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Meiselman v. Meiselman
Citations: 307 S.E.2d 551; 309 N.C. 279; 1983 N.C. LEXIS 1394Docket: 594A82
Court: Supreme Court of North Carolina; September 27, 1983; North Carolina; State Supreme Court
Michael Meiselman, a minority shareholder in family-owned corporations, seeks relief under N.C.G.S. 55-125 (a)(4) and N.C.G.S. 55-125.1, which allow trial courts to order corporate dissolution or other remedies to protect shareholder rights. The case centers on whether the trial court correctly ruled that Ira Meiselman, Michael's brother and majority shareholder, did not breach fiduciary duties as an officer or director by owning stock in a management company associated with their family corporation. Key facts reveal that both brothers inherited their father's substantial wealth from various business ventures, notably in movie theaters and real estate. Initially, their father divided corporate stock equally between them, but in 1971, he transferred a significant majority of Eastern Federal's stock to Ira, leaving Michael with a minimal share. Subsequently, Michael placed his shares in a trust controlled by their father, which limited his ability to regain control without specific conditions. This situation effectively positioned Ira as the majority shareholder, diminishing Michael's status as a minority stakeholder in the family business. The Supreme Court of North Carolina will clarify the legal standards for evaluating claims under the cited statutes and the trial court's decision regarding fiduciary responsibilities. Ira holds a controlling interest in all family corporations, except for General Shopping Centers, Inc., where he and Michael share equal ownership. Michael claims to own 29.82% of the family businesses but asserts that, after accounting for intercorporate shares, his ownership would rise to approximately 43%. As of December 31, 1978, the total book value of the corporations was $11,168,778, with Michael’s shares valued at $3,330,303 based on his 29.82% stake. Both Michael and Ira have been employed by the family corporations, with Michael starting in 1956 and Ira in 1965. The details of Michael’s involvement from 1961 to 1973 are disputed, although both agree he worked for the family business from 1973 until his termination in September 1979, shortly after he filed a lawsuit against Ira regarding stock ownership in Republic Management Corporation. Ira's termination letter to Michael also revoked his insurance benefits and requested the return of corporate credit cards. Ira demanded payment for Michael’s debts to Eastern Federal, and it was stated that Michael’s firing effectively ended his participation in a profit-sharing trust. Ira admitted that his decision to terminate Michael was influenced by the ongoing lawsuit but characterized the termination as primarily a corporate decision related to the management contract between Eastern Federal and Republic. Republic, established in 1973, succeeded earlier family companies dating back to 1951, in which Michael had initial ownership stakes. Republic acted solely as a vehicle for allocating the administrative costs of operating multiple Meiselman business units, including over 30 theaters. Under a contract with Eastern Federal, Republic agreed to manage these operations for 5.5% of theater admissions and concession sales. While Michael received a salary from 1973 until his termination in 1979, he did not own any stock in Republic, which was solely owned by Ira. Republic experienced fluctuating profits, ultimately retaining over $65,000 in earnings, which Michael claims he is entitled to as a shareholder. Michael's derivative claim against Ira alleges a breach of fiduciary duty due to this ownership situation. Ira maintains that there was no animosity between him and Michael, attributing any discord to Michael's actions post their father's death aimed at redistributing family wealth. He asserts that Michael was never excluded from management, but rather chose to limit his involvement. In contrast, Michael disputes this characterization, stating that his role diminished following the management contract with Republic. He describes a lack of influence in corporate decisions, claiming he was not allowed access to important corporate information and that all significant transactions were conducted without his consent. Michael also notes a decline in his ability to contribute time and effort to the business, feeling systematically discouraged over the years. Ira’s testimony suggests that while Michael was never formally barred from corporate offices, his engagement in decision-making was not welcomed, as indicated by Ira’s remarks about Michael’s presence and notice for shareholder meetings. Ira's lawyer communicated to Michael's attorney regarding Michael's potential involvement on family enterprise boards, emphasizing a desire to maintain focus on business rather than personal grievances. Ira testified that Michael had not been excluded from corporate management, citing two instances where decisions were influenced by Michael's objections. One involved abandoning a proposed merger that Michael opposed, and the other pertained to Ira's sole ownership of Republic, which led to the termination of Michael's management contract with Eastern Federal due to Michael's objections. Ira characterized Michael as suffering from "crippling mental disorders," suggesting this influenced their father's decision to place Ira in control of the family businesses. Evidence supporting Ira's claims included historical familial disputes, such as a