Renbaum v. Custom Holding, Inc.

HARRELL, J. On 3 June 2002 Michael Renbaum (Michael) filed in the Circuit Court for Baltimore County a petition for the involuntary dissolution of Custom Holding, Incorporated (“Custom”), a closely held Maryland corporation, claiming that the directors of Custom were “so divided respecting management” of Custom that the “votes required for action by the board” could not be obtained. Michael, the majority shareholder of Custom (holding 53.86% of its capital stock) 1 and a director, alleged that the four directors of Custom were deadlocked as to whether dividends should be declared and whether the ³³ Treasurer of Custom, Barry Renbaum (Barry), Michael’s brother, possessed the authority to act unilaterally on behalf of Custom. The court appointed counsel for Custom because the board of directors (Barry, Michael, and their respective wives) could not agree on counsel for these proceedings. Barry, owner of 20.9% of the total capital stock of Custom, later intervened on his own behalf as a minority shareholder.

After a March trial on the merits, the Circuit Court denied Michael’s petition in a written order entered on 7 May 2003; however, the court subsequently granted Michael’s motion to alter or amend judgment and admit additional evidence arising after the trial ended. Presumably moved by that additional evidence, the court ultimately ordered dissolution of Custom under § 3-413(a)(1) of the Corporations & Associations Article. Md.Code (1975, 1999 Repl.Vol.). Barry appealed on numerous grounds to the Court of Special Appeals, which affirmed the judgment in an unreported opinion filed on 17 September 2004.

Barry petitioned this Court for a writ of certiorari. We granted his petition and issued the writ, Renbaum v. Custom Holding, 383 Md. 256 , 858 A.2d 1017 (2004), to consider the following three questions framed in his petition, which we reorder and restate for clarification. 2 I. Did the trial court abuse its discretion in granting the post-judgment motion on the basis of operative facts distinct from and occurring subsequent to those adduced at trial?

II

May a court properly order dissolution of a corporation because its directors are divided on one or more issues without record evidence or a finding that the ³⁴ impasse impaired the successful conduct of the company’s day-to-day business affairs?

III

Did the trial court commit prejudicial error in appointing independent counsel for Custom over the objection of an attorney / party / shareholder / director / officer who purported to represent the interests of the corporation? We shall reverse in part and affirm in part the judgment of the Court of Special Appeals. Although the first two questions, at the time certiorari was granted, portended matters of substantial legal significance and novelty, for reasons we shall explain and upon closer consideration of the record and analysis, the results reached are rather a more prosaic set of conclusions. I. A. The material facts were not disputed.

Custom was incorporated on 7 January 1993 in Baltimore County under the General Corporation Law of the Corporations and Associations Article of the Maryland Code. Its stated purpose in the Articles of Incorporation is to “invest in securities of all kinds.” Like other corporations in Maryland, the Articles included the ability to conduct any related or unrelated business activity to its purpose and all of the general powers granted a Maryland corporation under § 2-103 of the Maryland Corporations and Associations Article. Md.Code (1975, 1999 Repl.Vol.). 3 Custom was the offspring of the sale of Custom Savings Bank (“Custom Savings”) to Household International in 1993. Barry and Michael were the sole shareholders of Custom Savings at the time of sale.

The approximately $40 million in ³⁵ proceeds from the sale of Custom Savings funded Custom’s investment activities pursuant to its corporate charter. 4 Custom originally had five directors; however, its Articles were amended to reduce that number to four, a decision that enabled the present litigation. A unanimous joint director and shareholder agreement on 15 June 1993 ordered the surrender and retirement of all of the existing shares of capital stock and reissued new shares to the current shareholders in two classes Class B for Barry Renbaum and Class M for Michael Renbaum. Custom’s President, Michael, and its Secretary, Barry, subsequently filed Articles of Amendment adopted by the directors and shareholders, permitting each class of stock the right to elect two„of the four directors. 5 As a result of these changes, Custom had (and currently has) two “Class B Directors” (Barry and his wife, Carol) and two “Class M Directors” (Michael and his wife) elected by their respective class of shareholders. Following these changes, there were 29,663 Class M shares controlled by Michael and his family and 22,837 Class B shares controlled by Barry and his family. 6 Each share of Class M or Class B stock had identical rights to dividends and an equal distribution per share of the corporation’s assets upon liquidation.

