ÿWPC‹ 5# öUN %O 0(Uw@}4½Ñ 0DàUH$blt 0J| 0TÆ 0^ 0hx 0rà 0|R 0†Î 0T 1uä 0dY AQ½ Æ 0DÔ 0@ 0DX D/œ BË Bè D3 U>8 Vv U 6Ì U* B), DCU AM˜ U*å +v~:vÓ¸˜HP LaserJet 4SiHPPCL5MS,ü,,,,,ü0nLhÎ(ÖÃ9 Z ‹6Times New Roman RegularX($¡¡ 6 7 {8 9 D: U; D< D= > Ó€H ê‚_#3|xJ (3¯$©©Ý ƒ!ÝÝ  Ý<à09Z 0Courier (W1) Regular- ù-2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ!"#$&Cþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5(3¯$¢¢Ý ƒ!ÝÝ  Ý("ÿÿ$££Ò  ÒÒ  Ò($$””ò òÚ  Ú1Ú  Úó ó(('÷ÿ dxd düÿP Pd'''''ÿÿdxd< Œ 9p`(&Times New Roman LÝ ƒ!ÝÔ€*ÔÝ  ÝÝ ƒ )ÝÝ  ÝÌÌÌ< Œ 9p`(Courier New< Œ 9p`(Times% Line 7 d....7Border 1dd!#/Cþÿ << Gÿÿ< Œ 9p`(Arial !Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€*ÔÝ  ÝÝ ƒ""ÝÝ  ÝÔ€1ÔÔ€1ÔÓ  Óò òÔ YYY ÔFILEDÔ€1XÔÌÌDecember€22,€1997ÌÌCecil€W.€CrowsonÌAppellate€Court€ClerkÔ  Ôó óPtPtHHÚ(ÿáÿâùFG(üHHØ(d'`Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  ion-F Geneva ÒÒ  ion-F Geneva ÒÝ ƒ!ÝÔ . ÔÔ€*ÔÝ  ÝÖ€+ÖÑ\R AØ'\ÑÔ€,ԛр ÑÑ7€ °N XXdÈdÈ7ÑØ ØÓ&€--XÐd&ÓÑ  ÑœÞ ÞÌà àà àà àà àà àà àà àà àà àDecember€22,€1997Ì›à àà àà àà àà àà àà àà àà àòòFOR€PUBLICATIONóóÌÌÌà@ àIN€THE€SUPREME€COURT€OF€TENNESSEEÌÌÙ€!ÙœßR€02/A1-j|ïý-` ç `€€@ÿRß›à@ àAT€œNASHVILLE›ÌÌÌÌWILLIAM€A.€HALL€AND€BEEFà àà àà à(ÌTRANSPORT,€INC.,à àà àà àà à(Ìà àà àà àà àà àà àà à(Ìà àœÔ€,&ÔPlaintiffs„Appellees„Appellants,Ô€,XÔ€(›Ìà àà àà àà àà àà àà à(Ìv.à àà àà àà àà àà àà à(Ìà àà àà àà àà àà àà à(ÌTENNESSEE€DRESSED€BEEF€CO.€ANDà à(ÌRICHARD€N.€HALL,à àà àà àà à(Ìà àà àà àà àà àà àà à(€€Davidson€ChanceryÌà àœÔ€,&ÔDefendants„Appellants„Appellees,Ô€,XÔ€(›Ìà àà àà àà àà àà àà à(€€Hon.€Robert€S.€Brandt,Ìandà àà àà àà àà àà àà à(€€ChancellorÌà àà àà àà àà àà àà à(ÌÒ ° ÒÒ , ÒWILLIAM€A.€HALL,€DERIVATIVELYà àà à(€€S.€Ct.€No.€01S01„9611„CH„00236ÌON€BEHALF€OF€TENNESSEE€DRESSEDà à(ÌBEEF€CO.,à àà àà àà àà àà à(Ìà àà àà àà àà àà àà à(Ìà àœÔ€,&ÔPlaintiff„Appellee,Ô€,XÔ›à àà àà à(Ìà àà àà àà àà àà àà à(Ìv.à àà àà àà àà àà àà à(Ìà àà àà àà àà àà àà à(ÌRICHARD€N.€HALL,à àà àà àà à(Ìà àà àà àà àà àà àà à(Ìà àœÔ€,&ÔDefendant„Appellant.Ô€,XÔ›à àà àà à(ÌÓӜ̛ÌÓÓòòÔ€,&Ôœ›For€œPlaintiffs„Appellees„Appellantsóó:›à àœ€€€òòFor›€œDefendants„Appellants„Appelleesóó:›ÌÌÔ€,XÔJeffrey€A.€Greeneà àà àà àà àœ€€€John›€S.€HicksÌAlvin€L.€Harrisà àà àà àà àœ€€€Darwin›€A.€Hindman,€IIIÌGreene€&€Greeneà àà àà àà àœ€€€Brigid›€T.€MillerÌNashvilleà àà àà àà àà àà àœ€€€Baker,›€Donelson,€BearmanÌà àà àà àà àà àà àà àà à€€&€CaldwellÌà àà àà àà àà àà àà àœ€€€Nashville›ÌÌÌÌà@ àòòò òO€P€I€N€I€O€Nóóó óÌÌœJUDGMENT›€OF€TRIAL€COURT€REVERSED;ÌJUDGMENT€OF€COURT€OF€APPEALS€REVERSED€ÌIN€PART€AND€AFFIRMED€IN€PART.à àà àà àà àà àà àREID,€J.ÌÒ ° ÒÒ À ÒÓ` Ü` ˜XÓÓÓà àThis€case€presents€appeals€by€all€parties€from€theÏdecision€of€the€Court€of€Appeals€affirming€in€part€and€reversing€inÏpart€the€order€of€the€trial€court€granting€summary€judgment€in€favorÏof€the€defendants€on€all€issues.