26 Del. 1 | Del. | 1911
delivering the opinion of the court:
On or about the twenty-eighth day of October, A. D. 1901, Henry Brooks, Richard B. Morrell and William M. Pyle organized a corporation under the general corporation laws of the State of Delaware, for the purpose of conducting and carrying on the textile business in which Brooks and Morrell had been previously engaged in the State of Pennsylvania. Before entering upon its business, the corporation, which was known as Geo. Brooks and Son Company, issued $300,000 of its capital stock, of the share value of $100 each, $100,000 of which was preferred stock, the holders of which, by the provision of its charter, were excluded from any voice or vote in the management of its affairs, and $200,000 of which was common stock, the holders of which, by like provision, were vested with the sole right to vote in matters pertaining to the corporation. To Henry Brooks were issued 1,000 shares (or all) of the preferred stock and 1,000 shares (or one-half) of the common stock, and to Richard B. Morrell were issued 1,000 shares (or the balance) of the common stock. From the holding of Morrell, three shares were transferred to William M. Pyle in order to qualify him as a director, resident in Delaware.
The three named incorporators were duly elected directors and together acted as such until February 5, 1908, when a vacancy in the board of directors occurred by the death of Henry Brooks, which was filled by the election of Marshall A. Brooks at a meeting held by Morrell and Pyle, the two surviving directors.
Dissatisfaction and disagreements arose and culminated at a stockholders’ meeting held on May 11,1908, which was a deferred annual meeting of the stockholders of the company for the election of directors. At that meeting those who had succeeded to the stock of Henry Brooks, who proved to be members of the Brooks family and one John B. Wurtz, a stranger to both the Brooks and Morrell interests, voted 1,000 shares of-preferred and 1,000 shares of common stock for George H. Brooks, the plaintiff in error, John W. PI. Brooks and Marshall A. Brooks, while the
George H. Brooks, John W. H. Brooks and Marshall A. Brooks were declared elected directors, which offices they immediately assumed by organizing a board of directors, electing George H. Brooks president of the company, and taking possession of its property and assuming control of its business.
In contest of the right of those claiming election as directors by the vote of the preferred stock of the company, Morrell filed-a bill of complaint against the company in the United States Circuit Court for the District of Delaware, at Wilmington. At a hearing in that court on a motion for a preliminary injunction prayed for in the bill, George H. Brooks, the president of the defendant company, was present with the company’s solicitor, rendering him such aid as his official position afforded. During a recess and while in the Federal Building, George H. Brooks was served with the rule, allowed by the Superior .Court in this case, requiring him to show cause why leave to file an information in the nature of a writ of quo warranto should not be granted against him
Upon the return of the rule and under leave to appear specially, the respondent moved to vacate the service of the rule on the ground of privilege and exemption from service while in attendance on the United States Circuit Court under the circumstances - indicated. The motion was denied and exception noted.
Upon the failure of the respondent in the rule to show cause, the court made the rule absolute and granted leave to the Attorney General to file against the respondent an information in the nature of a writ of quo warranto. The information is in the following form:
“New Castle County—ss.:
“Robert H. Richards, Attorney General of the State of Delaware, who sues for the said State of Delaware, in this behalf, comes here before the judges of the Superior Court of the State of Delaware in and for New Castle County, on this thirteenth day of June, A. D. 1908, at. the June term of said court, and for the
“Whereupon the said Attorney General prays that the court do grant a writ of quo warranto directed to the said George H. Brooks and John W. H. Brooks commanding them and each of them that they appear in the said court on some day to be named by the said court, to show by what warrant or authority they claim to have and enjoy the franchises, offices, privileges and liberties aforesaid.
Robert H. Richards, Attorney General of the State of Delaware."
After refusal by the court to allow subsequent motions to quash the information and discharge the rule for reasons that appear in subsequent pleadings, the defendant below filed his plea to the information. By his plea he admits the incorporation of the Geo. Brooks and Son Company, and that prior to the stockholders’ meeting of May 11, 1908, Marshall A. Brooks, Morrell and Pyle were its lawfully elected and qualified directors to remain
The plea concludes with a denial of the usurpation of the office charged in the information, by employing the formal language of a special traverse, “Without this, that the said George H. Brooks during all the time since the eleventh day of May, A. D. 1908, the said franchises, offices, privileges and liberties of director of the said corporation has usurped and still does usurp in the manner and form as in the said information is alleged, and this the said George H. Brooks is ready to verify.”