past argument with their father and a fallout over a football game invitation. The strained relationship between Michael and Ira is further illustrated by the timeline of their litigation, which began shortly after their father's death. Michael's amended complaint sought dissolution of the corporate entities under G.S. 55-125 (a) or alternative relief under G.S. 55-125.1, highlighting the need to protect his rights and interests. Ultimately, Michael is specifically requesting a fair buy-out of his interest in the corporations under N.C.G.S. 55-125.1 (a)(4), rather than seeking dissolution. Michael asserted a derivative claim against Ira, alleging a breach of fiduciary duty due to Ira's sole ownership of stock in Republic, and sought recovery of profits he claimed were wrongfully diverted to Republic Management Corporation. The trial court denied Michael's claims, prompting him to appeal to the Court of Appeals. The appellate court interpreted N.C.G.S. 55-125 (a)(4) to allow for liquidation when fairness necessitates it, concluding that a complaining shareholder need only demonstrate real harm rather than bad faith or mismanagement. The Court found substantial evidence indicating that Ira's actions had significantly harmed Michael and determined the trial court had misapplied the law and abused its discretion by not providing necessary relief under G.S. 55-125.1. Consequently, the Court reversed the trial court's judgment and remanded the case for a suitable remedy to protect Michael's interests. Additionally, the Court found that the trial court erred in ruling that Ira had not breached his fiduciary duty and remanded for a judgment against Ira for the profits accumulated in Republic. Judge Hill dissented on both issues. The defendants subsequently appealed to the higher court, emphasizing that the case involved close corporations, which differ fundamentally from publicly held corporations, often functioning similarly to incorporated partnerships. This distinction is significant, as close corporations necessitate a high degree of cooperation and mutual respect among participants. The excerpt outlines the dynamics and challenges faced by minority shareholders in close corporations, emphasizing the interdependence of personal relationships and investment interests within such entities. It highlights that these corporations often rely on substantial trust among participants, as indicated by Professor O'Neal's assertion that many close corporations are rooted in personal relationships that create "reasonable expectations" for minority shareholders, such as job security and management participation. When these relationships deteriorate, minority shareholders can find themselves marginalized by majority shareholders, who use their voting power to terminate employment or exclude them from decision-making. Critics argue that minority shareholders should have negotiated better protections; however, the reality in many cases is that these individuals lack the awareness or bargaining power to do so, often entering agreements without legal counsel. This situation is particularly prevalent when a minority shareholder is invited to invest in a closely held company predominantly owned by a single individual or a small group. Consequently, minority shareholders may unwittingly assume risks without adequate safeguards for their interests or understanding of the potential for oppression. Close corporations are frequently established by individuals who do not anticipate future disagreements, often involving friends or family. When a minority shareholder acquires shares through gift or inheritance, they lack the opportunity to negotiate protections regarding their expectations within the corporation. As noted by Professor O'Neal, American courts traditionally hesitate to intervene in corporate internal matters, leaving minority shareholders without remedies in cases of internal conflict. Unlike partners in a partnership, minority shareholders cannot dissolve the business unilaterally, nor can they liquidate their shares in a public market. This illiquidity exposes them to potential exploitation by majority shareholders. The majority's control in close corporations enables them to allocate benefits arbitrarily, disadvantaging minority shareholders whose investments are effectively locked within the business. The barriers to judicial relief for minority shareholders are primarily twofold: the principle of majority rule in corporate governance and the business judgment rule. Courts tend to uphold majority rule in corporate settings without thorough examination, which can lead to disappointing outcomes for minority shareholders who may have invested with the expectation of a meaningful role in decision-making. Failure of courts to remedy the grievances of minority shareholders in close corporations can effectively force continued association among parties against their will, undermining the traditional reluctance of equity courts to enforce undesirable relationships. In response to calls for reform, many states have enacted statutes allowing courts to grant relief to minority shareholders under broader circumstances, with at least seven states permitting corporate dissolution when directors' actions are deemed "oppressive." Examples include Illinois, Maryland, Michigan, New Jersey, New York, South Carolina, and Virginia. A New York trial court recently interpreted "oppressive" conduct under dissolution statutes, ruling that discharging a minority shareholder as an employee and officer constituted oppression, damaging the shareholder's reasonable