As a result, any dividend or distribution of ³⁶ assets to the combined shareholders was distributed equally among all of the shareholders, regardless of class. Custom’s by-laws also stated that the Board of Directors “may appoint” a general counsel. The by-laws further stated that “[i]t shall be the duty of the Officers and Directors to consult from time to time with the general counsel (if one has been appointed), as legal matters arise.” The general counsel could be removed and replaced only by the Board of Directors. In 1995, the Board of Directors approved an annual dividend of $4 million, payable on 4 January 1995.

Subsequent annual dividends ranging from $2.5 million to $4 million were paid in January of each year from 1996 until 2001 upon informal director approval, generally by way of an oral agreement. While these payments were made in January, they were dividend distributions pertaining to the preceding calendar year. In late 2001, Barry and Michael disagreed over the annual dividend for 2001, to be paid in January 2002. Barry refused to support any dividend amount; Michael desired at least a $3 million dividend.

Custom’s board of directors did not declare a dividend for 2001. Contrary to the dispute over the distribution of dividends (which was debated, at least in part, in terms of the substantial decrease at the time in the market value of Custom’s marketable securities portfolio), both Barry and Michael (and their wives) were able to agree on the selection of a professional manager, the Vanguard Group, for Custom’s investment holdings. Neither Barry nor Michael disagreed as to the management of Custom’s investments and, even during the conflicts that gave rise to this litigation, teleconferenced regularly with Vanguard personnel concerning the asset allocation and investment strategy for Custom’s holdings. Concurrent with the dispute over dividends, Barry also disagreed with Custom’s corporate counsel, Shale Stiller (who was also Michael’s personal attorney), over a legal bill sent to the corporation.

Although Custom’s by-laws reposed the power to appoint or remove Custom’s counsel solely in the board ³⁷ of directors, Barry, on his own behalf, sent a letter dated 29 May 2002 requesting that Mr. Stiller step down as corporate counsel and refusing to pay any further billings from Mr. Stiller’s law firm. B. Unwilling to face the prospect of his personal and familial financial commitments in 2002 without a dividend payout and seemingly at odds with his brother, Michael filed in the Circuit Court his petition for involuntary dissolution, pursuant to § 3-413(a)(1), on 3 June 2002. 7 His petition stated that the board of directors “have been deadlocked” on the question of dividends. In addition, “the directors are deadlocked on the question of the authority of Barry J. Renbaum, as Treasurer of the Corporation, to take certain actions on behalf of the Corporation,” to wit, the situation regarding corporate counsel. The petition also alleged that the board would be unable to agree to counsel for Custom in the litigation because Custom’s general counsel (Stiller) was also Michael’s private attorney.

Michael also filed contemporaneously a motion to appoint counsel for Custom in the litigation. The motion to appoint counsel was granted on 3 June 2002 and Jeffrey Forman, Esq., was appointed as counsel for Custom for purposes of the litigation. On 18 June 2002, Barry moved to vacate Forman’s appointment and to intervene. 8 In ³⁸ his motion, Barry asserted that Custom had a constitutional right to choose its own counsel (which, in his opinion, was himself) and that there was no statutory authority for an ex parte appointment of counsel for the corporation in an involuntary dissolution proceeding. Although the court struck its 3 June order and ordered a hearing to determine appropriate counsel for Custom, it determined as the result of the hearing that the directors, and particularly Michael and Barry, could not agree on appropriate counsel and re-appointed Forman as counsel for Custom.

Barry’s intervention was allowed. On 21 November 2002, a special meeting of the board of directors was called by Barry in an attempt to resolve the dividend deadlock. Both Michael and Barry presented proposals to the Board. Michael presented eleven resolutions, of which two (that were not approved) are material to this appeal.