To that part of the defendant’s plea in which he shows the title by which he claims and holds the office he is charged to have usurped, the Attorney General replied by special replication, setting up new matter in avoidance of that upon which the defendant based his title. By this new matter he challenges the right of holders of the preferred stock to vote for directors, and quotes from the charter and by-laws of the corporation the provisions respecting the voting power of stock. The provision of this charter is, that “The holders of said preferred stock shall not be entitled, by reason of their holdings thereof, to any voice or vote in the management of the affairs of the corporation. The voting power shall be confined to the holders of the common or general stock;" and it is further shown that the by-laws provide that
“The one hundred thousand of preferred stock shall have no vote in the transaction of any business of the company, being a
“The two hundred thousand common stock shall have and possess all voting power, shall meet and elect board of directors, once a year, order and amend by-laws, and, in fact, exercise all the power of stockholders, as hereinafter provided.”
It is therefore replied that the 1,000 votes received by the defendant below and cast for him by the holders of that quantity of preferred stock, were illegal, that without the votes on the preferred stock, each person voted for at the election mentioned received the same number of votes, that the vote was therefore a tie and as a consequence no one was elected, and that the defend-. ant and his brother have usurped the offices.to which Morrell and Pyle are entitled as holding-over directors. To this replication the defendant below demurred specially, showing for causes of demurrer matters that appear in his assignment of errors. The demurrer was overruled, and upon election, final judgment was entered.
This cause comes before this court on a writ of error, in support of which the plaintiff in error suggests error in the judgment and proceedings below by an assignment of errors containing ten specifications, which have been grouped and classified so that the questions presented by them may be considered under the following titles:
1. Exemption of the defendant below from service of process.
2. Whether the remedy employed extends to the usurpation of an office in a private corporation.
3. Whether the proceeding is properly entitled in the name of the State of Delaware upon the relation of the Attorney General.
4. Whether a replication may contain new matter in reply to a plea concluding with the absque hoc.
5. Whether the proceeding is.futile and nugatory.
6. Construction of constitutional and statutory provisions relating to the voting power of stock.
Being a non-resident, the appearance of George H. Brooks within this jurisdiction was voluntary; the action being against his corporation and not against him, he was not present as a party; and the argument being on affidavits, his presence as a witness was neither compelled nor required. It is urged, however, that his presence as the president of the defendant corporation was necessary either to the court or to his corporation, and therefore is privileged, and the service of process upon him while in attendance upon the litigation of his corporation, was consequently invalid.
The privilege of parties to judicial proceedings, as well as witnesses, attorneys, judges, jurors and certain other officers of the court, of going to the place where they are held, and remaining as long as necessary and returning wholly free from the restraint of process in other civil proceedings, has been long settled and liberally enforced. The rule is of ancient origin and is mentioned in. the Year Books as early as Henry VI. It came to us out of the common law with only such modifications as were required to make its principle harmonize with American institutions and to be in accord with American jurisprudence.
The rule is based upon reason and was established for a purpose which has been consistently adhered to from the early English authorities down through the modern American authorities upon the' subject. The reason of the rule is the proper adminis
A close examination of the leading cases cited, as well as of many other English and American authorities, discloses that the principle which uniformly underlies the decisions is that the privilege or exemption from service of process is extended and is limited to those persons whose duty requires their attendance upon the court and whose presence is necessary to the court in the performance of its function of administering justice, and in no instance ,do we find a case where immunity is given a person who appears before the court in any capacity, unless his appearance be in response to a duty or his presence be necessary to the court. .Applying to the case in hand the test of duty or necessity, it remains to determine whether it was the duty of George H. Brooks
Goerge H. Brooks was neither a party nor a witness in the court upon which he was in attendance; by his absence he would have violated no duty to the court and by his presence he could have rendered the court no aid. Whatever assistance he may have rendered the solicitor for his corporation, cannot be construed by indirection to be an assistance to the court of a nature that would make his presence necessary within the rule. He was present at an argument in which he could have given no testimony. He was there in the capacity of an agent of one of the litigating parties, and in this he was in no different position and is entitled to no further immunity than would have been a director of a corporation, the secretary of an unincorporated association, or the business manager of a partnership, when present under like circumstances. Any other rule would enable a party and not the court to extend the privilege and determine the necessity of a person’s presence, and would extend the class of privileged persons from those over whom the court has control to all those who might be deemed by a party to be necessary to him or to his counsel in the preparation and presentation of a case. We are therefore of opinion that the service of the rule was valid and that the court below committed no error in refusing to vacate it
2. The Geo. Brooks and Son Company, being a private corporation in the sense that its charter powers relate to a manufacturing business for the personal gain of its stockholders and not to matters in which the public have a beneficial interest, and its officers being private officers in the sense that they have no public services to perform, the question is raised whether the remedy of an information in the nature of a writ of quo warranto will extend to the usurpation of an office in a corporation of such a private nature.
