Beard v. Beard

133 P. 797 | Or. | 1913

Lead Opinion

Mr. Justice Bean

delivered the opinion of the court.

The first point urged by the defendant’s counsel is raised by the demurrer and by the third separate answer, to wit, that it is not within the judicial province of a court of this state to supervise the internal affairs of a corporation of the State of Washington. The Beard Fruit Company was organized under the laws of the State of Washington by S. M. Beard, now deceased, who was the equitable owner of nearly all the assets of the corporation. In 1906 he moved from Vancouver, Washington, to Portland, Oregon. Until July 6, 1912, all the stockholders of the company resided at the latter place. At that time a share of stock was assigned to E. S. Biesecker, of Vancouver, as trustee. The by-laws of the Beard Fruit Company were amended July 13,1909, so that they required four directors. It was also necessary, under the Washington laws, that there should be a Washington stockholder, who should also be a member of the board of directors. One share of the stock was therefore assigned to each of the following: Captain Griffith, E. S. Biesecker, and W. L. Gray, who executed certificates of trust therefor to Mary B. Gray. They were chosen directors. The authorized capital stock of the company was 100 shares. At the time of the organization 50 shares of the stock were issued to Mary E. Beard, whose present name is Mary B. Gray, 40 shares to A. Edgar Beard, and 10 to S. M. Beard. The latter died January 8,1910. The ownership of the 10 shares is in litigation, the defendant claiming them as his own, and the plaintiff claiming that they belong to the estate of S. M. Beard. These shares were involved in an action for the possession thereof, in which an opinion has just been rendered by this court, to wit, in the case of Beard, as Executor, v. Beard, post, p. 526 (133 Pac. 795). The estate of S. M. Beard is being administered in the probate court of Multnomah County, Oregon. S. Boscoe Beard is the sole executor. The devisees under S. M. Beard’s will are S. Boscoe Beard, Mary B. Gray, A. Edgar Beard, and Carrie Ella Cadwell, who are brothers and sisters, and were the nephews and nieces of S. M. Beard, deceased, and Susan Beard, the mother of the four devisees just mentioned, and a sister in law of the deceased. These parties, by the will, were each given a one-fifth interest in the estate for the payment of certain small legacies.

1. The doctrine that courts decline jurisdiction of controversies relating to the management of the internal affairs of a foreign corporation is not strictly a question of jurisdiction, but rather of discretion in the exercise of jurisdiction. Except in cases involving the exercise of visitorial powers, the rule rests more upon grounds of public policy and expediency than upon jurisdictional grounds, and more upon a want of power to enforce a decree than upon jurisdiction to make it.

2. Where the relief sought amounts to requiring a resident of the state, who has been an officer in the corporation, to deliver property to his successor in office, who has been duly elected, in order that the property may be cared for and protected, and where all the parties interested are residents of this state, and where the authority of the court is to be exercised upon the person of the defendant, and the action is brought in behalf of the corporation, the court should exercise the power of determining the controversy without remanding the suitor to a foreign jurisdiction in which it is shown that services of process cannot be had upon the defendant: Babcock v. Farwell, 245 Ill. 14 (91 N. E. 683, 137 Am. St. Rep. 284, 19 Ann. Cas. 74); Edwards v. Schillinger, 245 Ill. 231 (91 N. E. 1048 137 Am. St. Rep. 308, 33 L. R. A. (N. S.) 895); Ernst v. Rutherford etc., 38 App. Div. 388 (56 N. Y. Supp. 403, 405); Richardson v. Clinton Wall etc. Co., 181 Mass. 580 (64 N. E. 400); Beale, Foreign Corporations, §§ 300-312.