€€The€decisions€granting€summaryÏjudgment€are€reversed€and€the€case€is€remanded.ÌÑ  ÑÌÓ  Óò òIó óÌÌÓ  Óà àWilliam€A.€Hall,€individually€and€derivatively€on€behalfÏof€Tennessee€Dressed€Beef€Co.,€and€Beef€Transport,€œInc.›€brought€suitÏagainst€Hallððs€brother,€Richard€N.€Hall,€and€Tennessee€Dressed€BeefÏœCo.›€alleging€numerous€causes€of€action€based€on€transactions€wherebyÏRichard€N.€Hall€gained€control€of€Tennessee€Dressed€Beef€Co.€andÏsubsequent€actions€taken€by€that€corporation.€€ÌÌà àFor€purposes€of€summary€œjudgment›€the€facts€are€notÏdisputed.€€œPlaintiff›€William€A.€œHall›€and€defendant€Richard€N.€HallÏeach€were€issued€one„third€of€the€shares€of€stock€in€the€defendantÏTennessee€Dressed€Beef€Co.€when€it€was€incorporated€in€1962.€€TheÍremaining€one„third€shares€were€divided€equally€between€œLouis›€andÏPatrick€œMcRedmond.€€Tennessee€Dressed€Beef€Co.€is€engaged€in€theÏbusiness€of€brokering,€slaughtering,€and€processing€cattle.›€€InÏ1965,€another€corporation,€Beef€Transport,€Inc.,€was€incorporatedÏwith€William€œA.€and›€Richard€œN.€Hall›€as€its€sole€and€equalÏshareholders.€€Beef€Transport,€Inc.€œprovides›€transportation€servicesÏto€Tennessee€Dressed€Beef€Co.,€as€well€as€to€other€customers.€€FromÏ1962€until€1992,€when€the€McRedmonds€sold€their€interests€inÏTennessee€Dressed€Beef€Co.,€the€Halls€used€their€majority€votingÏpower€to€control€the€business€of€the€corporation.€€The€McRedmondsÏfrequently€disagreed€with€the€Halls€and€even€brought€an€unsuccessfulÏsuit€alleging€that€the€Halls€received€secret€profits€through€theÏformation€of€Beef€Transport,€Inc.€€òòTennessee€Dressed€Beef€Co.€v.ÏHallóó,€519€S.W.2d€805€(Tenn.€Ct.€App.€1974),€òòcert.€deniedóó,€(Tenn.Ï1975).ÌÌà àIn€the€late€1960s€or€early€1970s,€William€œA.€and›€RichardÏN.€Hall€began€to€disagree€about€management€issues€and€corporateÏpolicy.€€Although€they€continued€to€align€themselves€against€theÏMcRedmonds,€the€relationship€between€the€Halls€œdeteriorated,€and,€inÏ1988›€William€A.€Hall€ceased€to€be€active€in€the€daily€operations€ofÏTennessee€Dressed€Beef€Co.€€He€continued€as€president€of€BeefÏTransport,€Inc.€€In€the€early€1990s,€each€of€the€Halls€undertook€toÍbuy€the€other's€stock€in€Tennessee€Dressed€Beef€Co.€€When€theirÏattempts€to€reach€an€agreement€were€unsuccessful,€they€eachÏapproached€the€McRedmonds.€€A€deal€was€struck€between€Richard€N.ÏHall€and€the€œMcRedmonds›€whereby€Richard€N.€Hall€œwould€acquire›Ïcontrol€of€a€majority€of€the€shares€of€stock€of€Tennessee€DressedÏBeef€Co.€€That€transaction€and€subsequent€actions€taken€by€RichardÏN.€Hall€and€Tennessee€Dressed€Beef€Co.€are€the€basis€for€this€case.€€€€Ìà àAt€that€time,€the€bylaws€of€Tennessee€Dressed€Beef€Co.