Whatever may have been the origin and history of the writ of quo warranto and of its succeeding remedy, an information in the nature of a writ of quo warranto, it is certain that the latter was a
A writ of quo warranto was in the nature of a writ of right for the king against him who claimed or usurped any office, franchise or liberty, to inquire by what authority he supported his claim, in order to determine the right. Little is known of its origin as its history is obscured by antiquity. Nor is there any historical certainty of the origin of the remedy by information in the nature of a writ of quo warranto, which succeeded and later superseded the original remedy, nor is its history important in the present consideration, in view of the fact that it is known that the remedy by information was in use contemporaneously with the remedy of the writ of quo warranto as a common-law remedy long before the statute of 9 Anne, Ch. 20 (1711), and that that statute was not the origin of the proceeding by information, for by its fourth section there is an express recognition of its pre-existence. It is further known that the statute of Anne was limited in its territorial scope and conferred upon the courts jurisdiction to employ the remedy by information only with respect to those offices and franchises of a public and politcal character originally derived from the king, that were particularly enumerated in its preamble. This statute was never in force in this or any other American colony (State v. Stewart, supra), therefore the remedy by information, which was adopted in Delaware by reference to that of the common law, was the common-law remedy by information in the nature of a writ of quo warranto and not the statutory remedy.
While differing in origin, form and procedure from the writ of quo warranto, the common-law remedy by information, like the
There is no doubt that the remedy by information may not be invoked for the redress of mere private grievances (Spelling's Ex. Rem. §§ 1830, 1831), and can only be invoked when wrong has been done to the public. Hence it follows, if a wrong complained of be the usurpation of an office, it must be the usurpation of an office public :in character, otherwise the people cannot be called upon in their sovereignty to petition for its redress.
This brings us to a consideration of what is a public office. At the time the common-law remedy by information was employed in England, public offices seem to have been only those which were a part of the apparatus of government at large, or that of municipalities, cities and boroughs. Here, as in England, we have offices of the same public character in our municipal corporations, created and established by acts of the Legislature, in regard to the protection of which, by the remedy of an information, there can be no question; and we have as well a large number of corporate offices, created by special and general legislative authority in connection with grants of corporate franchises. These offices are created so that the design of the grant may be effectuated and the existence of the corporation perpetuated by the due and regular election of officers in accord with the rules and laws of their governance. Those who fill the offices are alike amenable to the law of their origin. With respect to the manner of their creation, there is in principle no difference between the office of mayor of a municipal corporation and that of president of a state bank, created alike by special acts of the Legislature, nor in principle is there an)'’ difference between the office of director of a bank,
The public character of a corporation and of its offices, when viewed with respect to the remedy under consideration and as distinguished from corporations and offices that are public in a political sense, is not to be determined by the nature or purpose of its business, but is to be determined by the character of its origin and the policy of the law. In the case of People v. Utica Insurance Company, 15 Johns. (N. Y.) 386 (8 Am. Dec. 243), the Supreme Court of the State of New York, in emphatic language held: ‘ ‘ That every privilege or immunity of a public nature, which cannot legally be exercised without legislative grant is a public franchise.” Followed in State v. Ashley, 1 Ark. 513, 536. The privileges and immunities of a corporation, even in a business of the most private character, cannot be exercised except by legislative grant. A corporation is a franchise (Com. Digest, tit. Corp. F.), and when granted only by legislative authority or by force of the public will, it becomes a public franchise. In our system of government all franchises repose in the people and, when parted with, are granted by the people under an established system of law, which directs the method of their use and provides against their abuse. Corporations for private gain, whether created directly by act of the Legislature or .indirectly under the general authority of a corporation law, differ in. no essential that affects the public character of the grant of the franchise, from corporations created for purely public purposes. Their corporate powers spring alike from the same source, their organization is directed by the same hand, their regulation and restraint are controlled by the same authority and they are answerable alike to the same sovereignty. If a corporation is chartered by the state to engage in what would otherwise be a private business, surely it is not