expectations. Similarly, the Illinois Supreme Court upheld a dissolution decree where one shareholder's conduct denied others management participation, clarifying that "oppressive" behavior does not require fraud or mismanagement and is defined by the reasonable expectations of minority shareholders. The oppression provisions aim to provide relief in various contexts, including exclusion from management or deliberate harm by a parent corporation. Some states also allow dissolution when corporate control leads to unfair treatment of shareholders. In 1955, North Carolina enacted N.C.G.S. 55-125(a)(4), allowing superior court judges to liquidate a corporation's assets when necessary to protect the rights or interests of a complaining shareholder. This statute aligns with similar laws in California and New York. The drafting committee for the new Business Corporation Act drew heavily from the Model Act of the American Bar Association and the laws of California and Ohio. Professor Latty noted that courts should not treat liquidation of a close corporation with greater conservatism than partnership dissolution. A California Appellate Court case, Stumpf v. C.E. Stumpf. Sons, Inc., affirmed that liquidation was justified due to extreme hostility between shareholders, preventing one from participating in business operations. The rights of minority shareholders in close corporations stem from their expectations and the specific circumstances of the corporation's formation. Statutes permitting involuntary dissolution reflect a recognition that the perpetual nature of corporations is not suitable for closely held entities, though they apply to all corporations, not just close ones. The determination of whether liquidation is necessary will depend on the nature of the corporation. The primary issue in the case is whether the trial court misapplied the law by ruling that relief under the cited statutes was not reasonably necessary for the protection of Michael's rights or interests in the defendant corporations. Determining whether the trial court misapplied the law necessitates first identifying the applicable legal standards. The analysis established here outlines the criteria for a trial court to evaluate claims made by a minority shareholder seeking relief under N.C.G.S. 55-125(a)(4). The key issue is the standard for assessing a minority shareholder's entitlement to dissolution or other relief, which requires a consideration of all circumstances surrounding the parties involved. The shareholder seeking relief bears the burden of proving that their rights or interests are being violated. Once established, the trial court must exercise equitable discretion, weighing the benefits and detriments to all shareholders when deciding on dissolution or other remedies. Michael, the complaining shareholder, filed his action under N.C.G.S. 55-125(a), which specifies four conditions under which a Superior Court can liquidate a corporation upon a shareholder’s request. These conditions include: (1) deadlock among directors preventing business operations; (2) voting deadlock among shareholders; (3) pre-existing agreements providing for liquidation; or (4) the necessity of liquidation to protect the complaining shareholder's rights or interests. Michael asserts his claim falls under subsection (4), arguing that liquidation is necessary for his protection. The determination of whether liquidation is "reasonably necessary" requires a clear articulation of the complaining shareholder’s specific rights or interests, as the statute focuses on the individual shareholder rather than the collective interests of all shareholders. In close corporations, a shareholder's rights or interests encompass their reasonable expectations regarding the corporation. "Reasonable expectations" of participants in a corporate relationship must be assessed through the comprehensive history of their interactions, encompassing initial expectations, their evolution over time, and those that arise during ongoing dealings. The interests and perspectives of all participants are critical in determining what constitutes "reasonable expectations." For a plaintiff's expectations to be deemed reasonable, they must be known to or assumed by other shareholders and mutually agreed upon; private expectations not disclosed to others are not considered reasonable. Expectations must be articulated through shared understandings, either express or implied, and only substantial expectations warrant recognition by the court, requiring case-by-case analysis. This approach protects potential defendants. The "rights or interests" of each shareholder may differ, necessitating a detailed examination of the entire relationship history, including both initial and evolving expectations. Relief for minority shareholders is justified when controlling shareholders or managers act contrary to the minority's reasonable expectations, even if their actions align with the corporation's formal powers. In close corporations, charters and bylaws often do not fully encompass the business agreement among participants. Following the articulation of a complaining shareholder's rights, the court must determine whether liquidation is "reasonably necessary" for their protection. While N.C.G.S. 55-125(a)(4) suggests that liquidation is the sole remedy when necessary, this statute should not be interpreted in isolation; N.C.G.S. 55-125.1 allows for alternative remedies in such cases. N.C.G.S. 55-125.1 outlines the powers of a court in shareholder dissolution actions under G.S. 55-125(a). The court can grant various forms of relief