First, the Board failed to approve a resolution (by a 2-2 vote) to confirm Shale Stiller and his law firm as counsel for Custom. The second resolution called for a $3 million dividend distribution, payable in January 2003, and provided that the Class M Directors would possess the sole right to declare future annual dividends so long as the dividend did not exceed fifteen percent of the fair market value of Custom’s investment portfolio. Although Barry and Carol Renbaum, the Class B Directors, professed that they would approve the $3 million dividend proposal were it standing alone, they rejected the package assertedly because of the attached grant to the Class M Directors of the sole right to declare future dividends. Barry presented one resolution, a $4 million dividend, payable in January 2003.

This proposal also was not approved after Michael and his wife, the Class M Directors, voted against it. On 25 and 27 March 2003, Michael, Carol, and Barry Renbaum testified in the Circuit Court at a merits hearing on Michael’s petition for involuntary dissolution. At the end of the second day, the Circuit Court declared from the bench ³⁹ that “the facts convince me that the directors are not so divided respecting management of corporate affairs that they cannot operate.” On the issue of dividends, the Circuit Court concluded: Even though it is a weak year that doesn’t necessarily mean to me maybe you shouldn’t declare dividends. If I’m right, only those two know that.

If I am right, Barry’s position on that isn’t then a viable one because the dividends aren’t to split up profits only. I think the dividend is an issue, but there is more to it than meets the eye. I believe that in 2002, payable in 2003, Barry Renbaum was willing to vote for a dividend up to $4 million. Three million would satisfy the construction in the case.

Three million would be satisfactory to Michael Renbaum, too. But he wants total control of the dividends, up to 15 percent of the value of the stocks, which would be around three to four million. There is a question as to whether that violates existing law. Barry Renbaum’s counsel says, it does.

Mr. Proctor, Michael Renbaum’s counsel says, it doesn’t. Barry believes it does. I think that is the issue. Barry believed it did.

Whether right or wrong, if he believed in good faith that it did, he has an obligation to vote against that, just vote for straight dividends. As to corporate counsel for Custom, the Circuit Court concluded that there was no issue for deadlock among the directors at that time (unlike the November special board meeting). The judge stated that “[Barry] testified under oath that .. . the lawyer is Shale Stiller.... He is not contesting that he doesn’t have the authority to hire or fire [Custom’s corporate counsel].” While awaiting the entry of judgment, which occurred on 7 May 2003, Michael attempted to obtain approval from the board of directors for a $4 million dividend distribution.

Initially, Barry claimed that he wanted to wait for the appeal period to expire on the Circuit Court’s judgment before agree ⁴⁰ ing to meet to declare a dividend. On 10 April 2003, Michael called a special meeting of the board for 21 April 2003, but Barry and his wife could not attend. Michael wrote to Barry on 21 April stating that the special meeting was rescheduled for 30 April 2003, at which time a vote would be taken on a resolution for a $2 million dividend, payable on 6 May 2003, and a second $2 million dividend, payable on 13 January 2004. Michael attached a copy of a Proposed Director Consent Form approving the dividend distributions as proposed and requested that Barry and Carol Renbaum sign and fax it back to him in the event they could not attend the rescheduled meeting.

Barry responded by letter on 29 April 2003, stating that the Class B Directors would approve a $4 million dividend “upon a determination by Bar Counsel [of the Attorney Grievance Commission of Maryland] that [Michael’s] counsel 9 did not engage in sanctionable conduct in the course of prosecuting your lawsuit to dissolve Custom.” On 8 May 2003, Michael sent Barry a letter stating that if he and his wife would not sign the Director Consent Form, Michael would apply for relief from the Circuit Court. Barry and Carol did not return the Proposed Director Consent Form. Michael filed with the court on 19 May 2003 a motion to alter or amend judgment 10 asserting that the deadlock between the directors persisted despite Barry’s in-court testimony that he would vote for a dividend distribution. At a hearing on 12 August 2003, the court granted the motion and entered an order on 19 August 2003 re-opening the 7 May 2003 judgment.

