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366 KANSAS LAW REVIFW [Vol. 15
THE VALIDITY OR INVALIDITY OF CORPORATE
DIRECTORS' ACTION AND THE QUORUM
REQUIREMENT
Statutory and case law decreeing how corporations shall operate requires that
their business and affairs be managed through the action of a number of directors
constituting a quorum of the board of directors at a board meeting.' According to
the common-law rule a quorum is a majority of the entire authorized number of
directors, and a majority of a quorum is required for action by the board
The number of directors necessary to constitute a quorum and the number of a
quorum necessary to bind the corporation are now almost wholly regulated by
statute. The statutes generally provide that: (1) a majority of the number of direc-
tors fixed by the by-laws or articles of incorporation constitutes a quorum; (2) a
majority of the directors present at a meeting at which a quorum is present can bind
the corporation by its action; and (3) the corporate by-laws and/or articles may pro-
vide for a greater or lesser number in either case (1) or (2), or both."
The purpose of this comment will be to examine those situations which most fre-
quently prevent compliance with the quorum requirement. This examination will
not be limited to an analysis of the case law on the subject, but will offer, in addition,
suggested steps by which certain of these situations may be anticipated in order that
4
the corporation may protect itself against the lack of a quorum.
The three most common situations are: (1) vacancies; (2) the presence of in-
terested directors; and (3) the absence of directors.

' ABA-ALI MODEL Bus. CORP. ACT ANN. § 33 (1960) (hereinafter cited as MODEL ACT). But see note
4 infra.
'2 FLETCHER, PRIVATE CORPORATIONS §§ 419, 425 (rev. vol. 1954); HENN, CORPORATIONS § 210, at
341 (1961); STEVENS, CORPORATIONS § 161, at 750-1 (2d ed. 1949).
'See MODEL ACT S 37, at 625, 627 for charts summarizing state provisions. In Kansas the bylaws or
articles of incorporation may provide for a lesser or greater number to constitute a quorum, but in no
case less than one-third of the total number of the board nor less than two. KAN. STAT. ANN. § 17-3101
(1964). For action by the board, a greater number than a majority of a quorum may be required by the
by-laws or articles of incorporation. Ibid.
A corporation may desire unanimity requirements for a quorum or board action. In Benintendi v.
Kenton Hotel, 294 N.Y. 112, 60 N.E.2d 829 (1945), the court struck down such requirements, declaring
that they violated the public policy of New York, although they were not expressly forbidden by statute.
In response to this New York changed its law, allowing unanimity requirements. See N.Y. Bus. CORP.
LAW § 709. Thirty-one states have now adopted statutes identical to or similar to the Model Business
Corporation Act which allows greater than majority requirements in the by-laws or articles for quorum or
voting purposes. The comment following the section explicitly states that unanimity may be required. See
MODEL ACT § 37.
A unanimity provision, even where allowed, should be drafted with care. If unanimous action of all
the directors is desired, this will not be achieved by a provision calling for unanimous action of the
"board" or "board of directors." Such a provision will be interpreted as providing for unanimous action
of a quorum. See Tidewater So. Ry. v. Jordan, 163 Cal. 105, 124 Pac. 716 (1912).
'The obtainment of, or failure to obtain, a bona fide quorum and the requisite number of votes does
not automatically resolve the question of validity or invalidity of the action taken. If a quorum is present
the act may, nevertheless, be invalid because it is ultra vires, because of fraud, or for any one of a number
of other reasons. On the other hand if a quorum is not present the action may be ratified by director or
stockholder action, or the party objecting may be estopped to question the action taken. See 2 FLETCHER,
PRIVATE CORPORATIONS §§ 428-30 (rev. vol. 1954). Moreover, a number of states now expressly provide
that the directors may act without meeting, provided they comply with certain formalities. See, e.g., CAL.
CORP. CODE § 814.5; CONN. GEN. STAT. ANN. § 33-316(d) (1960). Although the related problems in
these areas are recognized, the discussion here is limited to those situations which may prevent valid
action because of lack of a legal quorum.
1967] COMMENTS

