New York Law Review

Tag: Supermajority Vote

  • Wallace v. Income Fund Enterprises, Inc., 21 N.Y.2d 264 (1967): Interpreting Statutory Voting Requirements for Zoning Amendments

    Wallace v. Income Fund Enterprises, Inc., 21 N.Y.2d 264 (1967)

    When a statute requires a supermajority vote (e.g., three-fourths) of a legislative body to pass an amendment, that requirement refers to three-fourths of the total number of members of the body, not merely three-fourths of those present at a meeting.

    Summary

    This case concerns a dispute over the validity of a zoning amendment passed by the Common Council of the City of Kingston. A property owner petitioned to reclassify its property, triggering a protest from neighboring owners. Under General City Law § 83, such a protest required a three-fourths vote of the council to pass the amendment. The council, with 11 of 13 members present, voted 9-2 in favor. The plaintiffs argued this did not meet the three-fourths requirement. The Court of Appeals affirmed the lower courts’ rulings, holding that § 83 required three-fourths of the entire council membership (13), not just those present, to vote in favor for the amendment to pass over the protest. This decision emphasizes the importance of interpreting statutory voting requirements to reflect legislative intent and ensure that a protest triggers a higher threshold for approval.

    Facts

    1. Income Fund Enterprises Corporation petitioned the Common Council of Kingston to reclassify its property to allow garden-type apartments.
    2. Neighboring property owners protested the reclassification.
    3. Section 83 of the General City Law required a three-fourths vote of the council to pass the amendment due to the protest.
    4. Eleven of the thirteen council members were present for the vote.
    5. The vote was 9 in favor and 2 against.
    6. Property owners brought an action, arguing the amendment did not pass with the required three-fourths vote of the whole council.

    Procedural History

    1. The Special Term ruled in favor of the plaintiffs, finding that the amendment was not validly passed.
    2. The Appellate Division affirmed the Special Term’s decision.
    3. The case was appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether Section 83 of the General City Law, requiring a three-fourths vote of the council to pass a zoning amendment when a protest is filed, requires three-fourths of the entire council membership or merely three-fourths of the members present at a meeting where a quorum is present?

    Holding

    1. Yes, because the legislative intent behind Section 83 is that a protest should trigger a higher threshold for approval, requiring a vote of three-fourths of the entire membership of the council to pass the amendment.

    Court’s Reasoning

    The Court reasoned that the common-law rule (majority of a quorum can act) is superseded by statute and constitutional provisions requiring a specific percentage of all members, reflecting a policy shift towards more representative legislative action. The court noted several statutes that dictate such requirements. Specifically, the court referenced § 35 of the Second Class Cities Law and § 115 of the Kingston City Charter, both requiring a majority of all members for ordinance passage. It also cited § 41 of the General Construction Law, which defines “whole number” as the total number of members, absent vacancies or disqualifications.

    The court rejected the argument that § 83 of the General City Law reverts to the common-law rule, stating that such an interpretation would lead to the illogical result that an amendment could be carried by fewer votes if a protest had been filed (6 votes) than if no protest was filed (7 votes). The court emphasized that “[t]he obvious intention of the statute is that, under any circumstances, a larger vote should be necessary if a protest is filed than would otherwise be the case.”

    The Court affirmed the Appellate Division decision, citing Aquavella v. Lamb, stating that “A three-fourths vote of the entire membership of the Common Council of the City of Rochester was required to enact the amendment to the ordinance in question here to effect compliance with the provisions of section 83 of the General City Law.”

    Therefore, when a statute requires a supermajority vote (like three-fourths), it means three-fourths of the total members, not just those present.

  • Boericke v. Stevenson, 43 N.Y.2d 704 (1977): Enforceability of Corporate Bylaws Requiring Supermajority Vote

    Boericke v. Stevenson, 43 N.Y.2d 704 (1977)

    A corporate bylaw requiring a supermajority vote for amendment is invalid if it conflicts with a state business corporation law stipulating a simple majority, unless such a provision is included in the certificate of incorporation; furthermore, a resolution to change the number of directors is ineffective absent a bylaw authorizing such a change by resolution.

    Summary

    This case concerns a dispute over the validity of a corporate bylaw requiring a two-thirds majority to amend certain bylaws, and the effectiveness of a simple majority resolution to increase the number of directors. The New York Court of Appeals held that the supermajority bylaw was invalid because it conflicted with the Business Corporation Law, which requires only a simple majority unless the certificate of incorporation states otherwise. The court also found that a simple majority resolution to increase the number of directors was ineffective because it was not authorized by an existing bylaw.

    Facts

    The shareholders attempted to amend the bylaws to increase the number of directors from four to five by a simple majority vote.

    Article VIII of the corporate bylaws required a two-thirds majority vote to amend certain bylaws, including the one setting the number of directors.

    There was no bylaw in effect that provided for changing the number of directors through a simple resolution.

    Procedural History

    The case was submitted to the Appellate Division under CPLR 3222, asking whether a simple majority resolution of the stockholders, increasing the number of directors, was valid and effective.

    The Appellate Division ruled in the negative.

    The New York Court of Appeals affirmed the Appellate Division’s order.

    Issue(s)

    1. Whether a corporate bylaw requiring a two-thirds majority shareholder vote to amend certain bylaws is valid when the Business Corporation Law allows for amendment by a simple majority unless the certificate of incorporation provides otherwise.

    2. Whether a simple majority resolution of the stockholders, increasing the number of directors, is valid and effective without an existing bylaw authorizing such a change by resolution.

    Holding

    1. No, because the Business Corporation Law clearly provides that a simple majority vote of the shareholders is sufficient to amend the bylaws, unless the certificate of incorporation provides otherwise.

    2. No, because subdivision (b) of section 702 of the Business Corporation Law requires either an amendment to the bylaws or a bylaw in effect that provides for the change by a simple resolution.

    Court’s Reasoning

    The court reasoned that the supermajority voting requirement in the bylaw was invalid because it directly conflicted with the Business Corporation Law, which mandates a simple majority for bylaw amendments unless the certificate of incorporation specifies otherwise. The court cited Matter of Faehndrich, 2 Y 2d 468, 473, 474, noting that the two-thirds majority vote provision would have been valid had it been placed in the certificate of incorporation.

    Regarding the resolution to increase the number of directors, the court pointed to Business Corporation Law § 702(b), which allows shareholders to change the number of directors either through a bylaw amendment or by a simple resolution *if* there is a bylaw in effect allowing for such a change by resolution. Because the shareholders acted by resolution alone, and no such bylaw existed, the resolution was deemed unenforceable. The court emphasized that “even though a simple shareholder vote could have effected a change in the number of directors if such a by-law had been adopted authorizing such a vote, their naked resolution to do so cannot be enforced.” This highlights the importance of following proper corporate governance procedures and adhering to the specific requirements of the Business Corporation Law.