Abercrombie v. Davies

Court of Chancery of Delaware, New Castle · 1957 · Corporations

131 A.2d 822 (1957)

Updated August 22, 2026

CorporationsVoting trustsEquityJurisdictionillegal voting trustvoid agreement8 Del.C. § 218in rem jurisdiction

Facts

The Supreme Court had already held a so-called Agents' Agreement void as an illegal voting trust. On remand, plaintiffs sought a judgment declaring the agreement void in its entirety and releasing the parties from all obligations, while appearing defendants argued the agreement should only be unenforceable until made to comply with 8 Del.C. § 218. After the Supreme Court's decision, defendants attempted to revive the agreement by filing a copy in the corporation's principal office and causing a notation on the corporation's books that stock subject to the agreement had been deposited in escrow. Some nonresident defendants had appeared and litigated the merits, while others had not appeared and, in some instances, had no property in Delaware.

Issue

Whether, after the Supreme Court declared the Agents' Agreement void as an illegal voting trust, the Court of Chancery should enter judgment declaring the agreement entirely void and enjoin its enforcement, or instead treat it as potentially curable through later compliance with the voting trust statute. The court also had to decide against which defendants it had jurisdiction to issue injunctive relief.

Rule

Where an agreement was not intended to be a statutory voting trust, a court may not preserve it as merely unenforceable pending later statutory compliance; if the higher court has held the agreement void, later efforts to force compliance with the voting trust statute cannot cure the defect. In an in rem proceeding, the Court of Chancery may issue injunctive relief against residents and nonresident defendants who voluntarily appeared and litigated the merits when such relief is reasonably necessary to implement the court's decision, but it may not enjoin nonappearing nonresidents absent personal jurisdiction.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In a dispute over shares of a Delaware corporation based in Tulsa, an appellate court has already held a shareholder control agreement "void as an illegal voting trust." The agreement was originally drafted to let a small group coordinate board control, and it never contemplated filing the agreement at the corporation's principal office or making statutory notations on the stock records. After the appellate decision, several signatories file the agreement and add the missing notation, arguing the arrangement is now enforceable.

How should the trial court rule on the signatories' argument?

Explanation. Where the agreement was not intended from the outset to be the type of statutory voting trust authorized by statute, later efforts to retrofit compliance do not validate it. Once the higher court has held the arrangement void, the lower court should implement that ruling rather than treat the agreement as merely unenforceable pending cure.