Abbassi v. Kidwai

A-3760-97T2 and A-4039-97T2 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: January 28, 1999

CORPORATIONS; DIRECTORS; ELECTIONS—Even if a board can not cooperate in electing a director to fill a board vacancy, if the by-laws call for replacement by the board, and not the shareholders, a court can not order a shareholder election to fill such a vacancy.

A non-profit corporation had a four member board of trustees. After some initial litigation, a court determined the names of four individuals constituting the board. One of them was found to be a “holdover” trustee pending the election of his successor by the board of trustees. A meeting of the board was held to elect the successor but the meeting the meeting concluded without holding a vote after an argument about procedure. When the “holdover” trustee returned to court, the lower court declared that the seats on the board of trustees held by the “holdover” trustee and a declared trustee were vacant and directed that an election to fill the two vacancies be held among the general membership. Finding the language of the corporation’s constitution and by-laws to be clear, the Appellate Division reversed and ruled that the “holdover” trustee remained a member of the board and that the by-law language providing that any vacancy through death, resignation, incapacity, disqualification or through any other cause would be filled by the remaining trustees must be given effect despite the controversy and the need for the board of trustees to have the dispute heard in the courts. Consequently, it ruled that any election of trustees by the membership in accordance with the lower court’s order was null and void.