§ 1767. Appointment of custodian of corporation on deadlock or other cause.
(a) General rule.--Except as provided in subsection (b), upon application of any shareholder, the court
may appoint one or more persons to be custodians of and for any business corporation
when it is made to appear that:
(1) at any meeting for the election of directors, the shareholders are so divided that
they have failed to elect successors to directors whose terms have expired or would
have expired upon the qualification of their successors;
(2) in the case of a closely held corporation, the directors or those in control of the
corporation have acted illegally, oppressively or fraudulently toward one or more
holders or owners of 5% or more of the outstanding shares of any class of the corporation
in their capacities as shareholders, directors, officers or employees; or
(3) the conditions specified in section 1981(a)(1), (2) or (3) (relating to proceedings
upon application of shareholder or director), other than that it is beneficial to
the interests of the shareholders that the corporation be wound up and dissolved,
exist with respect to the corporation.
(b) Exceptions.--
(1) The court shall not appoint a custodian to resolve a deadlock if the shareholders
by agreement or otherwise have provided for the appointment of a provisional director
or other means for the resolution of the deadlock, but the court shall enforce the
remedy so provided if appropriate.
(2) Subsection (a)(2) shall not be applicable:
(i) to a corporation that has at the time a person holding or owning 5% or more of the
outstanding shares of any class of the corporation that is:
(A) a registered corporation or a foreign corporation for profit described in section
4102(b) (relating to registered corporation exclusions); or
(B) a person (other than a natural person) that is engaged principally in the business
of making equity investments in other businesses; or
(ii) with respect to any matter involving a person described in subparagraph (i) that is
or was a holder or owner of shares of the corporation.
(c) Power and title of custodian.--A custodian appointed under this section shall have all the power and title of a receiver
appointed under Subchapter G of Chapter 19 (relating to involuntary liquidation and
dissolution), but the authority of the custodian shall be to continue the business
of the corporation and not to liquidate its affairs and distribute its assets except
when the court shall otherwise order.
(d) Contrary provisions of the articles.--
(1) The articles may not contain a provision that varies or is otherwise inconsistent
with subsection (b)(2).
(2) A provision of the articles that varies or is otherwise inconsistent with any provision
of this section shall not be effective unless it is included in the original articles
or in an amendment adopted by the affirmative vote of all shareholders of the corporation
whether or not otherwise entitled to vote thereon.
(e) Cross references.--See sections 2525 (relating to appointment of custodian) and 3137 (relating to appointment
of custodian).
(Dec. 19, 1990, P.L.834, No.198, eff. imd.)
1990 Amendment. Act 198 amended subsecs. (a) intro. par. and (3) and (b) and added subsecs. (d) and
(e).
Cross References. Section 1767 is referred to in sections 2333, 2334, 2525, 3137 of this title.
Notes of Decisions
Cited in
13
cases (
4 in the last 5 years), 2000–2025 · leading case:
Santoro v. Morse, 781 A.2d 1220 (Pa. Super. Ct. 2001).
Santoro v. Morse, 781 A.2d 1220 (Pa. Super. Ct. 2001).
· cites it 2× “§ 1767(a)(2) provides that, upon application of a shareholder, the court may appoint a custodian of a corporation where (2) in the case of a closely held corporation, the directors or those in control of the corporation have acted illegally, oppressively or fraudulently toward…”
Baron v. Pritzker, 52 Pa. D. & C.4th 14 (2001).
· cites it 4× “15 Pa.C.S. §§1767, 1981, 1984. That the BCL would authorize the court to grant such drastic relief, but forbid the court from affording milder equitable remedies, would make no sense.”
Bair v. Purcell, 500 F. Supp. 2d 468 (M.D. Penn. 2007).
“2d at 556 (citing 15 Pa. Cons.Stat. § 1767 comment). Such an attempt by a majority shareholder to “freeze-out” or “squeeze-out” a minority shareholder constitutes a breach of this fiduciary duty.”
Adler v. Tauberg, 881 A.2d 1267 (Pa. Super. Ct. 2005).