At the same hearing, the Circuit Court also granted Michael’s request to present additional evidence on “additional issues, that arose after the hearing in March....” ⁴¹ The taking of additional evidence was scheduled for 22 September 2003. On the eve of renewed battle, however, Barry and Carol signed Michael’s Proposed Director Consent Form, capitulating to Michael’s request for $4 million in dividends. The hearing went forward nonetheless. Michael testified, among other things, to his repeated attempts to procure a majority vote or other form of approval for dividend distributions from the board of directors after the March hearings.

He alleged that the Director Consent Form, signed and delivered on 18 September 2003, “comes much too late to accomplish its desired purpose.” For his part, Barry stipulated, “[fjor the record and this will be construed against me. We’ll take great issue with the fact that Shale Stiller is general counsel of Custom, and if the court can construe that as a deadlock issue, we will concede that issue.” On 4 November, the Circuit Court rendered its oral opinion granting the petition for involuntary dissolution of Custom. The court stated that the decision regarding general counsel for Custom was at an “impasse” and a “material decision to be made in the operation of and in conducting duties of the corporation.” As to dividends, the Circuit Court stated, “[wjith that impasse [over general counsel] you can assume that the issue with dividends would never ever come to a resolution. Therefore, I am going to grant the motion for reconsideration and grant dissolution.” An order was entered later that day declaring that “pursuant to Maryland Rule 2-534 and received additional evidence” the “directors of Custom Holding, Inc. are so divided respecting the management of the corporation’s affairs that the votes required for action by the board cannot be obtained.... ” Barry filed a timely appeal with the Court of Special Appeals. 11 Forman filed a reply brief on Custom’s behalf supporting Barry in his contention that involuntary dissolution ⁴² was wrongfully ordered and that the grant of the motion to alter or amend judgment was an abuse of the trial judge’s discretion. 12 The Court of Special Appeals affirmed the Circuit Court’s order, stating in its unreported opinion that a deadlock between the directors of a holding corporation, like Custom, regarding the distribution of dividends was “sufficient cause” for involuntary dissolution. 13 The intermediate appellate court also stated that the additional evidence admitted after granting the motion to alter or amend judgment reflected that the evidence in the March trial indicating Barry’s agreement to approve the payment of dividends became an invalid basis for initially denying relief to Michael.

As a result, the Court of Special Appeals stated that the Circuit Court did not err in admitting the additional evidence demonstrating that there was no such agreement. Lastly, the intermediate appellate court concluded that the Circuit Court did not err when it appointed special counsel for Custom because the directors could not identify a mutually agreeable counsel for the present litigation.

II

Barry challenges the trial judge’s exercise of discretion in granting the motion to amend or alter judgment and ⁴³ ultimately the petition for involuntary dissolution. See Md. Rule 2-534; § 3-413. 14 We begin by reminding ourselves of the proper standard of appellate review. Before finding an abuse of discretion we would need to agree that, “ ‘the decision under consideration [is] well removed from any center mark imagined by the reviewing court and beyond the fringe of what that court deems minimally acceptable.’ ” In re Yve S., 373 Md. 551, 583-84 , 819 A.2d 1030, 1049 (2003) (quoting In re Adoption/Guardianship No. 3598, 347 Md. 295, 312-13 , 701 A.2d 110, 118-19 (1997) (some internal citations omitted)). Decisions on matters of law are reviewed de novo.

Davis v. Slater, 383 Md. 599, 604 , 861 A.2d 78, 80-81 (2004) (interpretations of the Maryland Code and the Maryland Rules are reviewed de novo); Nesbit v. Gov’t Employees Ins. Co., 382 Md. 65, 72 , 854 A.2d 879, 883 (2004) (interpretations of Maryland statutory and case law are conducted under a de novo review).

III

Barry first contends that the Circuit Court abused its discretion in granting Michael’s motion to alter or amend judgment and in allowing proof of facts that occurred after judgment had been rendered. We shall reject his argument because he overlooks the correct application of Rule 2-534 and miscasts the relevant events. Judgment had not been entered ⁴⁴ when the additional evidence arose that prompted the granting of the motion. Rule 2-534 states: In an action decided by the court, on motion of any party filed within ten days after entry of judgment, the court may open the judgment to receive additional evidence, may amend its findings or its statement of reasons for the decision, may set forth additional findings or reasons, may enter new findings or new reasons, may amend the judgment, or may enter a new judgment.