Ïcontained€the€following€provision:ÌÌÓÓà8 àNo€stock€shall€be€sold€by€any€stockholder€unlessÏhe€has€given€the€corporation€twenty€days€noticeÏof€his€intentions€to€sell,€during€which€time€theÏother€stockholders€of€record€shall€have€theÏprivilege€of€purchasing€same€at€the€lowest€priceÏat€which€said€stockholder€offers€to€sell,€butÏthis€restriction€shall€not€apply€to€sales€by€andÏbetween€the€four€original€stockholders,€or€theirÏheirs€or€the€personal€representatives€of€theirÏestates.ÌÌÌÌÓÓà àOn€October€26,€1992,€Richard€N.€Hall,€on€behalf€of€himselfÏand€as€president€of€Tennessee€Dressed€Beef€Co.,€executed€a€StockÏPurchase€and€Redemption€Agreement€with€the€McRedmonds.€€TheÏagreement€provided€that€Richard€N.€Hall€would€purchase€100€shares€ofÏthe€McRedmonds'€stock€at€$187.39€per€share€for€a€total€cost€ofÏ$18,739.15€and€Tennessee€Dressed€Beef€Co.€would€redeem€the€remainingÏ7,400€shares€of€the€McRedmonds'€stock€at€the€same€price€per€œshare,›Ífor€a€total€cost€of€$1,386,724.€€The€agreement€provided€thatÏTennessee€Dressed€Beef€Co.€would€pay€the€McRedmonds€$280,000€in€cashÏat€closing€and€the€balance€of€$1,106,724€over€seven€years€at€8.75Ïpercent€interest.€€In€addition,€a€company€owned€by€the€œMcRedmonds,›ÏNashville€Recycling,€which€had€an€overdue€account€with€TennesseeÏDressed€Beef€Co.€of€approximately€$500,000,€would€repay€the€debtÏover€five€years€at€6.25€percent€interest.€€Pursuant€to€theÏœagreement,›€the€McRedmonds€designated€Richard€N.€Hall€as€theirÏproxies€to€vote€their€shares€at€subsequent€meetings€of€theÏshareholders€of€Tennessee€Dressed€Beef€Co.ÌÌà àThe€following€day,€Richard€N.€Hall€gave€notice€of€aÏspecial€meeting€of€Tennessee€Dressed€Beef€Co.ððs€shareholders€forÏNovember€9,€1992,€for€the€purpose€of€amending€the€bylaws.€€TheÏproposed€amendment€would€repeal€the€above„quoted€stock€transferÏrestriction,€which€granted€shareholders€the€right€of€first€refusalÏbefore€shares€could€be€sold€to€someone€other€than€the€original€fourÏshareholders.€€At€the€shareholders€meeting,€Richard€N.€Hall€votedÏhis€shares€and€those€owned€by€the€McRedmonds€for€the€amendment,Ïwhich€was€adopted.€€William€A.€Hall€voted€his€shares€against€theÏproposal.€€At€a€subsequent€shareholders€meeting,€Richard€N.€HallÏused€his€majority€vote€to€add€three€new€members€to€the€board€ofÏdirectors.€€At€the€board€of€directors€meeting€that€immediatelyÍfollowed,€Richard€N.€Hall€disclosed,€for€the€first€time,€theÏagreement€between€himself,€the€corporation,€and€the€McRedmonds.€€TheÏnewly€elected€board€ratified€the€agreement.€€As€a€result,€Richard€N.ÏHall€became€the€owner€of€50.3€percent€of€the€outstanding€shares€ofÏTennessee€Dressed€Beef€Co.,€with€William€A.€Hall€owning€theÏremaining€49.7€percent.ÌÌà àSubsequently,€Richard€N.