This is not an action where it is claimed that an officer of a corporation has offended solely against the majesty of the State of Washington. It appears from the pleadings and all the evidence that the action is brought to protect the rights of stockholders.and citizens of this State to the property in the corporation. No good reason appears why they are not entitled to receive full relief in our courts, in so far as such relief can be accomplished by acting directly on the person of the defendant. Should there be a question as to the enforcement of the judgment, we should be inclined to apply the suggestion made in the ease of Kalyton v. Kalyton, 45 Or. 116, 131 (74 Pac. 491, 78 Pac. 332), and declare the law irrespective of consequences that may result therefrom.

3. Courts will not exercise visitorial powers over foreign corporations or interfere with the management of their strictly internal affairs. The difficulty is in drawing the line of demarcation between matters which do and others which do not, pertain to the management of the internal affairs of the corporation: Guilford v. Western Union Tel. Co., 59 Minn. 332 (61 N. W. 324, 50 Am. St. Rep. 407). .The purpose of the rule which-restricts interference by a court in the internal affairs of a foreign corporation is the protection of the foreign corporation. The defense, therefore, is available only to the corporation; it cannot be maintained as against the corporation in a proceeding brought on its behalf and at its instance: Babcock v. Farwell, 245 Ill. 14 (91 N. E. 683, 137 Am. St. Rep. 284, 19 Ann. Cas. 74); Ernst v. Elmira Co., 24 Misc. Rep. 583 (54 N. Y. Supp. 116).

4. In the case at bar this court is not called upon to finally determine the validity of the election of the secretary of the corporation, nor to consider that question only in so far as the present necessities may require, but to find who has prima facie title to the office of secretary and entitled to the present possession of the property of the corporation, and grant relief accordingly, leaving the contest, if any there be as to the election to be determined in a proper proceeding. In this state such contest would be in an action in the nature of quo warranto.

5, 6. An officer whose term of office has expired cannot defeat his successor’s right to a writ of mandamus for possession of the indicia of the office and the property of the corporation by raising a question as to the validity of the latter’s title: Stevens v. Carter, 27 Or. 553, 561 (40 Pac. 1074, 31 L. R. A. 342). In this case the plaintiff instituted a proceeding in mandamus to obtain possession of the office to which she'had been prima facie elected. The question was raised under the Constitution as it then existed, as to the right of the plaintiff to hold the office. The court declined to pass upon that question, and sustained the writ. In a proceeding properly raising that question, it was determined that, under the Constitution before the amendments which have since been made, the plaintiff, being a woman, was not authorized to hold the office in question: State ex rel. v. Stevens, 29 Or. 464, 473 (44 Pac. 898). Until the election of tíre secretary of the Beard Fruit Company is declared to be void by the court of the State of Washington, we shall hold it to be valid, and protect the rights thereunder: See State ex rel. Ryan v. Cronan, 23 Nev. 437 (49 Pac. 41); Cruse v. State ex rel., 52 Neb. 831 (73 N. W. 212); State ex rel. v. Kipp, 10 S. D. 495 (74 N. W. 440); Ernst v. Rutherford etc. Co., 38 App. Div. 388 (56 N. Y. Supp. 403, 405).

7. It is contended by tbe defendant that tbe plaintiff lias a plain, speedy and adequate remedy at law by an action for possession of the personal property. High, Extraordinary Remedies, section 306, states: “And the rule is well established both upon principle and authority, that mandamus will lie to compel the surrender and delivery of corporate books and records to the officers properly' entitled thereto. And where the term of office has expired, either by removal, or by lapse of time, and the officer refuses to surrender the corporate records and documents to his successor duly elected and entitled to their custody and control, mamdamus will go to compel the delivery”: See, also, Cook, Corporations, § 515.

