CORPORATIONS-CHANGE IN THE BASIS OF SHARING PROFITS AS AN IMPAIRMENT OF THE OBLIGATION OF CONTRACTS

Plaintiff, a stockholder in defendant corporation, sought to enjoin distribution of dividends on a patronage basis. Defendant corporation was organized under the laws of Nebraska for the purpose of buying and selling grain, hay, and other agricultural products with a general reservation in the charter of the right to change, alter, and amend. The articles of incorporation were amended so as to convert the corporation into a co-operative organization distributing profits on the basis of the amount of business done with the corporation. Held, a general reservation of power to amend the articles did not confer on the corporation the right to make changes which would impair the contract rights of the members. This amendment constituted a fundamental change in the nature and purpose of the corporation and impaired the contractural right of the plaintiff to share in the profits. Hueftle v. Farmers Elevator, (Neb. 1944) 16 N.W. (2d) 855