100 P. 781 | Ariz. | 1909
This is an action brought by the appellants to set aside a reorganization of the Cieneguita Copper Company, a solvent, going corporation organized under the laws of this territory, into the Cieneguita Copper Company, a corporation organized for the purpose under the laws of the state of Nevada, with the same capitalization as the Arizona corporation, pursuant to which all of the assets of the Arizona corporation were conveyed to the Nevada corporation, under an agreement that the Nevada corporation should assume the debts of the Arizona corporation, and that the stock of the Arizona corporation should be replaced, share for share, in the hands of the shareholders by stock of the Nevada corporation. At the annual meeting of the Arizona corporation in December, 1905, this reorganization was proposed. The appellant T. E. Farish was personally present at the meeting, and voted for the' reorganization. The other appellants
At the outset it is to be observed that the reorganization of a corporation into a new corporation is not vulnerable upon the ground that it is ultra vires. It is not a matter of corporate power which is involved, but the matter of the rights of the stockholders under the corporate compact. It is quite clear that, in the absence of statutory authority, such a reorganization of a solvent, going corporation may not be accomplished without the unanimous consent of the stockholders, but this is not because the reorganization is beyond the corporate power, but because it ruptures the corporate compact, which, as in the case of all contracts, can lawfully be broken only by the unanimous agreement of all the parties thereto. By loose usage the term “ultra vires” has been applied to an attempted reorganization without unanimous consent, because it is beyond .the lawful power of the majority thus to break the corporate compact. The converse of the proposition is equally true: That, since the reorganization involves no question of corporate power, it may lawfully be accomplished by the consent of all the stockholders. It appears from the record that this action was dismissed in so far as the appellant T. E. Farish is concerned, upon the ground that, no fraud or deception having been practiced
The status of the other appellants is different, in that they were not personally present at the stockholders’ meeting, which authorized the reorganization, and do not appear to have presented their stock for exchange. They were, however, as has been stated, represented by proxies, who voted for the reorganization. There is no statute in Arizona which expressly authorizes voting by proxy at corporate meetings; nor does it appear that either the articles of incorporation or the by-laws of the defendant company authorize voting by proxy. Without determining whether, in this state of the public and corporate law, stockholders may lawfully be represented at corporate meetings, by proxies, we hold that a stockholder, who was in fact represented by an authorized proxy, is estopped to contend that his proxy could not lawfully be recognized. We hold, further, that, assuming, but not deciding, that measures which were carried only by the aid of the votes of proxies are voidable at the suit of stockholders who objected to the recognition of proxies, or who did not participate in the meeting, they are not absolutely void, and thus open to the attack of a participating or acquiescing stockholder. These appellants, therefore, having acquiesced in the reception of votes by proxy by sending proxies to the meeting, cannot be heard to assert that the proxies of other stockholders ought not to have been recognized.
These appellants contend that the authority conferred by them upon their proxies, broad and comprehensive though it is, did not extend beyond the authority to represent them in such business as might, in the ordinary course of corporate affairs, be expected to come before the annual meeting; that it cannot be construed as authorizing their proxies to destroy the business of the corporation, and make their
The appellee contends that these appellants are estopped by laches to complain. It appears that no notice or intimation was given to the stockholders that such a proposition would be presented at the stockholders’ meeting, and that the intervenors Wilson and Williams were without knowledge that such a reorganization had been attempted until immediately prior to the institution of this suit by T. E. Farish, Until they had acquired knowledge that their rights were being infringed they could not take legal proceedings to protect themselves. The suit by T. E. Farish was instituted “on-behalf of himself and other stockholders similarly situated.” His action brought into litigation the substance of their rights in the matter, in their interest as well as in his. Therefore the period of several months which elapsed between the institution of the suit and their appearance in it as inter-veno-rs cannot be counted against them as evidencing laches.
Appellee contends still further that, by paragraph 772 of the Civil Code of 1901, it is provided that a corporation may be dissolved by a majority vote of its members; that the reorganization here attempted is equivalent to a dissolution, and therefore was properly accomplished by a majority vote of the stockholders. This position is untenable. “Dissolution” of a corporation denotes its complete destruction, and con-notates the liquidation and distribution of its assets. The reorganization here attempted did not contemplate the termination of the corporate business, nor liquidation and distribution. It was an attempt to continue the corporate business under a new corporate entity, in a foreign jurisdiction. This is not a dissolution. Mason v. Pewabic M. Co., 133 U. S. 50, 10 Sup. Ct. 224, 33 L. Ed. 524. Appellee contends, further, that this reorganization is valid by reason of the provisions of Act No. 82 of the Laws of 1903, providing for the judicial dissolution of a corporation, “whenever at any general or special meeting of the stockholders of any such corporation, the holders of the majority of its outstanding stock represented or voting at any such meeting shall have directed
Finally, however, it is contended by the appellee that the appellants must fail because the Nevada corporation is not a party to this litigation. The sustaining of this contention would involve the impaling of appellants on the horn of one of two dilemmas in the pursuit of relief. If in the pursuit of a remedy in this jurisdiction, he can be met successfully by the objection that the Nevada corporation is an essential party in interest, and that, the relief sought being personal in its nature, the Nevada corporation cannot be brought within the jurisdiction of the decree unless it voluntarily appears in
The trial court dismissed the action of the interveners without prejudice to such rights as they might have to institute proceedings in courts of Nevada. The dismissal should be set aside, and by judgment entered in this court the action of the stockholders’ meeting, in attempted authorization of the transfer of the assets of the appellee, and the action of the directors and officers pursuant' thereto, should be decreed null and void. It is so ordered.