€Hall€terminated€William€A.€HallððsÏemployment€with€Tennessee€Dressed€Beef€Co.€and€thereby€eliminatedÏWilliam€A.€Hallððs€annual€income€from€the€corporation€of€$150,000;Ïthe€corporation€increased€Richard€N.€Hallððs€annual€income€by€theÏsame€amount;€and€Tennessee€Dressed€Beef€Co.€unilaterally€modifiedÏthe€contract€between€it€and€Beef€Transport,€Inc.€to€substantiallyÏeliminate€Beef€Transport,€Inc.ððs€profits€and€increase€TennesseeÏDressed€Beef€Co.ððs€profit,€causing€an€additional€annual€loss€ofÏincome€to€William€A.€Hall€of€œapproximately€$250,000.›ÌÌà@ àò òIIó óÌÌà@ àAÌÌà àThe€complaint€alleges€several€causes€of€action€in€contractÏand€tort€and€œseeks,€in€addition€to€money€damages,€removal€of€RichardÍN.€Hall€as€a€director€of€Tennessee€Dressed€Beef€Co.€and€BeefÏTransport,€Inc.€and€judicial€dissolution€of€both€corporations.›ÌÌà àThe€record€presents€three€determinative€and€interrelatedÏissues.€€The€first€is€whether€the€corporation€was€obligated€by€theÏprovision€in€its€bylaws€to€give€notice€to€all€its€shareholders€ofÏthe€McRedmondsðð€offer€to€sell€their€shares€of€stock;€the€second€isÏwhether€William€A.€Hall€can€bring€a€derivative€action€on€behalf€ofÏTennessee€Dressed€Beef€Co.€against€Richard€N.€Hall;€and€the€third€isÏwhether€William€A.€Hall€has€a€cause€of€action€against€Richard€N.ÏHall€for€breach€of€a€fiduciary€duty.€€All€three€issues€will€beÏanswered€in€the€affirmative.ÌÌà@ àBÌÌà àWilliam€A.€Hall€claims€that€Tennessee€Dressed€Beef€Co.Ïbreached€the€first€refusal€provision€of€the€corporationððs€bylaws€byÏnot€notifying€him€that€the€McRedmonds€had€offered€to€sell€theirÏstock€to€a€non„shareholder,€the€corporation€itself.€€This€Court€hasÏnot€previously€addressed€the€issue,€but€the€weight€of€authority€fromÏother€jurisdictions€holds€that€properly€adopted€bylaws€constitute€aÏbinding€contract€between€the€corporation€and€its€shareholders.€€òòSee,Ïe.g.óó,€òòElisian€Guild,€Inc.€v.€U.S.óó,€412€F.2d€121,€124€(1st€Cir.Í1969);€òòGross€v.€Texas€Plastics,€Inc.óó,€344€F.€Supp.€564,€566€(D.€N.J.Ï1972);€òòSchraft€v.€Leisóó,€686€P.2d€865,€872€(Kan.€1984);€òòMass.ÏCharitable€Mechanic€œAssððn›€v.€Beedeóó,€70€N.E.2d€825,€829€(Mass.€1947);ÏòòAppeal€of€Two€Crow€œRanch,€Inc.óó,›€œ494›€P.2d€915,€919€(Mont.€1972);ÏòòGolden€v.€Oahe€Enterprises,€Inc.óó,€240€N.W.2d€102,€108€œ(S.D.›€œ1976).€ÏTo€suggest€that€a€corporation€has€no€legal€duty€to€follow€its€ownÏbylaws€"would€be€to€reduce€the€bylaws€to€meaningless€mouthing€ofÏwords."€€òòLewisburg€Community€Hosp.,€Inc.€v.€Alfredsonóó,€805€S.W.2dÏ756,€759€(Tenn.€1991)€(citation€omitted).ÌÌà àIn€this€case,€Tennessee€Dressed€Beef€Co.€had€notice€of€theÏproposed€sale€of€stock.€€In€order€to€give€effect€to€the€right€ofÏfirst€refusal,€the€bylaw€provision€must€be€read€to€obligateÏTennessee€Dressed€Beef€Co.