aside from dissolution, including: (1) altering the corporation's charter or bylaws; (2) modifying or enjoining corporate resolutions or actions; (3) directing or prohibiting actions by shareholders, directors, or officers; and (4) facilitating the purchase of a shareholder's shares at fair value, as determined by court procedures. The statute emphasizes that relief may be granted when dissolution is not necessary, allowing the court to consider whether liquidation is essential or if alternative relief would be more suitable. When interpreting N.C.G.S. 55-125(a)(4) alongside 55-125.1(b), it is established that a court must assess the "rights or interests" of the complaining shareholder and whether some form of relief is necessary for their protection. The existence of N.C.G.S. 55-125.1(b) confirms that courts can provide alternative relief without necessitating liquidation. For a plaintiff to secure relief based on expectations, they must demonstrate: (1) substantial reasonable expectations recognized by other parties; (2) frustration of those expectations; (3) that the frustration was largely beyond their control; and (4) entitlement to equitable relief under the case's circumstances. Michael, the plaintiff, claims his rights as a shareholder in family corporations include secure employment, benefits from corporate affiliation, and significant participation in management. These claims align with the notion that "reasonable expectations" of shareholders in closely held corporations often encompass similar rights. Michael's rights as a minority shareholder in closely held family corporations, valued at over $11 million, are broader than the defendants assert. After being terminated from his job and excluded from management decisions, Michael argues for protection of his interests, which extend beyond traditional shareholder rights (such as notice of meetings, voting rights, access to corporate records, and dividends). Defendants claim Michael is only entitled to relief if these traditional rights are violated, asserting that his dividend distributions have been generous. However, the court emphasizes that the definition of "rights or interests" under N.C.G.S. 55-125(a)(4) should consider the specific circumstances and reasonable expectations of the shareholder's relationship with the corporation, rather than being limited to traditional rights. The trial court's findings include: 1. The corporate management philosophy has been consistently conservative. 2. There is a lack of evidence showing that corporate financial policies have resulted in inequities toward Michael. The court must evaluate whether these findings adequately define Michael’s rights and whether relief is necessary to protect those rights. Increases in salaries for corporate officers, including Ira S. Meiselman, and corporate reserves (e.g., depreciation and capital improvements) have been documented. Changes in dividend policy and retention of earnings have been noted as potentially harmful to minority stockholder Michael H. Meiselman. Asset purchases aimed at long-term appreciation for second-generation heirs were also mentioned. However, there is no evidence of bad faith or excessive growth requiring detrimental capital outlays for either majority or minority stockholders. H.B. Meiselman maintained a policy of avoiding long-term debt for financing growth projects. From 1968 to 1978, minority shareholder equity increased by $2,500,000, with further growth in 1979. Personal conflicts between majority and minority stockholders did not appear to influence corporate policy; rather, objections from Michael H. Meiselman prompted significant corporate decisions such as abandoning a merger and terminating a management agreement. There is no evidence of oppression or unfair advantage taken by the majority stockholder, Ira S. Meiselman. The court noted that in the absence of gross abuse by the majority, enforcing a sale would be challenging due to the distinction between book and market value and the lack of marketability of shares in closely held corporations. There is no evidence of management deadlock or of any other individual stockholder's financial capability to purchase Michael Meiselman's shares. The trial court concluded that there was no evidence of wrongdoing or unfair conduct by Ira S. Meiselman, emphasizing the absence of gross abuse or bad faith affecting stockholders. The trial court incorrectly applied legal standards in assessing Michael's entitlement to relief under N.C.G.S. 55-125 (a)(4), focusing on "rights or interests" of the shareholder rather than the standards of "oppression" and "unfair advantage." The court's findings did not address Michael's specific rights or interests in the family corporations, necessitating a remand for an evidentiary hearing. On remand, the trial court must clarify Michael's rights, reasonable expectations, and determine if these require protection, alongside prescribing appropriate relief if warranted. Michael also claims that Ira breached his fiduciary duty as a director and officer by owning stock in Republic, which had a management contract with Eastern Federal. While the trial court correctly found the contract reasonable, Michael's objection centers on Ira's ownership, claiming it usurped a corporate opportunity belonging to the corporate defendants. To succeed in his claim, Michael must establish standing as a shareholder and demonstrate Ira's breach of fiduciary duty by usurping this opportunity. The corporate opportunity doctrine, referenced in Brite v. Penny, prohibits corporate officers from appropriating business