We are of opinion that the offices of a corporation created by special act of the legislature or under the provisions of the general corporation law of this state, are offices of a public character within the meaning that the remedy by information in the nature of a writ of quo warranto lies against one who usurps such an office. Angell on Corp. 476, 478, 480; Com. v. Arrison, 15 Serg. & R. (Pa.) 127, 16 Am. Dec. 531; Atty. General v. Utica Ins. Co., 2 Johns. Ch. (N. Y.) 371; Atty. Gen. v. Utica Ins. Co., 15 Johns. (N. Y.) 358, 8 Am. Dec. 243; Com. v. Union Ins. Co., 5 Mass. 231, 4 Am. Dec. 50; Gunton v. Ingle, 4 Cranch, C. C. 438, Fed. Cas, No. 5,870; People v. Tibbets, 4 Cow. (N. Y.) 388; State v. Stewart. 6 Roust. 359; State v. Hunton, 28 Vt. 594; Hullman v. Honcomp, 5 Ohio St. 237; State v. Tudor, 5 Day (Conn.) 329, 5 Am. Dec. 162; 23 A. & E. Ency. of Law (2d Ed.) 640; 32 Cyc. 1425; Spelling’s Ex. Rem. §§ 1831, 1842, 1855.
3. The next question presented by the'assignment of errors is whether the proceeding is properly entitled in the name of the State of Delaware upon the relation of the Attorney GeneraL This is a mixed question of parties and procedure.
By the fiction of the feudal law the king was the fountain whence all franchises were derived, the exercise of any of which without regal grant was considered a usurpation of the king’s prerogative. Hence the writ of quo warranto became a prerogative writ that issued of right, wherein the king, being the sole party in interest, instituted the action in his own name, in his own right, by his Attorney General.
The proceeding by information in the nature of a writ of quo warranto that existed contemporaneously at common law with the
The information in the nature of a writ of quo warranto contemplated by the statute of Anne was by the provisions of that statute extended to private persons for the redress of their wrongs, and hence the remedy under that statute, while still prerogative in its nature in that it cannot be employed without leave, is entitled in the name of the king upon the relation of a private person. As that statute is not in force in this state, the practice under it is not here followed.
In most of the American jurisdictions that provide statutory remedies by quo warranto, their statutes are modeled after the statute of Anne, and the proceeding, while prerogative, is entitled in the name of the state, people, or commonwealth upon the relation of a private individual, and represented by a state or county attorney.
From this analysis it will appear that the prerogative character of the proceeding, whatsoever its origin, has been preserved from its earliest uses down to the present time; and probably there are no exceptions to the rule that the proceeding, being in theory a prosecution (Wright v. People, 15 Ill. 417), must be instituted and prosecuted in the name of the state or of a public officer representing the sovereignty (Respublica v. Griffiths, 2 U. S. 112, 1 L. Ed. 311; Spelling’s Ex. Rem. § 1766).
As we have held that the common-law proceeding by information in the nature of a writ of quo warranto is the proceeding adopted in this state, it follows that the common-law manner of entitling and instituting the proceeding prevails in this state. Rex v. City of London, 3 Har. St. Tr. 545.
When considered with respect to the principles that apply to the relation of the state to its franchises, previously considered, as well as to preserve the remedy in symmetry with its original, the proceeding should be entitled in the name of the State of Delaware upon the relation of the Attorney General.
The rule issues upon the ex parte application of the relator (Lynch v. Martin, 6 Houst. 487; State v. Hancock, 2 Penn. 252, 256, 45 Atl. 851), and is heard upon the affidavits and counter affidavits filed by the parties (Lynch v. Martin, 6 Houst. 487). The granting of the leave rests in the sound discretion of the court. Lynch v. Martin, 6 Houst. 487. When leave is granted, the rule is made absolute and the information filed. Like other rules it is subject to a motion to discharge, which when made should be accompanied with a corresponding motion to dismiss the information. If such motions are not made, or, if made, are not allowed, then the case proceeds to pleading, the first rule being on the defendant.