VACANCIES

Because of vacancies on the board, it may not be possible to meet the quorum
requirement. For example, if a board consists of seven members, a majority of
which is required for a quorum, and there are four vacancies, the vacancies have so
reduced the number of authorized directors that the quorum number cannot be met.
Another type of vacancy problem arises when a specific number of directors is
called for in the articles or by-laws (either initially or by an amendment which in-
creases the authorized number), and fewer than that number of positions have been
filled. Seemingly, this should not lower the quorum requirement since the unfilled
positions remain authorized directorships. Some state statutes specifically provide
that in such a situation a vacancy exists.' However, the cases indicate that the quorum
requirement is lowered and that the courts will uphold the power of the directors in
office to act. In Robertson v. Hartman' five directors, the only shareholders, amended
the by-laws to provide for nine directors but none of these positions was ever filled.
When three directors (a quorum was five) authorized the issuance of a trust deed to
plaintiffs, a later grantee as a defense to an action to quiet title pleaded that the
authorization was not valid since there was not a quorum present at the meeting.
The court held that the five directors in office were the proper board, and that three
was a quorum.7 In another case," the by-laws provided for a variable number of
directors from three to seven, and the shareholders elected seven; two of the seven
elected, upon being notified of their election, declined to serve. Corporate action
taken by three qualified directors was challenged as not being the act of a quorum
of directors. The court held that the two who had declined to serve had never been
members of the board, and further, that the shareholders' act in electing seven did
not show an intent that the board be fixed at seven.9 The Delaware Court of
Chancery that same year held that an increase in the authorized number of directors
through a by-law amendment did not change the number required for a quorum so
long as the new directorships had not been filled.'
It is submitted that in those states which allow the by-laws or articles to alter or
set the proportion required for a quorum, and in particular in those states where the
corporation statute does not speak of a specific number of the board of directors or
a specific proportion of the number of directors fixed by the by-laws or articles, it
should be permissible for the corporation to draft a by-law or article to protect against
the possibility of lack of a quorum due to the existence of unfilled directorships which
have never been filled. Such a by-law might read: "A majority of the board of direc-
tors shall constitute a quorum, provided that in computing the proportion of directors
needed for a quorum, the board shall be considered to include only those directorships
which have at some time been filled." In Indiana this problem is seemingly covered

'CAL. CoRP'. CODE § 806(c) provides that a vacancy exists if at any meeting of shareholders at which
any director is to be elected, the shareholders fail to elect the full authorized number of directors to be
elected at that meeting. The Connecticut provision is that a vacancy exists in the board if at the time the
number of directorships is greater than the number of directors in office. CONN. GEN. STAT. ANN. §
33-31 7 (a) (1960).
"6 Cal. 2d 408, 57 P.2d 1310 (1936).
The court hedged slightly, however, stating that even if the action was irregular it was not void but
voidable, and that only the corporation or its shareholders could raise the question. Id. at ..... 57 P.2d
at 1311.
sBlish v. Thompson Automatic Arms Corp., 30 Del. Ch. 538, 64 A.2d 581 (1948).
9Id. at ._ 64 A.2d at 602.
"Belle Isle Corp. v. MacBean, 30 Del. Ch. 373, 61 A.2d 699 (Del. Ch. 1948).
 KANSAS LAW REEw [Vol. 15
by a statute which states: "A majority of the actual number of directors elected and
qualified,from time to time, shall be necessary to constitute a quorum. .. ."I' While
it appears that the courts will attempt to find some ground to uphold the action of
a quorum of the board computed on the basis of directorships which have been
filled, the adoption of a by-law such as the above is suggested as a protective measure
where it is valid.
Another situation in which the existence of a vacancy may be asserted to negate
the presence of a quorum arises when a director, or directors, whose presence is
necessary to constitute a quorum, has failed to qualify. The argument is that the
board position of an unqualified director is vacant. Fletcher states as a general rule
that "votes cast for a person who is not eligible as a director . . . cannot elect him,
and he does not become even a de facto officer ....
The most common qualification which may be required by the by-laws or articles
is stock ownership, 8 and it is this requirement that has prompted litigation. Con-
trary to Fletcher's "general rule," the cases have exhibited liberality in upholding
corporate action in such situations. In Lippman v. Kehoe Stenograph Co.,14 the
Delaware statute required that a candidate own at least three shares of the corpora-
tion's stock to be eligible for election. The presence of a quorum at a meeting was
questioned, it being argued that three directors in attendance had not been duly
elected because they had not owned shares at the time of the election, their positions
thus being vacant. The court held that since they had acquired the requisite shares
before the meeting in question took place, they qualified as directors. 5 In a Cali-
fornia case' 6 a director, whose presence was necessary for a quorum, had divested
himself of his stock prior to the meeting (again, directors were required to be share-
holders), and this transaction had been entered on the books. The court held that
his office had not been vacated; where he continued to act as director, his acts were
valid as to third persons, and his title to office could not be impeached collaterally. 7
A corporation may protect itself against the possibility that it may be unable to
act because of vacancies which prevent the assemblage of a quorum of directors.
Two methods which are recognized are: (1) a statutory, by-law, or article provision
allowing the directors to fill vacancies; and (2) the holding of a special meeting of
the shareholders to fill the vacancies. The first method may not suffice if the direc-
tors, by statute, may not fill a vacancy unless there is a quorum present at the meet-
ing. The second method may be undesirable because of the time and trouble in-
volved in calling a special meeting of the shareholders. Furthermore, the corporation,
particularly if it is a relatively close one, may prefer that the remaining directors run
the corporate affairs for the time being until suitable new directors can be found.
Thus, a third method is suggested: a by-law or article providing that a quorum
'IND. ANN. STAT. § 25-208 (Supp. 1965). (Emphasis supplied.) See also MASS. ANN. LAWS ch. 156B,
57 (Supp. 1966), which states that unless otherwise provided in the by-laws a quorum "shall be a
majority of the directors then in ofice." (Emphasis supplied.)
12 FLETCHER, Op. cit. supra note 2, § 312 at 98.
" Such a requirement is usually optional with the corporation. Only two states, Montana and Vermont,
require it as a condition. MONT. REV. CoDEs ANN. § 15-401 (1947); VT. STAT. ANN. tit. 11, § 221 (1959).
" 11 Del. Ch. 190, 98 At. 943 (Del. Ch. 1916).
toId. at ..... 98 AtI. at 947-48. The court also held that a director who, prior to the meeting, had
transferred his shares in blank without consideration, the transfer not being recorded on the books of the
corporation, was still a director until the transfer was made on the books. Id. at . 98 At. at 946-47.
" Seal of Gold Mining Co. v. Slater, 161 Cal. 621, 120 Pac. 15 (1911).
17Id. at .... 120 Pac. at 18-19.
1967] COMMENTS

