Cali Co. incorporated on January 1, 2010 was engaged in the processing and distribution of feed grains.

(a) Prior to incorporation, Marilee had been hired by the present members of the board of directors to set up the corporation and was authorized to enter into contracts with suppliers of grains. Marilee signed a contract with Grain Brain, Inc. for two (2) monthly deliveries of 10,000 lbs. of grain at $1.00/lb commencing on February 1, 2018. On February 1, Grain Brain delivered the first shipment which was accepted and paid for by Farmers Friend. Subsequently, Farmers Friend refused Grain Brains March 1 delivery. State separately the rights and remedies of Marilee, Farmers Friend and Grain Brain.

(b) At the 1^st annual meeting of shareholders, duly called and noticed for January 1, 2020 401 of the 800 shareholders of record were present and voted on the following:

1. to declare a dividend of $.25 / share on the preferred stock and $.30 / share on the common stock. Two hundred fifty-two (252) shareholders voted in favor, one hundred forty-nine (149) against.

2. to prohibit the sale of oats in the feed because a recent study showed that oats were the chief cause of cholesterol in beef. One hundred ninety-nine (199) shareholders voted in favor, two hundred one (201) against.

The board of directors refused to implement either of the proposals, claiming that there were insufficient votes on each of the proposals, and further that the shareholders had acted improperly. Decision and why?