€to€notify€the€other€shareholders€of€theÏproposed€sale.€€Otherwise,€the€other€shareholders€would€be€unawareÏof€the€opportunity€to€buy€the€stock,€which€would€render€the€right€ofÏfirst€refusal€meaningless,€a€result€contrary€to€the€clear€purpose€ofÏthe€bylaw€provision.€€òòSeeóó€òòSmithart€v.€John€Hancock€Mut.€Life€Ins.ÏCo.óó,€71€S.W.2d€1059,€1063„64€(Tenn.€1934).ÌÌà àThe€defendants€contend€that€William€A.€Hall€had€no€rightÏof€first€refusal€to€purchase€the€McRedmonds'€stock€because€the€bylawÏprovision€was€amended€before€the€transaction€was€closed.€€RegardlessÍof€the€validity€of€the€action€to€repeal€the€bylaw€provision,€as€ofÏOctober€26,€1992€when€the€Stock€Purchase€and€Redemption€AgreementÏwas€executed,€the€bylaw€provision€was€in€effect.€€At€that€time,ÏTennessee€Dressed€Beef€Co.€had€a€duty€to€notify€William€A.€Hall€ofÏthe€intention€of€the€McRedmonds€to€sell€their€stock.€€This€CourtÏholds€that€William€A.€Hall€may€proceed€with€his€claims€againstÏTennessee€Dressed€Beef€Co.€and€Richard€N.€Hall€based€on€the€allegedÏbreach€of€the€bylaw€provision.Ì€€€ÌÓ  ÓCÌÌÓ  Óà à€€€The€second€issue€is€whether€William€A.€Hall€hasÏstanding€to€bring€a€derivative€action€on€behalf€of€Tennessee€DressedÏBeef€Co.€against€Richard€N.€Hall,€despite€the€fact€that€William€A.ÏHall€is€the€only€affected€shareholder€and€has€brought€an€independentÏaction€against€Tennessee€Dressed€Beef€Co.€€A€shareholder€may€bring€aÏderivative€action€in€the€name€of€the€corporation€to€enforce€theÏrights€of€the€corporation.€€Tenn.€Code€Ann.€ðð€48„17„401(a)€(1988).€ÏIn€order€to€bring€the€action,€the€shareholder€must€have€been€aÏ"shareholder€of€the€corporation€when€the€transaction€complained€ofÏoccurred."€€òòIdóó.€€Also,€the€shareholder€must€allege€withÏparticularity€that€the€shareholder€made€a€demand€that€was€refused€byÏthe€board€of€directors€or€that€such€a€demand€was€not€given€forÍsufficient€reason.€€Tenn.€Code€Ann.€ðð€48„17„401(b)€(1988).€€Finally,ÏTenn.€R.€Civ.€P.€23.06€provides€that€the€shareholder€must€"fairlyÏand€adequately€represent€the€interests€of€the€shareholders€orÏmembers€similarly€situated."ÌÌà àRule€23.06€refers€to€"a€derivative€action€brought€by€òòoneóóÏor€more€shareholders."€€(Emphasis€added.)€€Rule€23.06€does€notÏrequire€a€specific€number€of€similarly€situated€shareholders.€€OtherÏjurisdictions€addressing€this€issue€have€held€that€the€class€ofÏshareholders€represented€in€the€derivative€action€may€consist€ofÏonly€one€person.€€òòLarson€v.€Dumkeóó,€900€F.2d€1363,€1368„69€(9thÏCir.),€òòcert.€denied€sub€nom.óó€òòRound€Table€Pizza,€Inc.€v.€Larsonóó,€498ÏU.S.€1012,€111€S.€Ct.€580,€112€L.Ed.2d€585€(1990);€òòJordan€v.ÏBowman€Apple€Prods.€Co.,€Inc.óó,€728€F.€Supp.€409,€412„13€(W.D.€Va.Ï1990);€òòHalstead€Video,€Inc.