shall be a specific proportion of the number of directors then in office. The validity
of such a provision must be considered in the light of two factors: (1) a possible
violation of any public policy such that the court might strike it down; and (2) the
validity or invalidity of the provision under the state statute.
Where the board is composed of directors elected by contending factions of
shareholders, an argument in opposition to the third alternative would be that the
provision would allow a minority faction to gain control through such fortuitous oc-
currences as, for example, deaths on the board, or resignations due to illness. This
argument fails to take into account several practical considerations. It is submitted
that such a provision would be adopted only when there are no contending factions;
obviously, if there are factions, the controlling faction would never allow such a pro-
vision to be passed. Another possible objection is that a minority shareholder's
interests might be unjustly affected by the third alternative. For example, a share-
holder with the power to elect one of three directors has a veto power by operation of
a by-law requiring unanimous vote of the board of directors. 8 This veto power may
be lost by virtue of this type provision if the vacancy is created by the director he
elected. Again, it is submitted that a minority shareholder with this power would
never allow this provision to be passed.
Certainly it seems that a provision allowing the directors in office to act should
not be invalidated when the court can find no inequity with respect to any party;
therefore, if a corporation adopts such a provision the presumption should be that
there is no inequity, and the burden of proving it unfair should be on the party so
asserting.
The validity of this third alternative may also depend upon the language of the
statute giving the corporation power to fix the number required for a quorum. The
corporations' power may be limited by the statute, and it seems likely that the cor-
porations' provision may be scrutinized with reference to the quorum set by the
statute in absence of corporate action.
In Massachusetts and South Carolina the third alternative would clearly be good.
The statutes there provide that a majority of directors in office shall be a quorum in
the absence of any other provision.' 9 In Kansas the statute provides that "a majority
of the directors shall constitute a quorum ... unless the articles ... or the by-laws
shall provide that a different number shall constitute a quorum."2 Therefore, a
strong argument could be made to sustain such a provision in Kansas. But, on the
other hand, this provision would probably not be allowed in Arkansas, for its statute
provides that a majority of the number fixed by the by-laws or articles shall constitute
a quorum unless a greater number is provided in the articles or by-laws. 2 '

PERSONAL INTEREST OF DIRECTORs

The presence of a director "interested" in the matter voted upon may prevent the
presence of a quorum as to that act. "As a general rule, a director is demeed 'in-
terested' in every transaction where, as a result of action by the board of directors, he
may receive a financial benefit or be subjected to financial loss, either directly or

tsSee note 3 supra and accompanying text.