8. It is apparent that an action of replevin would not be an adequate remedy, for the reason that only a portion of the property is situate in one jurisdiction. In order to adjust the property rights pertaining to S. M. Beard’s estate, the parties have already prosecuted an action at law: Beard, as Executor, v. Beard, post, p. 526 (133 Pac. 795); and a suit in equity: Mary B. Gray and S. Roscoe Beard v. A. Edgar Beard, ante, p. 59 (133 Pac. 791), opinions in which have been lately rendered. A portion of the property involved in those cases was held by the Beard Fruit Company. Replevin is a local action, and lies only for the possession of the goods situate in the county in which venue is laid: Kirk v. Matlock, 12 Or. 319 (7 Pac. 322); Prescott v. Heilner, 13 Or. 200 (9 Pac. 403); Moorhouse v. Donaca, 14 Or. 430 (13 Pac. 112); Byers v. Ferguson, 41 Or. 77, 79 (65 Pac. 1067, 68 Pac. 5). In a replevin action it is necessary to describe the personalty with greater particularity of description than is required in a proceeding in mandamus, trover, or trespass: 34 Cyc. 1471; Foredice v. Rinehart, 11 Or. 208, 209 (8 Pac. 285); Fox v. Tift, 57 Or. 268, 271 (111 Pac. 51, Ann. Cas. 1912D, 845).

9, 10. The Circuit Court found that at a meeting of the stockholders of the Beard Fruit Company, held on the 9th day of July, 1912, Mary B. Gray, W. L. Gray, J. H. Griffiths and E. S. Biesecker were duly elected trustees of said corporation for the year beginning July 9, 1912; that at said meeting, Mary B. Gray rightfully voted 47 shares of stock of the corporation; that S. Roscoe Beard, as executor of the estate of S. M. Beard, deceased, rightfully voted 10 shares of stock of the corporation, and that W. L. Gray, J. H. Griffiths, and E. S. Biesecker rightfully voted one share each of the stock of the corporation; that after their election the trustees duly qualified by taking the trustees’ oath prescribed by the State of Washington. We think there was sufficient evidence to support the finding. A proceeding in mandamus is an action at law: In re Vinton, 65 Or. 422 (132 Pac. 1165). The findings of the lower court have the force and effect of a verdict, and should not he set aside where there is evidence to sustain them: Giaconi v. Astoria, 60 Or. 12, 28 (113 Pac. 855, 118 Pac. 180); Aerne v. Gostlow, 60 Or. 113, 119 (118 Pac. 277); Van De Wiele v. Garbade, 60 Or. 585 (120 Pac. 752).

Finding no error, the judgment of the lower court will be affirmed. Affirmed.

Mr. Chief Justice McBride, Mr. Justice Eakin and Mr. Justice McNary concur.

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Rehearing

Decided September 23, 1913.

On Petition eor Bbhearing.

(134 Pac. 1196.)

Mr. Justice McNart

delivered the opinion of the court on rehearing.

11. A petition for rehearing has been filed in this case by counsel for defendant on the ground that, if the title to an office is directly and unavoidably in controversy, the court will not grant relief by action of mandamus; and in advocacy thereof, counsel cite the case of State v. Williams, 25 Minn. 340. In that case, the contest was over a political office. The county treasurer of one of the counties of the state had been, during the term of his office as county treasurer, elected to and had accepted the office of representative in the state assembly. The board of commissioners, believing the state Constitution inhibited the treasurer from serving in the dual capacity of county treasurer and representative, appointed another to the office of county treasurer. Possession of the office being withheld by the treasurer, the appointee of the county commissioners sought to compel delivery by mandamus.

In the legal controversy which ensued, the treasurer contended the only question for the court to consider was the title of the office of county treasurer, and that the correct proceeding would be one in the nature of quo warranto, and that mandamus could not be maintained. The court with fitness said:

“We think this is so. Unless his election to, his acceptance' and entry upon, the duties of the office of representative, operated to deprive Williams of the office of treasurer, the relator’s appointment is an absolute nullity. The question whether the relator has any right to the office depends altogether upon whether Williams has any title to the same. That question lies at the threshold of the controversy. The relator cannot move a step until he has first made it appear that Williams’ title is at an end. Until he has done this, his certificate of appointment is prima facie evidence of nothing. And right here lies the distinction between the case at bar and the class of eases represented by Crowell v. Lambert, 10 Minn. 369 (Gil. 295), and Atherton v. Sherwood, 15 Minn. 221 (Gil. 172), (2 Am. Rep. 116). In that class of cases — in which the question is, who is prima facie entitled to the possession of the records and other property of a given office — the certificate of the auditor, which is conclusive until it is affirmatively overthrown, is properly held prima facie evidence that the person named in it has been elected, and is therefore, if he has duly qualified, entitled to the possession of the records and other property of the office. In that class of cases, the title to the office is not finally adjudicated; but the question of prima facie right is properly regarded as settled by the auditor’s certificate. But the case at bar is another thing entirely, because the question of title must be examined and determined against Williams, the incumbent de facto of the office, before the relator’s certificate of appointment can possess any value whatever. The case, then, is one in which the title of the office is directly and unavoidably in controversy, although the action is in form an action, not for the determination of the title, but for the recovery of possession of the records and other property of the office. The case falls, then, within the rule laid down by Mr. High that, tif it be apparent to the court that, instead of a proceeding whose object is only to get possession of the books and insignia of the office, the writ is invoked in reality to test the title to the office, and that the question of title is the real point in issue, it will refuse to lend its aid by mandamus. In all such cases, the parties will be left to a determination of the disputed questions of title, by proceedings upon information in tbe nature of a quo warranto, since this is the only remedy by which judgment of ouster can be had against an actual incumbent, and the person rightfully entitled can be put into possession of the office. The court will not, therefore, upon an application for a mandamus to procure possession of official records, inquire into the right of a de facto incumbent of the office,- and if it is apparent that the relator’s rights cannot be determined without such an investigation into respondent’s title, mandamus will not lie’: High, Remedies, § 77, and citations. See, also, sections 49, 50, and citations. This rule appears to be exactly applicable to the present proceedings, which must therefore fail. ’ ’

That mandamus is an inappropriate remedy to try title to an office is a statement no one will be found to dispute. Equally well settled is the rule that mandamus will lie against the incumbent of a public office to compel the officer to deliver the books and papers thereof to one claiming to be his successor in office, for the reason the certificate of election issued to the claimant, with proof of his qualification thereunder, constitutes prima facie evidence of title to the office, and mandamus will lie to compel delivery of the emblems of the office to the person named in the certificate of election irrespective of his eligibility: Stevens v. Carter, 27 Or. 553 (40 Pac. 1074, 31 L. R. A. 342).

In the case under solution there was testimony offered sufficient to induce the trial court to make findings of fact to the' effect that plaintiff had been elected secretary of the corporation, in a manner and by procedure conformable to the by-laws of the corporation and existing laws, which situation established prima facie plaintiff’s title to the position of secretary of the organization.

The findings of the lower conrt, having the effect of a verdict, will not he set aside, if there is any evidence to sustain them. As expressed in our former opinion, we believe there was ample testimony offered to confirm the findings of the trial court. Admittedly, quo warranto, and not mandamus, is the proper remedy to try the disputed title to a corporate office, and if that were the purpose of this litigation, we would unhesitatingly declare plaintiff had mischosen his remedy; but as it clearly appears plaintiff desires to acquire possession of the insignia and effects of the office of secretary of the corporation, to which he was elected, and now holds, by a prima, facie title, we think mandamus will lie.

12. Counsel urge the election of plaintiff was irregular, for the reason that certain stock was voted by plaintiff which could not lawfully be done. This proposition is intimately blended with and is a part of the larger question, just discussed, that mandamus will not lie to search the records of an election, but that quo warranto must be so employed. After a careful review of the whole cause, we have reached the same conclusion as upon the former hearing, and therefore adherence will be given to the former opinion.

Affirmed: Rehearing Denied.

Mr. Chief Justice McBride, Mr. Justice Bean and Mr. Justice Bakin concur.