A motion to alter or amend a judgment may be joined with a motion for new trial. Maryland Rule 2-534 is an analog to the Federal Rules of Civil Procedure 52(b) and 59(a), but is more expansive than the federal rules. Commentary on the New Maryland Rules of Civil Procedure, 43 Md. L.Rev. 669, 811-12 (1984). Barry alleges that, like its federal counterpart, Rule 2-534 is “confined to evidence existing at the time of trial.” If it were not, he says, there would be a “perpetual continuation of lawsuits,” witnessed here by Michael and his motion.

If Barry is correct, the post-trial efforts that failed to produce a distribution dividend may not be relied upon by the Circuit Court to justify granting Michael’s motion to alter or amend judgment. Forman agrees with Barry as to the desired conclusion but argues for reaching it by a different path. Forman states that “the question goes to whether Circuit Courts have the inherent authority to re-open a case to take evidence of events that transpired after the trial and after the judgment.” Michael disagrees with both and cites to authority that, where newly discovered evidence bears directly on a previous proceeding, relief “should be granted” to the movant. He points out the not-so-subtle irony (in Barry’s argument) that, without leave to alter or amend the Circuit Court’s judgment, Barry could “perpetually continue” to refuse to approve a dividend distribution despite his contrary testimony on 27 March 2003 that he would agree to a dividend.

As such, the post-27 March failed attempts to approve a dividend distribu ⁴⁵ tion show the sham of Barry’s testimony when he claimed that he was willing to vote for either a $3 million or $4 million dividend distribution without any conditions attached. Michael states that the Circuit Court’s 27 March 2003 oral opinion denying dissolution hinged upon Barry’s expressed willingness to agree to an unencumbered dividend. Barry’s argument overlooks the correct milestones. The key date for purposes of proper analysis of this issue is the date of entry of judgment, not the date of the court’s oral opinion.

Indeed, a motion to alter or amend a judgment may not be entertained (and is generally a nullity) until entry of the subject judgment. Tierco Maryland, Inc. v. Williams, 381 Md. 378, 398 , 849 A.2d 504, 516 (2004); 15 Atlantic Food & Beverage Systems, Inc. v. City of Annapolis, 70 Md.App. 721, 725 , 523 A.2d 648, 649-50 (1987) (holding that a motion to alter or amend judgment is invalid unless filed after the date of entry of judgment). The facts recounted in the additional evidence presented to the Circuit Court on 22 September 2003 occurred before the initial judgment was entered on 7 May 2003, despite the passage of almost two months from the oral opinion rendered on 27 March. There is no judgment merely because an oral opinion is rendered.

Md. Rule 2-601; Claibourne v. Willis, 347 Md. 684, 691 , 702 A.2d 293, 296 (1997) (holding that the issuance of a final order and the entry of that order into the docket are the required acts for a judgment). As Rule 2-534 indicates, the Circuit Court retains almost a full measure of its discretion regarding a motion filed within ten days following the entry of judgment. Rule 2-534 is simply a measure by ⁴⁶ which, in this case, one party brought to light additional evidence that may cause the trial judge to enter a different, more appropriate judgment. The tendered evidence here (Barry’s asserted continuing refusal to grant an unencumbered dividend) was not, as For-man fears, a re-opening of a case to take “evidence of events after the trial and after the judgement.” It is quite obvious that the facts presented by the new evidence arose before the judgment was entered.

Even though the trial court’s discretion in such circumstances is wide, it cannot be exercised unevenly. The responding party must have an opportunity to address the merits of the Rule 2-534 motion (and the request to receive additional evidence). Paul V. Niemeyer et al., Maryland Rules Commentary 456 (3rd ed.2003) (stating that before a court may grant a Rule 2-534 motion, a hearing must be held in accordance with Rule 2-311(e)). In this case, Michael filed his motion within the ten days allowed by Rule 2-534.

