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Keywords

contractlawsuitfiduciarywillwrongful terminationcorporationfiduciary dutygood faithbreach of fiduciary duty
contractplaintiffequitywillcorporationrespondentappellant

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Ingle v. Glamore Motor Sales, Inc., 73 N.Y.2d 183, 535 N.E.2d 1311, 538 N.Y.S.2d 771, 57 USLW 2514, 117 Lab.Cas. P 56,458, 4 IER Cases 200

Facts

Ingle sought to purchase shares in Glamore Motor Sales, Inc. and was initially hired as a sales manager. In 1966, he entered into a shareholders' agreement allowing him to purchase shares and stipulating that his shares could be repurchased if he ceased to be an employee for any reason. After being terminated in 1983, Ingle's shares were repurchased by the majority shareholders, leading to his lawsuit claiming wrongful termination and breach of fiduciary duty.

In 1964, plaintiff-appellant Ingle sought to purchase an equity interest in respondent Glamore Motor Sales, Inc. from its then sole shareholder, respondent James Glamore.

Issue

Did Ingle, as a minority shareholder and at-will employee, have any legal protections against termination and the repurchase of his shares under the shareholders' agreement?

Did Ingle, as a minority shareholder and at-will employee, have any legal protections against termination and the repurchase of his shares under the shareholders' agreement?

Rule

A minority shareholder in a closely held corporation who contractually agrees to the repurchase of shares upon termination of employment for any reason does not acquire rights against at-will discharge.

A minority shareholder in a close corporation, by that status alone, who contractually agrees to the repurchase of his shares upon termination of his employment for any reason, acquires no right from the corporation or majority shareholders against at-will discharge.

Analysis

The court applied the rule that without a contract for a definite period of employment, Ingle's status as a minority shareholder did not provide him with protection against being fired. The court found that the repurchase provision in the shareholders' agreement was clear and did not imply any obligation of good faith that would prevent his termination.

The court applied the rule that without a contract for a definite period of employment, Ingle's status as a minority shareholder did not provide him with protection against being fired.

Conclusion

The court affirmed the Appellate Division's order, concluding that Ingle's claims were correctly dismissed as he had no legal grounds to challenge his termination or the repurchase of his shares.

Accordingly, the order of the Appellate Division, 140 A.D.2d 493, 528 N.Y.S.2d 602, should be affirmed, with costs.

Who won?

Glamore Motor Sales, Inc. and the majority shareholders prevailed because the court upheld their right to terminate Ingle's employment and repurchase his shares as per the shareholders' agreement.

Appellate Division order affirmed.

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