SMAss. ANN. LAws ch. 156B, S 57 (Supp. 1966); S.C. CODE ANN. § 12-18.10 (Supp. 1966).
'KAN. STAT. ANN. § 17-3101 (1964).
" ARK. STAT. ANN. S 64-305 (1966).
370 KANSAS LAW REvIEw [Vol. 15

indirectly."2 2 As stated by Fletcher, in general "a director who is disqualified by

reason of personal interest in the matter before a directors' meeting loses, pro hac
vice, his character as a director, and he cannot be counted for the purpose of making
'
out a quorum." 3
According to this rule a director whose presence is necessary to form a quorum
cannot be counted when his compensation is the subject of action.24 Nor may a
director be counted for a quorum when his presence and vote is necessary to approve
his purchase of corporate assets.2" Where a contract between two corporations is the
subject of a resolution, and the presence of a common director is necessary to form
a quorum and effectuate the transaction, he is held to be interested, and his presence
may not be counted for a quorum. 26 Directors may not be counted when the board
passes a resolution releasing stock subscriptions not yet paid in, and directors neces-
2
sary for a quorum are among those holding subscriptions which are to be released. 1
And where directors are to be the beneficiaries or potential beneficiaries of a stock
option plan or profit-sharing agreement they may not be counted. 28 In at least two
cases it has been held that a director who is an attorney for a shareholder or director
is interested when voting on a matter in which his shareholder or director client
would be interested.2 9 On a vote to cancel an option agreement whereby the corpora-
tion could repurchase a minority-shareholder-director's stock on the happening of
a certain contingency, that director's vote and presence may not be counted. 0 A
resolution to bring suit against certain directors in the corporate name disqualifies
them from being counted. 81
On the basis of these cases, and many others,"' it appears that the courts draw a
line quite broadly in deciding when a director is interested so as to disqualify him
from voting and being counted for quorum purposes. It need not be shown that the
director will actually profit in any financial way, nor that there is a question of un-
fairness. The courts find a sufficient basis for finding a director interested if it is
possible to see a relation between the board action and possible future benefit to him.
There is said to be another common-law rule that an interested director may be
4
counted for a quorum.85 Gumaer v. Cripple Creek Tunnel Trans. & Mining Co.
is said so to hold; however, a close reading of the case indicates that the court really
seemed to ignore the issue of whether the interested director could be counted for
quorum purposes, and instead addressed itself to the proposition that a majority
'SPELLMAN, CORPORATE DIRECTORS 465 (1931).
' 2 FLETCHER, Op. cit. supra note 2, S 426, at 283.
'E.g., Holcomb v. Forsyth, 216 Ala. 486, 113 So. 516 (1927); Fields v. Victor Bldg. & Loan Co., 73
Okla. 207, 175 Pac. 529 (1918).
SWishon-Watson Co. v. Commissioner, 66 F.2d 52 (9th Cir. 1933).
Colorado Management Corp. v. American Founders Life Ins. Co., 145 Colo. 413, 359 P.2d 665
(1961).
"Marcuse v. Broad-Grace Arcade Corp., 164 Va.553, 180 S.E. 327 (1935).
Kerbs v. California E. Airways, Inc., 33 Del. Ch. 69, 90 A.2d 652 (1952).
"In re Webster Loose Leaf Filing Co., 240 Fed. 779 (D.N.J. 1916) (Probably most restrictive view-
point in this area); Sarner v. Fox Hill, Inc., 151 Conn. 437, 199 A.2d 6 (1964).
'o Welchman v. Koschwitz, 21 N.J. Super. 304, 91 A.2d 169 (N.J. Ch. 1952).

8'Anderson v. Gailey, 33 F.2d 589 (N.D. Ga. 1929).

