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Bluebook 21st ed.

Malone Sharpe, Corporations - Quorum - Effect of Withdrawal of Shareholders, 6 MERCER
L. REV. 354 (1955).

ALWD 7th ed.

Malone Sharpe, Corporations - Quorum - Effect of Withdrawal of Shareholders, 6 Mercer
L. Rev. 354 (1955).

APA 7th ed.

Sharpe, Malone. (1955). Corporations quorum effect of withdrawal of shareholders.
Mercer Law Review, 6(2), 354-356.

Chicago 17th ed.

Malone Sharpe, "Corporations - Quorum - Effect of Withdrawal of Shareholders," Mercer
Law Review 6, no. 2 (Spring 1955): 354-356

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Malone Sharpe, "Corporations - Quorum - Effect of Withdrawal of Shareholders" (1955)
6:2 Mercer L Rev 354.

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Malone Sharpe, 'Corporations - Quorum - Effect of Withdrawal of Shareholders' (1955)
6(2) Mercer Law Review 354

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Sharpe, Malone. "Corporations - Quorum - Effect of Withdrawal of Shareholders."
Mercer Law Review, vol. 6, no. 2, Spring 1955, pp. 354-356. HeinOnline.

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 MERCER LAW REVIEW [Vol. 6

it down. In taking this action, the Georgia Supreme Court has indi-
cated that it has a distinct aversion to price regulation, and that there
are few businesses which meet the test of being "affected with a public
interest." Such diverse items as milk and cigarettes have failed to meet
the standard. But is is difficult to believe that the Georgia Supreme
Court in the future would deny the efficacy of price regulation acts
passed during a depression for the protection of the state's economy.
To sustain such legislation without reversing the Harris case, the
court would have to argue that economic conditions determine
whether or not a business is affected with a public interest. In doing
this, it would in effect be applying the "reasonableness" test used
by the Supreme Court.
LYMAN RAY PATTERSUN

CORPORATIONS-QUORUM-EFFECT OF
WITHDRAWAL OF SHAREHOLDERS
Plaintiff stockholder filed suit for preliminary injunction against
defendant corporation to prevent the continuation of an annual stock-
holder's meeting. The meeting had been adjourned on March 20 until
April 20, for lack of a quorum. The meeting of April 20 was recessed
until April 23, as it could not be determined if a quorum were pres-
ent. Simultaneous with the recess, plaintiff delivered a large number
of proxies and their subsequent revocations which the defendant dis-
regarded. Held, Preliminary injunction granted. A shareholder present
in person or by proxy before a quorum exists can leave and his orig-
inal presence will not cause his shares to be counted for quorum
purposes. Textron, Inc. v. American Woolen Co., 122 F. Supp. 305
(D.C. Mass. 1954).
A quorum is such a number of the members of a body as is compe-
tent to transact business. Morton v. Talmadge, 166 Ga. 620, 144 S.E.
111 (1928). Usually, the question as to what constitutes a quorum
for stockholders' meetings is governed by statute, see Clark v. Wild, 85
Vt. 212, 81 A. 536 (1911), or by rules and regulations of the corpora-
tion, and these rules and regulations have all the force of contracts
as between the corporation and its members and as between the mem-
bers themselves. State ex rel. Schwab v. Price, 121 Ohio St. 114, 167
N.E. 366 (1929). The effect of a withdrawal can be governed by the
charter or by-laws as to whether a quorum means that there must be
a majority present to organize the meeting, Commonwealth v. Vander-
grift, 232 Pa. 53, 81 A. 153 (1911), or that there be a majority present
1955] COMMENTS AND CASE NOTES

at the time of voting. Bridges v. Staton, 150 N.C. 216, 63 S.E. 892
(1909). In the absence of such regulations, the withdrawal of share-
holders leaving less than a quorum does not break the quorum so as
to prevent those remaining from holding a valid election, Duffy v.
Loft, Inc., 17 Del. Ch. 140, 151 A. 223 (1930), but where a with-
drawal for justifiable reasons leaves in af'tendance less than the neces-
sary number for the transaction of business, it will break the quorum.
Hexter v. Columbia Baking Co., 16 Del. Ch. 263, 145 A. 115 (1929);
Leamy v. Sinalor Exp. & Dev. Co., 15 Del. Ch. 28, 130 A. 282 (1928).
Once a quorum is present, a faction of shareholders should not be
permitted to break it by withdrawing. The courts in laying down the
rule for determining the presence of a quorum have used the word
"organized," saying that "once a meeting has been organized, subse-
quent withdrawals will not operate to break the quorum for the
transaction of business." The exact meaning of "organized" has not
been clearly spelled out, and the difficutly is to determine exactly
how far a meeting must progress before withdrawal is ineffective to
break the quorum. Many corporate by-laws omit altogether a provision
for means of ascertaining a quorum at the beginning of the meeting.
The instant case shows the value of a by-law provision requiring an
early roll-call whenever internal strife develops. Rather than permit
the dissident faction to block the transaction of business at a later
time, a roll-call should come early in the order of business.
MALONE SHARPE