4. The next question suggested by the assignment of errors is whether a replication may contain new matter in reply to a plea concluding with the absque hoc. This is a question of pleading and its solution requires an investigation into very nearly the whole subject of pleading in the form of remedy under consideration.
Briefly stated, the information charges usurpation generally, the plea denies usurpation specially, and sets up title to the office in the defendant, and the replication takes issue on the traverse of usurpation and replies new matter in avoidance of the title set up in the plea. The substance of the contention of the plaintiff in error is that the information is the narr., the plea by the absque hoc is a special traverse of the averments of the narr., upon which the plaintiff is bound to take issue, that the reply of the plaintiff of new matter in the replication is a reply to the inducement of the plea, and is bad, in that it is not allowable and amounts in effect to a departure from the information.
The pleading in the remedy by information in the nature of a writ of quo warranto is in hamKmy with the history amd in accord with the theorj^ of the proceeding. While in those states
The proceeding by information being in theory, as at one time it was in fact, a prosecution, the information as a pleading is less of a narr. than a complaint or accusation against the defendant for an offense. 4 Bla. Com. 308. By the information the defendant is accused of usurping a particular office, and is called upon to show by what authority he holds it, and is not called upon to try his title against the title of the relator as might be required of him in pleadings begun by narr.
The chief characteristics of an information are, first, the accusation of an usurpation; and, second, the demand that the defendant show the authority for his claim. Upon the first, being a statement of fact and presenting an issue, the defendant may take issue by plea; upon the second, being no statement of fact and presenting no issue, he cannot take issue by plea. Therefore when the defendant is called upon to plead to an information, he must admit or traverse the usurpation and disclaim or justify title, right or authority in or to the thing he is charged to have usurped. If he admit usurpation or disclaim title, the prosecution is entitled to judgment; if he traverse the usurpation and justify under his title, he may have his rights determined by trial. The plea of not guilty is not a sufficient answer, as it amounts simply to a traverse of the allegation of usurpation, and, like the plea of non usurpavit, fails to respond to the demand of the information that the defendant show his. title, right or authority. Atty. General v. Foot, 11 Wis. 14, 78 Am. Dec. 689; State v. Saxon, 25 Fla. 342, 5 South. 801; Spelling's Ex. Rem. § 1861; Shortt, Ex.
To a plea traversing usurpation and justifying, there is no question that the relator may demur (State v. Hancock, 2 Penn. 522, 263, 265, 45 Atl. 851; State v. Churchman, 3 Penn. 167, 174, 49 Atl. 381; People v. K. R. I. Co., 103 Ill. 491, 511), or join issue on the facts therein stated (People v. Crawford, 28 Mich. 88; State v. McCann, 88 Mo. 386; People v. K. R. I. Co., 103 Ill. 491, 511); the question in this case being whether the relator must join issue on the plea or may reply by way of confession and avoidance.
By the subtlety of a special traverse which the defendant in form has pleaded, he contends that the matter of justification shown by his plea is but inducement to his traverse of usurpation, that instead of joining issue on the traverse, the relator has replied to the inducement by matter in avoidance thereof, or in other words, the replication traverses a traverse, and therefore is bad.
There is a question, however, whether the plea in this case is a good special traverse, or is a special traverse at all' within the rule of pleading, although in form it concludes with the technical words of absque hoc, as do the pleas in the cases of State v. Hancock, 2 Penn. 252, 263, 265, 45 Atl. 851, and State v. Churchman, 3 Penn. 167, 49 Atl. 381, and in the English forms given in Wentworth's Pleading, 33, 39, 147, 151, 158. Nevertheless, the plea by the absque hoc certainly could have been intended for use only in
It thus appears that the information in the case at bar is in the exact form of the information in the Niagara Bank case, that the plea in that case, concluding with the traverse, “without this, that,” is like the one filed in this case, that the Attorney General in that case as in this one replied by new matter in avoidance, and that the rulings of the court below in this case upon question of procedure are supported by the authority of the Niagara Bank case. But more important is the statement of Savage, C. J., that the Niagara Bank case was decided on the authority of the case against the City of London, and we find that the form of information and manner of pleading in the case against the City of London are in exact and technical accord with the pleadings in the Niagara Bank case and in the case at bar. And this should be so, for the case against the City of London was tried in 1682-83, or 28 years before the statute of Anne (1711), and was a case tried by the common-law remedy by information in the nature of a writ of quo warranto. As we have held that was the remedy adopted in this state, it follows that we have adopted the practice and procedure that belong to it. We are therefore of the opinion that the court below committed no error in holding that the information and replication in their form are sufficient in law for the State of Delaware to maintain its action.