See cases collected in 2 FLETCHER, op. cit. supra note 2, at 283 n.77.
8'See HENN, Op. cit. supra note 3, § 210 at 341: "Whether or not directors who are personally in-
terested in a transaction with their corporation may count for quorum or voting purposes presents questions
not yet fully resolved."
' 40 Colo. 1, 90 Pac. 81 (1907).
1967] COMMENTS 371

of the quorm number could act when it was also a majority of the entire board.8
The problem is now academic because a subsequent case in the same jurisdiction has
explicitly held that an interested director cannot be counted for the determination
of a quorum. 6 Buell v. Buckingham & Co.! is another case cited as supporting the
rule that an interested director may be counted for a quorum. This 1864 case is, how-
ever, weak authority. Judge Cole, speaking for the court, assumed that the interested
director could be counted for quorum purposes and directed his attention to the
question whether a bare majority of a quorum which itself was a bare majority of
the total number of directors could "do a binding act." ' The concurring opinion
was not based upon the proposition that an interested director could be counted to
make a quorum, but upon the fact that the defendants who were third parties to the
transaction had no right to question the action taken. 9 Piccardv. Sperry Corp.40 and
Spicer & Son v. Spicer4' are two other cases cited as following the rule. They do not,
however, hold unequivocally that interested directors can be counted. The decisions
rely on the presence of charter provisions which in the one case specifically allowed
the counting of interested directors for a quorum, 4 2 and in the other provided that
acts should be valid notwithstanding the fact that a defect in the board's action should
later be discovered.48 Minnesota seems to stand alone in holding unequivocally that
interested directors can be counted for quorum purposes.44
It may be possible, therefore, to allow interested directors to be counted for a
quorum if the by-laws or charter provide that they are to be counted. In Piccard v.
Sperry Corp.45 a federal district court, applying Delaware law, upheld the validity of
such a provision. The charter provided that:
Any director whose interest in any such contract or transaction arises solely by
reason of the fact that he is a stockholder, officer or creditor of such other company
...shall not be deemed interested in such contract or other transaction under any of
the provisions of this paragraph, nor shall any such 46
contract or transaction be void
or voidable ... nor need such interest be disclosed.
This was preceded by a provision stating that "directors so interested may be counted
when present at meetings of the Board of Directors ... for the purpose of determin-
ing the existence of a quorum. '47 The court held that no public policy of Delaware
was violated by the provision.4" More recently the Delaware Court of Chancery has
held that a certificate of incorporation which allows interested directors to be counted
"We adopt the rule that where the board of directors of a corporation consists of five members, and,
under the by-laws, it requires four to constitute a quorum, a majority of the quorum, being a majority
of the board, can legally do any act which the entire board could be authorized to do." Id. at ..... 90 Pac.
at 85.
'Colorado Management Corp. v. American Founders Life Ins. Co., 145 Colo. 413, 359 P.2d 665 (1961).
16 Iowa 284 (1864).
Id. at 288.
"As the principal or parties interested may confirm the sale, a mere stranger cannot make the objec-
tion, that the trustee was the purchaser; or that the sale was irregular. The remedy belongs only to persons
who had an interest in the property before the sale, and no other person can apply to set aside the sale."
Id. at 293.
4048 F. Supp. 465 (S.D.N.Y. 1943).
4147 Commw. L.R. 151 (Austl. 1931).
4248 F. Supp. at 467-68.
547 Commw. L.R. 151, 176-77 (Austl. 1931).
" Fountain v. Oreck's, Inc., 245 Minn. 202, 71 N.W.2d 646 (1955).
' 48 F. Supp. 465 (S.D.N.Y. 1943).
,Id. at 467.
"Id. at 467-68.
Id. at 469.
 KANSAS LAW REVIEW [Vol. 15

is valid although it violates the common law of Delaware.4 9 The court reasoned that
the common-law rule as to the ineligibility of interested directors was not of such
nature that it could not be altered, as here, by shareholder agreement, at least in
situations where the action taken must be submitted for shareholder approval. °
Thus, there is support for the view that, at the very least, the shareholders may by
agreement provide for the counting of interested directors where the board action is
subject to shareholder approval. California, Nevada, New York, and South Carolina
now have statutes expressly providing that interested directors may be counted for
the purpose of establishing a quorum. 5'
More particular provisions concerning the participation of interested directors in
board action are found in several states. These provisions place the emphasis on ele-
ments such as disclosure of interest, substantiality of interest, and the fairness of the
contract or transaction, 52 rather than upon rigid application of the idea that a director
is in the fiduciary position of a trustee to the shareholders and thus may never act
for the corporation when his own interests may be involved.
Thus, while the common-law rule is that personal interest of the directors may
destroy the presence of a quorum, the statutory trend is toward mitigation of this
rule; since the statutes are often quite specific it is very important for the corporation
to consult its state's statute to see in what instances, if any, the statute modifies or
allows the charter or by-laws to modify the common law rule.