The trial court held a hearing to determine whether to vacate the 7 May 2003 judgment. It also held a hearing to determine whether additional relevant evidence regarding further consideration of dividend distributions, available only after the 27 March trial, should be admitted. Barry was present at these hearings. By limiting the additional evidence to events that occurred after the last day of the March trial, the Circuit Court exercised its wide discretion to foreclose Barry’s fear of the “perpetually continued” lawsuit and “do whatever is necessary to correct the original decision.” Niemeyer et al., swpra, at 456.

After the 7 May judgment was opened on 19 August 2003, the Circuit Court was free to consider additional admissible evidence in the matter. The Circuit Court did not abuse its discretion in granting Michael’s motion to alter or amend judgment.

IV

We now turn to consideration of the merits of the decision to order dissolution. We conclude it to be devoid of sufficient ⁴⁷ substance to warrant that relief in the face of the statutory protection the General Assembly and this Court extend to general corporations. Historically, Maryland has been reluctant to expand the equity jurisdiction of courts to include the ability to grant petitions for involuntary dissolution of a corporation without express authorization by statute, 16 unlike some other states that seem more willing to do so. E.g., Mason v. Supreme Court of Equitable League of America of Baltimore City, 77 Md. 483, 484 , 27 A. 171, 171 (1893) (holding that “[a]part from statutory power, a court of equity cannot dissolve a corporation”); see 2 George D. Hornstein, Corporation Law and Practice, § 816 at 359, n. 48 (1959) (observing that California, Colorado, Illinois, Maryland, Massachusetts, Nebraska, Ohio, South Dakota, and Utah denied equity courts jurisdiction to order dissolution without a grant of specific statutory power); but see Bonavita v. Corbo, 300 N.J.Super. 179 , 692 A.2d 119, 120 (1996) citing Brenner v. Berkowitz, 134 N.J. 488 , 634 A.2d 1019 (1993) (permitting a complaint for dissolution to advance on New Jersey common law grounds and statutory grounds); In re Dubonnet Scarfs, Inc., 105 A.D.2d 339 , 484 N.Y.S.2d 541, 543 (N.Y.App.Div.1985) (citing Leibert v. Clapp, 13 N.Y.2d 313 , 247 N.Y.S.2d 102 , 196 N.E.2d 540 (1963)). 17 ⁴⁸ When individuals create a business entity under the General Corporation Laws of Maryland (Title 2 and Title 3 of the Corporations and Associations Article), they subject themselves to numerous statutory limitations, obligations, and requirements.

The individuals must first choose a general corporation as their business entity. After selecting that form of entity, the individuals must file Articles of Incorporation and create corporate by-laws to govern the shareholders, board of directors, and corporate officers who manage the corporation. Incident to this is also the agreement between the individuals (as a group) and the corporation that the individuals will restrict their acts within the confines of that corporate structure. If performed in accordance with the statutory requirements found in Title 1 and Title 2 of the Corporations and Associations Article, the general corporation is created.

The statutes do more than merely allow a general corporation to be formed; they oversee the administration and organization of the corporation, and provide for the ultimate demise of the corporation, if necessary. Because one benefit of a corporation is that it may have a perpetual life, the demise of a corporation is regulated as an extraordinary action under ⁴⁹ Title 3 of the Article. The manner of corporate demise that is at issue in this case is involuntary, or judicial, dissolution. Our current involuntary dissolution statute has remained unchanged in substance since its inception as Chapter 649 of the 1967 Laws of Maryland.

First codified as § 79A of Article 23, it was later re-enacted as §§ 3-413 and 3-414 of the Corporations and Associations Article of the Maryland Code, 1975 Md. Laws, Chap. 311. The parties in this case argue that their dispute hinges on the exact meaning and application of, “the directors are so divided respecting the management of the corporation’s affairs that the votes required for action by the board cannot be obtained, ...” The situation described in § 3-413(a)(1) is commonly referred to as deadlock. A deadlocked corporation was defined, prior to enactment of § 79A, as “one which, because of decision or indecision of the stockholders cannot perform its corporate powers.” Murray v. Requardt, 180 Md. 245, 253 , 23 A.2d 697, 700 (1942). 18 Because the critical phrase “the management of the corporation’s affairs” is undefined and vague, we look to the legislative history in aid of our inquiry regarding this issue. The Final Report of the Commission on Revision of the Corporation Laws of Maryland (the “Commission”), dated 15 December 1966, sheds some light on the meaning of these terms.