5. We hold that this proceeding is not futile and nugatory for reasons that previously appear in the consideration of other questions. Spelling’s Ex. Rem. §§ 1786, 1788.
6. The court below, in holding the sufficiency of the form of the pleadings in this case, also held the matters therein contained to be sufficient in law for the state to maintain its action; and finding George H. Brooks guilty of usurping the office of director
At the time of the incorporation of Geo. Brooks and Son Company, it was provided by Section 13 of the General Corporation Law (22 Del. Laws, c. 167), that “every corporation shall have power to create two or more kinds of stock of such classes, with such designations, preferences and voting powers or restrictions or qualifications thereof, as shall be stated and expressed in the certificate of incorporation.” Supplementary to this provision was another (Section 17) which directed that “unless otherwise provided in the charter, certificate or by-laws of the corporation, each stockholder * * * shall at every election be entitled to one vote * * * for each share of the capital stock held by him. * * * ” Pursuant to these provisions, the incorporators proceeded to incorporate their company otherwise, and by charter and by-laws deprived its preferred stock of any voting power and vested the whole voting power in its common stock. The sections of the general corporation law above quoted and under which the incorporators acted, are identical with the sections (18 and 36) of the general corporation law of New Jersey (P. L. 1896, p. 277), from which obviously they were taken. Wilm. City Ry. Co. v. W. & B. S. Ry. Co., 8 Del. Ch. 468, 46 Atl. 12. The two laws are also similar in providing that “the certificate of incorporation may also contain any provision * * * for the regulation of the business: * * * Provided, such provisions are not contrary to the laws of this state” (22 Del. Laws, c. 167, § 5, subd. 8, and P. L. N. J. 1896, p. 280, § 8). At the time of the enactment of the New Jersey law there was in that state no consitutional provision relating to the voting power of stock, but at the time of the enactment of the Delaware law, March 10, 1899 (21 Del. Laws, c. 273), and of the incorporation of the Geo. Brooks and Son Company (1901), there was in this state a constitutional provision that directed that “in all elections for directors or managers of stock corporations, each share
It is important to state, and make clear, that the constitutional provision referred to, and with respect to which it is suggested that the subsequent laws and charter are not in harmony, was repealed in 1903 by acts of the General Assembly (Laws of Delaware, Volume 22, Chapter 1, pp. 3, 4, and Chapter 254, p. 543), and is not the law of this state today. Therefore the remainder of this opinion, and the decision under it, relate only to the state of the law, constitutional and statutory, as it existed before the date of the repeal of Section 6 of Article 9 of the Constitution of 1897.
With respect to the constitutional provision in question, it is the contention of the defendant in error that “This section does not mean that the Legislature could not provide for certain classes of stock having restricted voting powers or no voting powers at all. It means only that voting in corporations shall be according to the number of shares held by the stockholder having the right to vote and not one vote for each stockholder, irrespective of his share holdings, as was the rule at common law.” In other words, it is contended that the effect of the provision was simply to change the common-law rule of one vote for each shareholder, regardless of the number of shares held by him, to one vote for each share held by the shareholder, and that his right to a share vote was not derived from the constitutional provision, but was extended or limited by the charter of the corporation when created under a statute subsequently enacted, which allowed the incorporators to create several classes of stock and to define and regulate the voting power of each class.
' It is further contended that the constitutional provision at most confers upon stockholders a right to a share vote, which right is waived by them when they incorporate a company that bj'- its
The plaintiff in error contends that, the Constitution having expressly declared who shall be entitled to vote for directors, its provisions were imperative upon the corporation, constituting a part of the law of its being, and a corporation had no authority under statutes subsequently enacted, that provide otherwise, to limit the right as regulated by the Constitution.