€v.€Guttilloóó,€115€F.R.D.€177,€179„80Ï(N.D.€Ill.€1987);€òòBrandon€v.€Brandon€Constr.€Co.,€Inc.óó,€776€S.W.2dÏ349,€353„54€(Ark.€1989);€òòEye€Site,€Inc.€v.€Blackburnóó,€796€S.W.2dÏ160,€161„63€(Tex.€1990).€€This€Court€agrees€with€the€Court€ofÏAppeals€that€the€class€of€shareholders€contemplated€by€Tenn.€R.€Civ.ÏP.€23.06€may€consist€of€one€shareholder.€€Otherwise,€as€the€courtÏbelow€noted,€a€shareholder€of€a€closely€held€corporation€might€beÏdeprived€of€the€ability€to€bring€a€derivative€action.€€Thus,€theÏfact€that€William€A.€Hall€is€the€only€affected€shareholder€does€notÍpreclude€him€from€maintaining€a€derivative€action€in€this€case.€€€€€€€€ÌÌà àCiting€an€unreported€decision€of€the€Court€of€Appeals,ÏRichard€N.€Hall€claims€that€William€A.€Hall€lacks€standing€becauseÏof€a€conflict€of€interest.€€Maintaining€a€derivative€action€onÏbehalf€of€a€corporation€while€at€the€same€time€asserting€anÏindividual€claim€against€the€corporation€may€constitute€a€conflictÏof€interest;€and,€if€there€is€a€conflict€of€interest,€theÏshareholder€is€disqualified€from€maintaining€a€derivative€actionÏpursuant€to€Tenn.€R.€Civ.€P.€23.06.€€However,€there€is€no€conflictÏof€interest€in€this€case.€€William€A.€Hall€is€not€attempting€toÏrepresent€the€interests€of€any€other€shareholders.€€He€is€the€onlyÏsimilarly€situated€shareholder.€€Shareholders€may€bring€derivativeÏand€individual€actions€simultaneously.€€òòSeeóó€òòIn€re€TransOcean€TenderÏOffer€Securities€Litig.óó,€455€F.€Supp.€999,€1014€(N.D.€Ill.€1978).€ÏWhile€there€is€always€a€theoretical€conflict€of€interest,€the€greatÏweight€of€authority€rejects€a€òòperóó€òòseóó€rule€prohibiting€suchÏrepresentation.€€òòId.óó€€Because€there€is€no€evidence€in€the€record€toÏsupport€a€finding€that€William€A.€Hall€is€incapable€of€fairlyÏrepresenting€the€interests€of€the€corporation€in€the€derivativeÏaction€while€maintaining€his€individual€suit,€the€existence€of€bothÏis€no€reason€to€deny€him€standing.ÌÌÓ  ÓDÌÌÓ  Óà àIn€the€final€issue,€William€A.€Hall€asserts€several€claimsÏthat€Richard€N.€Hall€breached€a€fiduciary€duty€owed€William€A.ÏHall.à àRecently,€in€òòNelson€v.€Martin€and€Gammonóó,€___€S.W.2d€€€€€Ï___€(Tenn.€1997),€the€Court€addressed€the€relationship€betweenÏshareholders€in€a€close€corporation.€€In€that€case,€a€shareholderÏsued€the€two€remaining€shareholders€alleging€the€wrongfulÏtermination€of€his€employment€by€the€corporation€and€also€hisÏwrongful€removal€as€an€officer€and€a€director.€€The€Court€stated:ÌÌÓÓà8 àà àThe€shareholders€of€a€close€corporationÏshare€a€fiduciary€relationship€which€imposesÏupon€all€shareholders€the€duty€to€act€in€goodÏfaith€and€fairness€with€regard€to€theirÏrespective€interests€as€shareholders.€€OfficersÏand€directors€of€a€corporation€owe€a€similarÏduty€to€the€corporation.