote its stock at the meeting here reviewed. Defendants refused on the ground that plaintiff was not entitled to vote such stock under the terms of the following agreement executed by the plaintiff and the defendant corporation in December, 1925:

‘ Whereas, It is of prime importance that the Trustees of Hiram Grand Lodge Masonic Temple Incorporated [defendant corporation] should safeguard the interests of her Stockholders, and

‘ Whereas, Since the possessions of The Most Worshipful Hiram Grand Lodge [plaintiff] are the possessions of all Masons who have paid taxes and assessments through the years of her existence, the Trustees of Hiram Grand Lodge Masonic Temple Incorporated see grave danger to the interests of the Stockholders in the purchase of common stock by the Most Worshipful Hiram Grand Lodge for her [32 Del.Ch. 87] money invested. The Trustees cannot overlook the possibility of the Grand Lodge voting the Stock of the Craft against the Stockholder; therefore, be it

‘ Resolved, That the Most Worshipful Hiram Grand Lodge [plaintiff] receive common stock for all of her money invested now, or in the future; and, the same to be void of voting power, but held in trust as the property of the Craft. In cases of misgovernment of the Trustees, or anything that would work harm to the corporation, or to the Grand Lodge, such stock held in trust by the Most Worshipful Hiram Grand Lodge, shall be released for voting purposes.’

In December, 1925 plaintiff paid the defendant corporation the full par value price of the common shares issued to it and received a certificate therefor. At or about the same time the parties executed the quoted agreement.

Defendants defend their action in refusing to permit plaintiff to vote its stock on the ground that the quoted agreement is valid and binding and no grounds for permitting the stock to vote existed. Plaintiff asserts that the agreement is invalid for several reasons.

Plaintiff first contends that the alleged agreement is not a legally binding obligation because of its uncertainty and indefiniteness. Defendants argue that it is reasonably definite.

It is well settled that an agreement in order to be a legally binding agreement must be reasonably definite and certain in its terms. Truitt v. Fahey, 3 Pennewill 573,52 A. 339. The question then is whether the language of the agreement that the stock was not to be voted except ‘ in cases of misgovernment * * * or anything that would work harm’ to the plaintiff or the corporate defendant is sufficiently definite.

I pass over the question as to whether or not the phrase ‘ cases of misgovernment’ is reasonably definite. Is the language ‘ or anything that would work harm’ to the plaintiff or to the defendant corporation reasonably definite? I think not. Nowhere in the agreement is there [32 Del.Ch. 88] any standard by which the quoted language can be rendered more definite. In this respect, among others, it is distinguishable from the agreement in Ringling v. Ringling Bros., Del.Ch.49 A.2d 603, affirmed with modification, 53 A.2d 441. Is the standard to be subjective or objective? Certainly stockholders can have innumerable diverse yet honest opinions as to whether ...


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