A by-law that restricts or alters the voting power of stock of a corporation as established by the law of its charter, is of course void. People v. Tibbets, 4 Cow. (N. Y.) 358; People v. Kip, 4 Cow. (N. Y.) 382, note.
A provision in a charter of a corporation, giving to its stock a voting power different from that contemplated by the statute under which it was created, is likewise void. Brewster v. Hartley, 37 Cal. 15, 24, 99 Am. Dec. 237; Audenried v. E. C. M. Co., 68 N. J. Eq. 450, 59 Atl. 577, 584; Com. v. Conover, 10 Phila. (Pa.) 55; Taylor v. Griswold, 14 N. J. Law, 222, 27 Am. Dec. 33; People v. C. G. T. Co., 130 Ill. 268, 22 N. E. 798, 8 L. R. A. 497, 17 Am. St. Rep. 319; E. P. R. Co. v. Vaughan, 14 N. Y. 546, 551; Com. v. Yetter, 190 Pa. 488, 495, 496, 43 Atl. 226.
A statute that authorizes a corporation to give to its stock a voting power different from that prescribed by the Constitution is equally void.
The question, therefore, is narrowed down to whether the Constitution established the voting power of stock or conferred a personal privilege that might be waived.
Considering the question in the reverse order, we find the statement of the defendant in error, that “a person may waive any provision either of contract or statute intended for his benefit,” is not supported by the authorities cited, when considered in relation to the provision under construction. The cases cited relate to provisions of statutes that are made for the particular and personal protection of one solely interested, and which may be waived without infringing upon the rights of others or affecting public policy. The cases cited go to the right of one to waive notice of depositions, or notice of a continuance, or notice to him
Disregarding the excerpt from the debates of the constitutional convention that adopted the section, the language of the provision alone is sufficiently clear and unambiguous to indicate that the purpose of the convention was to change the control of stock corporations from individual control to stock control, to do which it directly gave to a share of stock the quality of a vote. In doing this it made no discrimination between different classes of stock which subsequent laws might authorize, but provided generally that the holder of a share of stock was the holder of a vote which he was entitled to cast. Being the holder of an interest in property that conferred upon him the right pro tanto to control and regulate that property, the holder of a share of stock was then possessed of a personal privilege or benefit which he might use or reject as he chose (State v. Ashley, 1 Ark. 513, 549), and it is in this sense that a person may waive the provision of a law intended for his benefit. Being the owner of a share of stock with a voting power given it by the Constitution, he was by the possession of the share possessed of a privilege, but he could not by any act of his change the character of the share that gave him the privilege or rob it of the voting power conferred upon it by the Constitution, so that in his hands or in the hands of any subsequent holder it would not carry the power conferred upon it at its birth by the law that authorized its existence.
The general corporation law that was enacted subsequently to the adoption of the Constitution of 1897, under the terms of which the preferred stock of Geo. Brooks and Son Company was deprived of voting power, must have been enacted in ignorance of the constitutional provision then existing. It was this law, passed two years later, that authorized a corporation created unde it to give to its stock such preference and voting power as it migh
We are of opinion that by force of the constitutional provision (section 6 of article 9), as it existed at the time of the incorporation of the Geo. Brooks and Son Company, the holders of the preferred stock of that company were entitled to one vote for each share of preferred stock they held, and there having been cast for George H. Brooks, at the election for directors, as many votes as there were shares of preferred stock, together with votes upon the common stock sufficient to give him a majority of all the votes cast, we are further of opinion that George H. Brooks was legally elected director under the law as then existing. Wilm. City Ry. Co. v. W. & B. S. Ry. Co., 8 Del. Ch. 468, 491-494, 46 Atl. 12; Tomlinson v. Jessup, 15 Wall. 454, 457, 21 L. Ed. 204; Holyoke Co. v. Lyman, 15 Wall. 500, 522, 21 L. Ed. 133; Bixler v. Summerfield, 195 Ill. 147, 62 N. E. 849; Taylor v. Griswold, 14 N. J. Law, 222, 27 Am. Dec. 33; State v. Anderson, 31 Ind. App. 34, 67 N. E. 207; Oregon Ry. Co. v. O. Ry. Co., 130 U. S. 1, 9 Sup. Ct. 409, 32 L. Ed. 837; Morawetz on Private Corporations, § 1054; Thompson on Corporations, § 216.
The judgment of ouster entered by the court below is reversed and the case remanded.