· cites it 3× “§ 1767, a court may appoint a custodian for a corporation upon application of a shareholder when: “In the case of a closely held corporation, the directors or those in control of the corporation have acted illegally, oppressively or fraudulently toward one or more holders or…”
Del Borrello v. Del Borrello, 62 Pa. D. & C.4th 417 (2001).
· cites it 5× “Under 15 Pa.C.S. §1767, a court may appoint a custodian for a corporation upon application of a shareholder when: “[I]n the case of a closely held corporation, the directors or those in control of the corporation have acted illegally, oppressively or fraudulently toward one or…”
Toth, M. v. Toth, B., 324 A.3d 469 (Pa. Super. Ct. 2024).
“” 15 Pa.C.S. § 1767(c). Under Subchapter G of Chapter 19, the statute provides that a receiver pendente lite — or a custodian — may have “such powers and duties as the court from time to time may direct and proceed as may be requisite to preserve the corporate assets wherever…”
Viener v. Jacobs, 51 Pa. D. & C.4th 260 (2000).
“The Pennsylvania Business Corporation Law of 1988 provides limited protection, under 15 Pa.C.S. §1767, for a minority shareholder who can prove oppressive conduct 3 toward him by the directors or those in control of the closely held corporation.”
Gottfredson v. Donnelly (W.D. Pa. 2021).
“Gottfredson has failed to plead “illegal, oppressive, or fraudulent” conduct, as is required to state a claim under 15 Pa. C.S. § 1767. The broadest of these categories is “oppressive” conduct, which Pennsylvania courts have defined as any “conduct that substantially defeats the…”
McCoy-McMahon, D. v. Godlove, J.C., II (Pa. Super. Ct. 2014).
“15 Pa.C.S. § 1767(a)(2) permits the appointment of a custodian in a closely held corporation where “the directors or those in control of the corporation have acted illegally, oppressively or fraudulently to one or more [shareholders].”
— 15 Pa. Cons. Stat. § 1767(a) — 2 cases
Baron v. Pritzker, 52 Pa. D. & C.4th 14 (2001).
“15 Pa.C.S. §§1767, 1981, 1984. That the BCL would authorize the court to grant such drastic relief, but forbid the court from affording milder equitable remedies, would make no sense.”
— 15 Pa. Cons. Stat. § 1767(a)(2) — 6 cases
Santoro v. Morse, 781 A.2d 1220 (Pa. Super. Ct. 2001).
“§ 1767(a)(2) provides that, upon application of a shareholder, the court may appoint a custodian of a corporation where (2) in the case of a closely held corporation, the directors or those in control of the corporation have acted illegally, oppressively or fraudulently toward…”
Baron v. Pritzker, 52 Pa. D. & C.4th 14 (2001).
“15 Pa.C.S. §§1767, 1981, 1984. That the BCL would authorize the court to grant such drastic relief, but forbid the court from affording milder equitable remedies, would make no sense.”
Adler v. Tauberg, 881 A.2d 1267 (Pa. Super. Ct. 2005).
“§ 1767, a court may appoint a custodian for a corporation upon application of a shareholder when: “In the case of a closely held corporation, the directors or those in control of the corporation have acted illegally, oppressively or fraudulently toward one or more holders or…”
Del Borrello v. Del Borrello, 62 Pa. D. & C.4th 417 (2001).
“Under 15 Pa.C.S. §1767, a court may appoint a custodian for a corporation upon application of a shareholder when: “[I]n the case of a closely held corporation, the directors or those in control of the corporation have acted illegally, oppressively or fraudulently toward one or…”
— 15 Pa. Cons. Stat. § 1767(b) — 1 case
Baron v. Pritzker, 52 Pa. D. & C.4th 14 (2001).
“15 Pa.C.S. §§1767, 1981, 1984. That the BCL would authorize the court to grant such drastic relief, but forbid the court from affording milder equitable remedies, would make no sense.”
— 15 Pa. Cons. Stat. § 1767(c) — 1 case
Toth, M. v. Toth, B., 324 A.3d 469 (Pa. Super. Ct. 2024).
“” 15 Pa.C.S. § 1767(c). Under Subchapter G of Chapter 19, the statute provides that a receiver pendente lite — or a custodian — may have “such powers and duties as the court from time to time may direct and proceed as may be requisite to preserve the corporate assets wherever…”
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