for personal gain that rightfully belongs to the corporation. This doctrine has not been revisited by the Court since 1911. The rules governing the doctrine of corporate opportunity emphasize the fiduciary duty of corporate officers and directors to act with loyalty and good faith toward the corporation. This doctrine prohibits fiduciaries from appropriating business opportunities intended for the corporation for personal gain. The Supreme Court of Delaware, in Guth v. Loft, Inc., established that corporate officers and directors must not exploit their positions for private interests, asserting that they hold a fiduciary relationship with both the corporation and its shareholders. The doctrine requires that fiduciaries maintain undivided loyalty, avoiding any conflicts between their duties and personal interests. It recognizes three categories of business opportunities that fiduciaries may encounter: those unrelated to the corporation's business, those directly aligned with it, and those that complement it. To assess whether an opportunity belongs to the corporation, courts apply three tests: (1) whether the corporation had an "interest or expectancy" in the opportunity, (2) whether the opportunity falls within the corporation's "line of business," and (3) whether fairness considerations suggest the opportunity rightfully belongs to the corporation. North Carolina General Statute N.C.G.S. 55-30(b)(3) establishes that a corporate transaction involving a director with an adverse interest is not void or voidable if the director proves that the transaction was "just and reasonable" to the corporation at the time it was approved. The standard for determining what is "just and reasonable" is based on what would be paid for similar services under competitive, arm's-length conditions. In support of his argument against Ira's ownership in Republic, Michael references the precedent set in Highland Cotton Mills v. Ragan Knitting Co., which holds that transactions between a corporation and its directors are presumed invalid unless proven otherwise. The court concludes that the standards in Highland Cotton Mills and N.C.G.S. 55-30(b)(3) are equivalent, requiring the adversely interested party to demonstrate the transaction's fairness. When an officer or director is accused of usurping a corporate opportunity, they must prove that the transaction was just and reasonable to the corporation, indicating it was not an opportunity the corporation would have pursued. Determining what constitutes "just and reasonable" is case-specific, with no definitive rule. Relevant factors for courts include: the corporation's ability to seize the opportunity, prior negotiations by the corporation, awareness of the opportunity by the director or officer due to their fiduciary role, disclosure of the opportunity to the corporation, any rejection of the opportunity by the corporation, and whether corporate resources were utilized in acquiring the opportunity. The Delaware Supreme Court in Guth outlines these considerations for assessing potential usurpation of corporate opportunities. A corporate officer or director cannot seize a business opportunity for personal gain if it is within the corporation's capacity to undertake, aligns with its business interests, and creates a conflict of interest. The law requires examination of whether the opportunity is related to the corporation's business and whether the corporation has an interest or expectancy in it. A trial court must consider both aspects, reviewing all relevant facts, including recurring circumstances, to determine if a corporate opportunity has been usurped, impacting the fairness of related corporate transactions. In this case, the trial court found no actionable breach of fiduciary duty by the defendants, concluding with seven key findings: 1. H.B. Meiselman named Republic Management Corporation. 2. H.B. Meiselman had operated a management corporation prior to Republic's chartering. 3. There was no evidence of bad faith from Ira S. Meiselman regarding the management company, despite his role as CEO and President. 4. Republic Management Corporation had retained earnings of approximately $61,000 over five years, peaking in 1974 and incurring a loss in 1975. 5. Most retained earnings were accumulated during 1973 and 1974, with subsequent losses of about $10,000 for which no reimbursement was sought. 6. The plaintiff received a salary from Republic Management Corporation without holding equity or providing compensable work. 7. The management contract between Republic Management Corporation and Eastern Federal Corporation was deemed just and reasonable at its execution. These findings do not directly address whether Ira usurped a corporate opportunity. The Court of Appeals noted the relevance of Republic being a successor to previous management companies. In Meiselman v. Meiselman, the court evaluated whether Ira Meiselman usurped a corporate opportunity by purchasing all stock in Republic Corporation. The identity of the shareholders in the successor corporations is significant in this determination. The Court of Appeals affirmed that the trial court’s conclusion of no breach of fiduciary duty was partially based on the legality of a management contract between Republic Management Corporation and Eastern Federal Corporation, which was deemed reasonable at the time. However, the fairness of the contract itself was not the central issue. The critical transaction under scrutiny was Ira's acquisition of Republic's stock, which could conflict with his role as an officer and director of Eastern Federal and other