19 Wend. 37 | N.Y. Sup. Ct. | 1837
By the Court,
The first question presented on this application is, whether the late election of directors, is not void by reason of the non-compliance with the sixth section of the act concerning corporations. 1 R. S. 603, § 6. It provides that “ no by-law of the directors and managers • of any incorporated company, regulating the .election of directors or officers of such company, shall be valid, unless the same shall have been published, for at least two weeks in some newspaper in the county where such election shall be held, at least thirty days before such election.” The 17th § of the charter declares, that “ all future elections of such directors, shall be conducted in the manner .prescribed in the by-laws of the corporation.” The first section of those laws provides, that the annual meeting of the directors shall be held in the city of New-York on Saturday, next preceding the first Monday of June, in each year, and “that an election for directors shall be held at the last named day and by § 6, it is made the duty of the secretary qf the company, to give notice of the same. The earliest publication of notice, in this case, was on the sixteenth of May, for the meeting of the stockholders, on the fifth of June, a notice of twenty days. This might be considered reasonable, and sufficient to justify the election, were it not for the statute : if that has directly or virtually fixed' the time, a compliance is essential to render it valid, The King v. Theodorick, 8 East. 544. Willcock on corp. 49 Angel & Ames, 278, and cannot be dispensed with by the unanimous consent of the corporators, as it would seem. Supra. It is true, that the sixth section of the revised statutes above referred to, does not make it indispensable, that the election of the directors should be regulated by means of a by-law, but rather implies the contrary : and when no such law exists, the statute publication is of course dispensed with. The notice of the time and place of the election, together with the requisite qualifications of voters,
The only doubt that can exist, I think, is whether the appointment of the time, and place, when, and where the election shall be held, should be deemed in part regulating it within the intent of the sixth section. The term regulating, according to the best lexicographers, and which manifestly accords with the force of the word in the connection here found, means the establishment of fixed rules, and methods of proceeding for the government of the election. It is comprehensive enough to embrace all the powers possessed by the directors over this subject, and should, probably, be construed co-extensive with them. Fixing time and place, is undoubtedly among them. Indeed any regulation of the election would be imperfect, in which these did not enter into the arrangement. There is one provision of the charter, which leads to the conclusion that the notice prescribed by the sixth section, was in the mind of the legislature, in the enactment. It is the I8lh which provides that “no stockholder shall be allowed to vote, &c. for any stock that shall have been assigned .to him, at any time within thirty days prior to the lime at which such election shall be held.”
With a notice of two weeks previous to the thirty days, no embarrassment need arise out of the 6th section; but without it, the holders of a large portion of the stock might be disqualified, on account of transfers within the time limited : they might be unadvised of the election in season to avoid the difficulty. In this case, some 1700 shares of the stock were not represented, though the holders appear to have been qualified; and upwards of 11,000 were transferred within the thirty days. The statute providing for long notice to the stockholders, should be liberally expounded; it enables them to qualify for the election ; tends to promote a
If, however, there should be any doubt upon the first ground, there is another taken against the regularity of this election, which is unanswerable. Edwin Lord, on the 5th May, 1837, was the owner of 2700 shares of the stock of the company, by an assignment from the individuals, in whose names they stood upon the books; he applied at the proper place to have the transfer entered upon the books, and asked a new certificate upon the surrender of the old ones, agreeably to the 12lh and 13th by-laws of the corporation ; proposing, at the same time, to pay the instalments in arrears : all of which was refused for the reason as alleged, that the stock had already been declared forfeited for default, in payment of the calls. For the like reason his votes were refused at the election, upon 1200 shares of the same stock of which he held regular proxies. Twenty-two dollars and fifty cents had already been paid on each of the 2700 shares, amounting, in the whole, to $60,750. If Lord had been permitted to vote upon his stock, or even upon the proxies, the result would have been changed in respect to all the candidates upon the successful ticket, except those named on both. The question then arises, whether the directors possess authority under the charter, to declare a forfeiture of stock to the company for the non-payment by the holder of the instalments called in. If they do not, the acts of the board in this respect were nugatory, and Lord is still the holder of the 2700 shares, and should have been permilted to vote; the transfer of these shares to him, which appears to have been regular, should have been entered upon the books when application was made for that purpose, agreeably to the by laws: and at all, events, his votes should have been received upon the proxies.
The corporation possess the power to make by-laws not inconsistent with any existing law, for the management of
It appears from the affidavit of the inspectors, that they have no recollection of the offer of Lord to vote upon the proxies, though the fact is distinctly stated by him ; and further, that he procured them for the purpose. The fact is not very material, because it is obvious that the rejection of his votes was put upon the ground that the stock he held and proposed to vote upon, either in his own right or by proxy, had been declared forfeited. We cannot but see, if he had held proxies for the whole amount they would have been unavailable. From the broad terms of the statute, also, under which we act in this matter, 1 R. S. 603, § 5, we are bound, I think, to regard the refusal to enter the transfer of the stock upon the books according to the by-law of the company, by which Lord was wrongfully prevented from voting in his own right upon the whole 2700 shares, illegal.
The votes upon the stock standing in the name of D. Jackson were properly received. The inspectors were not to inquire beyond the transfer book, 1 R. S. 603, § 6. Any private agreement, or understanding between the individual holding the legal title to the stock in due form, and others, is a matter between themselves, with which the corporation have no concern. Ex parte Wilcocks, 7 Cowen, 402. Besides, no such objection was taken before the inspectors. The ground there assumed was, that the instalments were in arrear; an objection not insisted upon in the argument here.
The objection that the inspectors refused to produce the books of the company, when called for to test the qualifications of the voters, does not appear to be maintained in point of fact. We cannot avoid remarking, however, that this
Were I not inclined to the opinion that the election was irregular on account of the defect of notice, the four directors whose names were upon both tickets might be permitted to hold, and the order for a new election be confined to the remaining nine. The rejected votes upon Lord’s slock would, of course, not have varied the result as to them. If the whole proceeding, however, is to be deemed irregular, it seems necessarily to follow, that it must be entirely vacated. No inconvenience can arise from this course, because, if it is the wish of both parties that those four individuals should continue in the direction, and which is understood from the observations of counsel, it will be in the power of the stockholders to re-elect them.
It seemed to be supposed by the counsel for the motion, that it would be competent for the court not only to set aside the directors irregularly elected, but also to affirm the election of the opposite ticket. This we cannot do, unless we assume the power of pronouncing duly elected a ticket which confessedly received a minority of the votes. We cannot give effect to the votes of Lord, the same as if they had been received"; as injustice has been done him, we can repair it by affording him an opportunity to vote.
As the counsel have referred to me to fix the lime when the new election shall take place, I shall direct that the statute publication and notice be given, which is a notice of two weeks, thirty days before the election, 1 R. S. 603, § 6 ; the election to be held the same as if it was the regular annual one; the test of qualification to be with respect to the time when it is held, and not.as of the fifth of June last. This will enable all the existing stockholders to prepare and control the direction, if they choose; thus placing the power where it was intended by the charier to be, in the hands of a majority of the stockholders.