ABSENCE oF DIECTORS
The most obvious situation in which a quorum may be lacking arises when there
is not a sufficient number of directors present to constitute a quorum. The principal
question which has arisen in relation to this situation is whether a director may be
present and vote by proxy. Relying upon the theory that the directors represent all
of the shareholders, it is generally stated that they must be present in person at
directors' meetings to vote, and inferentially to be counted for a quorum,58 in order
that each may hear the opinions of the other directors and inform them of his own.
The number of cases actually holding that such a proxy may not be counted are
few.54 In an early Alabama case5" it was stated that such a proxy could not be
counted, but the court impliedly left open the question of whether the by-laws or
"general laws" could authorize such an action. In Paxton v. Heron5" the court ex-
plicitly left open the question whether a by-law could validate one director acting for
another. It has been stated also that the vote of a director participating in a meeting

5
" Sterling v. Mayflower Hotel Corp., 33 Del. Ch. 20, 89 A.2d 862 (Del. Ch.), af'd, 33 Del. Ch. 293,
93 A.2d 107 (1952).
' 33 Del. Ch. at ..... 89 A.2d at 866.
51
CAL. CORP. CODE § 820; NEV. REV. STAT. § 78.140(2) (1963); N.Y. Bus. CORP. LAws § 713(b);
S.C. CODE ANN. S 12-18.16(d) (Supp. 1966).
"See, e.g., CONN. GEN. STAT. ANN. § 33-323 (1960).
"2 FLETCHER, PRIVATE CORPORATIONS § 427 at 288 (rev. vol. 1954); STEVENS, CORPORATIONS § 161,
at 752 (2d ed. 1949).
' Greenberg v. Harrison, 143 Conn. 519, 124 A.2d 216 (1956) (proxy given to another director);
In re Acadia Dairies, Inc., 15 Del. Ch. 248, 135 Ad. 846 (Del. Ch. 1927); State v. Perkins, 90 Mo. App.
603 (1901) (alternative holding). See also First Nat'l Bank v. East Omaha Box Co., 90 N.W. 223 (Neb.
1902) (not clear whether director had a proxy).
'Perry v. Tuscaloosa Cotton-Seed Oil Mill Co., 93 Ala. 364, 9 So. 217 (1891).
' 41 Clo. 147, 92 Pac. 15, 16 (1907).
1967] COMMENTS

by telephone could not be counted. 57 Craig Medicine Co. v. Merchants' Banks5 also
reasoned that the practice was not allowed, and that the votes were of no effect; how-
ever, this was pure dictum.59

CONCLUSION

That a corporation must have a certain number of qualified board members physi-
cally present when the board meets may seem a minor problem when placed along-
side complex stock transactions and intricate tax problems. Nonetheless, as much
harm may result from failure to comply with the law in the former situation as in
the latter two. In some instances the fact that vacancies foreclose the possibility of a
quorum is obvious: the problem is what to do. And while in some cases it is possible
for the remaining directors to fill the vacancies, and in all for the shareholders to
elect new directors at a special meeting, it may be desirable in certain situations for
the remaining directors to have the power to act. For these situations a by-law has
been suggested whereby the number required for a quorum varies with the number
in office.
In other situations it may not be apparent that a quorum is lacking, e.g., when
only five members have been elected but the by-laws specify seven as a full board,
the board being under the mistaken impression that three is a quorum; or some of
the members taking part in a meeting may have failed to qualify as directors. For
the first of these a by-law has been suggested to remedy the problem. But the best
solution for problems of this nature is to devote careful attention to the statutes and
corporate rules under which the corporation is operating.
It is likewise true that careful attention to the statutory framework can forestall
the possibility that interested directors may destroy the quorum. Recent statutory
provisions indicate a more liberal attitude regarding the presence of interested direc-
tors; nonetheless, great care must be taken that when a director has a conceivably
adverse interest he divulge it to his fellow directors, and a number of directors suf-
ficient to make a quorum without him be assembled. Here, especially, the statutes
of the state of incorporation should be consulted so that the board knows what action
is permissible. In this area knowledge means power-power for the board to act.

JAMES E. LYONS

Nicholson v. Kingery, 37 Wyo. 299, 261 Pac. 122 (1927) (case decided on procedural ground).
14 N.Y.S. 16 (Sup. Ct. 1891).
r' Id. at 18-19. (Proxy for shareholders acted as proxy for directors.)