corporate defendants. The trial court did not adequately address whether the opportunity to purchase Republic's stock belonged to the corporate defendants rather than Ira personally. Consequently, the case is remanded for further findings on whether Ira's actions constituted usurpation of a business opportunity that rightfully belonged to the corporate defendants. The trial court's earlier denial of the plaintiff's claims under N.C.G.S. 55-125 (a)(4) and 55-125.1 is vacated, while the Court of Appeals' decision regarding Ira's breach of fiduciary duty is affirmed, with modifications to align with the articulated analysis. The case is remanded to the Superior Court for further proceedings consistent with this opinion. Justice Martin concurs with the result but emphasizes the need to consider the actions of all parties involved, including the plaintiff. The plaintiff, holding a 20% interest in a restaurant corporation, aimed to learn the business and engage in management but was terminated due to conflicts with employees and shareholders, which the court deemed "unsatisfactory performance." In evaluating the plaintiff's claim for relief, the court assessed the actions of the controlling shareholders and concluded that the opportunity for the plaintiff was lost due to factors beyond the defendants' control. The court emphasized the need to balance the plaintiff’s claims against the potential disruptive effects on the business, applying the principles established in Exadaktilos and Dowd v. Foundry Co. under North Carolina law. According to N.C.G.S. 55-125.1(b), relief may be granted when circumstances warrant it, necessitating a comprehensive evaluation of the case's facts. The court highlighted that equity cannot be used by a shareholder seeking relief simply to escape an unfavorable situation. The plaintiff bears the burden of proving equitable grounds for relief, and the court must also consider whether the minority shareholder has exhausted other statutory remedies to protect their rights before seeking liquidation. The majority shareholders and the corporation should not face dissolution if alternative statutory remedies exist. Examples of such remedies include the right to seek board representation and compel dividend payments. Ultimately, the trial court must weigh all circumstances, particularly if the need for protection arises from the plaintiff's own actions, in deciding whether to grant equitable relief. He who seeks equity must do equity, as established in Transit, Inc. v. Casualty Co. and Roberson v. Pruden. In resolving shareholder disputes, the court must consider the necessity of protecting the complaining shareholder's interests while also assessing the impact of any relief on the corporation and its other shareholders. Key factors include the potential interference with the corporation's ability to secure financing and attract additional capital, the financial burden imposed on the corporation or shareholders, and the rights of creditors. A forced buy-out of a plaintiff's shares may not be straightforward and could be unduly burdensome, influencing the trial court's decisions regarding relief and the valuation or payment method for the plaintiff's shares. The court also evaluates whether the plaintiff's grievances stem from oppression or misconduct by other shareholders, with oppression defined as unfair, harsh behavior detrimental to minority shareholders' interests. This concept aligns closely with breaches of fiduciary duty, as highlighted in West Virginia case law, which links oppressive conduct to the good faith and fair dealing owed by majority to minority shareholders. Whether or not the majority acted oppressively cannot solely be determined by unmet expectations, particularly when considering that the plaintiff’s shares were gifted rather than purchased, which may affect the assumed risks of investment. To succeed in a claim against Ira as an Eastern director and officer, the plaintiff must establish standing and prove a breach of fiduciary duty involving the usurpation of a corporate opportunity, requiring evidence that the opportunity was essential to or of interest to the corporation. The excerpt outlines the legal standards and considerations regarding corporate opportunities and equitable relief in North Carolina. It establishes that a corporation must demonstrate its financial capability to pursue an opportunity, and that the individual accused of usurping this opportunity acted in an official capacity. If these conditions are met, the burden shifts to the defendant to show the transaction's fairness, free from oppression or fraud, supported by precedents such as Thompson v. Shepherd and Schreiber v. Bryan. The trial judge must evaluate the reasonable expectations of the plaintiff based on the circumstances of the case, as mandated by N.C.G.S. § 55-125.1(b), which governs discretionary powers and equitable relief. The document also references the historical development of corporate law in North Carolina, particularly regarding close corporations, noting the challenges in defining such entities and the integration of their needs within a unified legislative framework. Additionally, the excerpt mentions the financial history of an individual named Michael, highlighting his dividend receipts over several years and a procedural argument by the defendants concerning Michael's adherence to appellate rules. It concludes with a reference to the presumption of invalidity in transactions between a corporation and its directors, citing legal commentary on the need for clarity in this area of corporate law.