Download Trial court granted plaintiff, Emma Galler specific performance of a

Galler v. Galler [32 Ill. 2d 16]
Name and Citation
Galler v. Galler [32 Ill. 2d 16]
Court
Supreme Court of Illinois
Judicial History
Trial court granted plaintiff, Emma Galler specific performance of a shareholder agreement.
Appellate Court for the First District reversed the trial court’s order. Plaintiff now challenges
Appellate court’s order, and wants the shareholder agreement upheld.
Facts
 Two brothers, Benjamin and Isadore Galler each owned half of the outstanding shares of
stock in a corporation.

The two brothers entered into a shareholders' agreement in 1955 that would assure their
families, upon the death of either brother, equal control of the corporation.

Before Benjamin’s death, Benjamin a power of attorney which enabled Emma to vote
Benjamin's 104 shares in the corporation.

Defendants, Isadore Galler and his son Aaron attempted to destroy copies of the
shareholder agreement, and refused to honor the agreement upon the death of Benjamin.

The trial court granted specific performance of the shareholder agreement to Emma
Galler.

The intermediate appellate court found that the shareholder agreement was
unenforceable.

The Appellate Court found that public policy demanded that the agreement be voided
because the agreement was too vague and did not comply with the Corporation Act.

On further appeal, it was held that public policy is inapplicable with a close corporation,
where it is completely owned by the two shareholders making the agreement.
Issues
Where enforcement of a shareholder agreement harms no one, and the corporation is closely
held, does public policy require that the agreement be voided?
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Holdings
No. Where enforcement of an agreement granting management powers to a non-board member
harms no one, and the corporation is closely held, public policy is inapplicable.
Reasoning
Enforcement of this agreement does not damage any other shareholders, nor does enforcement
damage the public. Therefore, to hold that the agreement is illegal, simply because statutes
provide that the business of a corporation must be managed by its board members, is pointless.
Since, at the time of the agreement, Isadore and Benjamin were the complete owners of the
corporation, there is no reason why they should not enter into a valid agreement with regard to
the business of the corporation, provided their agreement does not adversely affect the interests
of the creditors.
Decision
The cause reversed and remanded to the Circuit Court of Cook County.
Opinion by:
Justice UNDERWOOD
Concurring Opinions
None.
Dissenting Opinions
None.
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