€€In€order€to€withstandÏa€motion€for€summary€judgment,€allegations€thatÏthe€fiduciary€duty€has€been€violated€must€beÏsupported€by€material€evidence€that€the€actionÏwas€not€in€the€best€interests€of€the€corporationÏand€further€that€it€was€motivated€by€malice,Ïavarice,€or€self„interest.ÌÌÌÌÓÓòòId.óó€at€___€[slip€op.,€p.€20].€€In€òòNelsonóó,€the€Court€found€that€theÏevidence€in€the€record€did€not€present€a€disputed€issue€of€materialÏfact.€€Consequently,€the€motions€for€summary€judgment€wereÏsustained,€and€the€suit€was€dismissed.ÌÌà à€In€the€present€case,€there€is€evidence€that€the€executionÏand€performance€of€the€Stock€Purchase€and€Redemption€Agreement€wasÏin€violation€of€the€duty€owed€by€Richard€N.€Hall.€€Richard€N.€HallÏstresses€that€legitimate€business€considerations€supported€every€actÏabout€which€William€A.€Hall€has€complained€and€that€it€is€not€aÏbreach€of€fiduciary€duty€for€one€shareholder€of€a€close€corporationÏto€attempt€to€acquire€controlling€interest€in€the€corporation.€€HeÏrelies€on€òòJohns€v.€Caldwellóó,€601€S.W.2d€37,€45€(Tenn.€Ct.€App.),Ïòòcert.óó€òòdeniedóó,€(Tenn.€1980).€€A€transaction€whereby€an€officer€orÏdirector€uses€his€position€with€the€corporation,€uses€theÏcorporation,€or€uses€corporate€funds€for€the€purpose€of€promotingÏhis€personal€interest€at€the€expense€of€another€shareholder€may€beÏthe€basis€for€a€cause€of€action€against€the€officer€or€director.ÏòòJohns€v.€Caldwellóó€does€not€support€Richard€N.€Hallððs€position.€€òòSeeóóÏòòNelson€v.€Martin€and€Gammonóó,€___€S.W.2d€at€€___€[slip€op.,€pp.€12„13].€€There€is€sufficient€evidence€in€this€case€to€withstand€aÏmotion€for€summary€judgment€on€this€issue.ÌÌÓ  Óò òIIIó óÌÌÓ  Óà àIn€summary,€the€Court€holds€that€(1)€Tennessee€DressedÏBeef€Co.€was€obligated€by€a€provision€of€its€bylaws€to€provideÍWilliam€A.€Hall€the€opportunity€to€exercise€a€right€of€first€refusalÏto€purchase€the€McRedmonds'€stock€before€it€was€sold€to€theÏcorporation;€(2)€William€A.€Hall€has€standing€to€bring€a€derivativeÏaction€on€behalf€of€Tennessee€Dressed€Beef€Co.€against€Richard€N.ÏHall;€and€(3)€the€evidence€in€the€record€presents€a€disputed€issueÏof€material€fact€with€regard€to€Richard€N.€Hall's€breach€ofÏfiduciary€duty.€€Consequently,€the€trial€court€and€Court€of€AppealsÏare€reversed€as€to€the€first€issue,€and€the€Court€of€Appeals'Ïreversal€of€the€trial€court€as€to€the€second€and€third€issues€isÏaffirmed.€€The€result€is€that€summary€judgment€is€denied€on€allÏissues,€and€the€case€is€remanded€to€the€trial€court€for€furtherÏproceedings.ÌÌÌà àCosts€are€assessed€against€Richard€N.€Hall.€€Ì€€€€€€€€€€€€€€ÌÓÓà àà àà àà àà àà à________________________Ìà àà àà àà àà àà àReid,€J.ÌÌConcur:ÌÌAnderson,€C.J.,€Drowota,€Birch,Ì€€and€Holder,€JJ.