It states, in relevant part, that, The Commission is of the opinion that Section 52(e) [of Article 23] is inadequate to deal with situations of deadlock, serious dissention and the like. The Commission studied the current provisions of the Model Act and statutes of ⁵⁰ states which have enacted substantially that Act, as well as the statutes of some other states such as New York. The proposal draws principally on the current Model [Business Corporation] Act and the current provisions of the New York law, but differs in some respects. It seeks to draw an adequate line between situations in which dissolution is the only practical solution while retaining the proper concept of permanence of the corporate entity and a policy against requiring courts to arbitrate personal disputes about policy or management of the business enterprise.

While it appears that other state statutes were consulted in the compilation of the Report, the Commission credited the Model Business Corporation Act (the “Model Act”) and the New York corporation statute with significantly greater weight in its analysis. Section 3-413 is more similar to the New York provision, which states that holders of 50% or more of the outstanding shares entitled to vote in an election for directors may petition for dissolution if “the directors are so divided respecting the management of the corporation’s affairs that the votes required for action by the board cannot be obtained.” N.Y. Business Corporation Law § 1104 (a) (McKinney 1963), cited in Hornstein, supra, at 166 (1968 Supp.). 19 The relevant portion of the Model Act extant at the time of the Commission Report was much less similar to the Maryland statute than was the New York statute. 20 ⁵¹ Despite the similarities between the Maryland statute and the New York statute and, to a lesser extent, the Model Act, the Commission intended the Maryland act to operate differently than either of them. The intent is apparent in the Maryland scheme to afford the corporate entity statutory protection from internal and non-substantive personal quarrels regarding the management of the business. Because the record of the present case revealed only two possible grounds advanced for dissolution of Custom, we shall limit our inquiry to the asserted lack of approval of dividends and the failure to agree on corporate counsel for Custom.

A. Dividend Distribution Barry argues that the similarity of the Maryland statute with the New York statute should influence a conclusion that before dissolution is ordered the directors must be so divided on “matters material and essential to the existence of the corporation.” He cites Wollman v. Liftman, 35 A.D.2d 935 , 316 N.Y.S.2d 526 (N.Y.App.Div.1970) and In re Admiral Rubber Corporation, 12 Misc.2d 355 , 172 N.Y.S.2d 952 (N.Y.Sup.Ct.1958). 21 His argument follows that the distribution of ⁵² dividends is not a material matter essential to the existence of the corporation, but rather a matter of importance only to the shareholders. Because the distribution of dividends is of no consequence to the daily operation of the corporation, it is an insufficient ground upon which to order involuntary dissolution. In re Smith, 154 A.D.2d 537 , 546 N.Y.S.2d 382, 384 (N.Y.App.Div.1989) (holding that the failure to declare dividends by a close corporation without a policy of declaring dividends is insufficient to order involuntary dissolution under a claim for stockholder oppression); Hall v. John S. Isaacs & Sons Farms, Inc., 163 A.2d 288, 295 (Del.1960) (stating that “the refusal to declare dividends seems not to be ground for the appointment of liquidating receivers”). He argues in the alternative that a refusal to distribute dividends is not a deadlock, but rather the equivalent of a decision by the board not to issue dividends.

Forman, supporting Barry’s conclusion, but in a different manner, relies on the language of § 3-413 to frame a contention more in tune with our refusal to consider judicial dissolution outside of specific statutory authority. In Forman’s view, regardless of the extent of conflict and its impact on the corporation, the conflict must exist in the present, that is at the time of the dispositive evidentiary hearing. He states that nowhere in the record is there any finding by the trial judge of a deadlock over dividends. Furthermore, because Barry capitulated ultimately to the unrestricted dividend distribution (albeit at the proverbial eleventh hour), there was no conflict over dividends.

He is correct. Whatever ambiguity may exist as to what may be considered corporate deadlock under § 3-413, the statutory language is at