Byrd v. Raleigh Golf Ass'n, Inc.

472 S.E.2d 395 (1996)

Victor G. BYRD, C.L. Byrd, Randy L. Byrd, William Coppage, Plaintiffs, v. RALEIGH GOLF ASSOCIATION, INCORPORATED, Defendant.

No. COA95-993.

Court of Appeals of North Carolina.

July 16, 1996.

*397 Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. by Michael W. Mitchell and Christopher B. Capel, Raleigh, for plaintiffs-appellants.

Manning, Fulton & Skinner, P.A. by Howard E. Manning, Jr., and Kristen G. Lingo, Raleigh, for defendant-appellee.

EAGLES, Judge.

Plaintiffs first argue that the trial court erred in granting defendant's motion for summary judgment and denying plaintiffs' motion for summary judgment. Plaintiffs argue that summary judgment is appropriate in their favor because of the requirement set out in G.S. 55-6-01(c)(1) that a corporation provide to its shareholders at least one class of stock with "unlimited voting rights." G.S. 55-6-01(c)(1) (1989). We agree.

The plain language of G.S. 55-6-01(c) provides that RGA's "articles of incorporation must authorize ... [o]ne or more classes of shares that together have unlimited voting rights...." G.S. 55-6-01(c) (emphasis added). This language is mandatory and subject to no exception. It follows then that, when a corporation through its articles has authorized only one class of stock, any provision in the articles of incorporation that serves to restrict the voting rights of its shareholders is void as violative of G.S. 55-6-01(c).

Here, the defendant's articles of incorporation condition the exercise of voting rights upon the payment of annual dues to the corporation. Such an arrangement might well be permissible were plaintiffs members of a nonprofit corporation organized pursuant to Chapter 55A. See G.S. 55A-3-02 (1993); G.S. 55A-2-02 (1993); G.S. 55A-6-01 (1993); G.S. 55A-6-20 (1993); G.S. 55A-6-21 (1993); G.S. 55A-6-23 (1993). Defendant correctly admits in its brief, however, that it is a "for-profit, business corporation, existing under Chapter 55 of the laws of the State of North Carolina." A for-profit corporation may limit or attach conditions to the voting rights of different classes of its shares pursuant to G.S. 55-6-01(d)(1), but only so long as it first maintains a class of shares with unfettered voting rights. The mandatory requirements of G.S. 55-6-01(c) remain controlling.

We conclude that the relevant provisions in defendant's articles of incorporation are void to the extent that they purport to condition each shareholder's right to vote upon the payment of annual dues. We reverse the trial court's entry of summary judgment for defendant and remand the cause with direction to the trial court to enter summary judgment in favor of plaintiffs. Since this opinion removes any legal bar to plaintiffs' unfettered exercise of their voting rights, injunctive relief should be unnecessary absent a further showing by plaintiffs that their voting rights remain restricted in some way by defendant. We need not address plaintiffs' remaining assignments of error.

Reversed and remanded.

LEWIS and McGEE, JJ., concur.