13 N.J.L. 352 | N.J. | 1833
Robert M’Neely and others, owners of stock in the State Bank at Trenton, applied to this court to set aside the election of George Woodruff, and nine other persons, to the office of directors, upon an allegation that the election had been illegally holden and conducted. Ah act of the 8th of December, 1825, “ to prevent fraudulent elections by incorporated companies, and to facilitate proceedings against them, “ declares it shall be the duty of the Supreme Court, upon the application of any person or persons who may complain of any election, to proceed forthwith, and in a summary way to hear the affidavits, proofs and allegations of the parties, and thereupon establish the election so complained of, or order a new election, or make such order, or give such relief in the premises, as right and justice may appear to require. The election complained of had been holden on the third Tuesday in October, 1831. The grounds of complaint were, that it had been holden at an illegal time; that legal votes had been rejected; that illegal votes had been admitted; that legal proxies had been refused, and that illegal proxies had been received.
First. It is alleged that the election was holden at an improper time. The charter directs an election to be made of directors on the third Tuesday in October yearly, and that the persons elected shall serve as such for the year thence ensuing, “ and until others shall he elected to supply their places.” These persons had been legally chosen on the third Tuesday in October, 1829 ; but no election took place the following year in October, 1830, and they held over in virtue of the foregoing clause until October 1831, at which time they claim to have been re-elected. The applicants charge that the omission to hold an election in October, 1830, was preconcerted by the directors in order to continue themselves in office; that they frustrated the election by the contrivance of refusing to appoint inspectors. The directors say, on the other hand, that inspectors were duly and properly appointed; but when the day of election arrived, one of them was absent from sickness, and two others of the four did not attend. The board of directors never held a regular session on election day, and they could not convene a special meeting to fill those vacancies, as it required notice to be served on the directors personally, some of whom had left
Second. The next complaints are, that the inspectors rejected legal votes and admitted others that were illegal. There is also a preliminary complaint that they did not require the transfer book to be produced as evidence, contrary to the fifth section of the act of 1825, which enacts that, “ in all cases where the right of voting upon any share or shares of stock, shall be questioned, it shall be the duty of the inspectors of the election to require the transfer book, as evidence of stock.” The cashier presented a list made out from the books of the company of the names, of all persons entitled to vote, and the number of votes each one was entitled to give, as he said. One of the applicants claimed to vote in right of certain shares, and not finding them entered on this list, he applied to the inspectors to require the transfer book as evidence. The reason of not ordering it was, that the cashier immediately admitted the right claimed, and that the omission in his list was an accidental mistake. The correction of the error put an end to the question ; and the power of requiring the book under this section ceased. It is not to be
There was some reference made to a provision in the 6th section, where an election has been omitted on the charter day that those who were entitled to vote on that day, and those only, shall be admitted at the next ensuing election. There was no evidence or pretence of the transfer of any shares between October 1830, and October 1831. It was therefore impossible that this regulation could be violated, even if it were applicable to an election upon the annual or charter day.
After these preliminaries, the applicants make a definite charge, that the inspectors rejected legal votes upon an erroneous pretence that the shares in right of which those votes were claimed had been forfeited for nonpayment of instalments, when in fact no forfeitures had legally accrued. In order to determine this dispute about forfeitures, it is necessary to premise that an original share in the stock of the bank was fifty dollars, which sum each subscriber was bound to pay by instalments as they should be called for, according to law, on pain of forfeiting his share and all previous instalments paid thereon. Those which had been called for and paid in, up to the 9th of November 1825, had amounted altogether to only thirty dollars. Then the stockholders were notified to pay a further instalment of fifty cents on each share; and afterward, on the 12th of February 1828, a further one of twenty-five cents on each share. It was for non-payment of one or both of these small instalments that the shares in question had been declared to be forfeited and were so entered on the minutes of the company. There was no .pretence that the instalments were paid. It was also admitted,, that a forfeiture might be legally incurred under the charter for non-payment of instalments called for, in order to effect the ends and objects of the charter,' which were for banking purposes; but these were called for the declared purpose of defraying incidental expenses; it was so avowed on the face of, the minutes and resolutions of the board of directors; and the applicants denied that non-payment of instalment, for these purposes, could
The next definite charge, that the inspectors admitted illegal votes, contains a specification of fifty votes being allowed to Mr. Woodruff, in virtue of shares belonging to the company and transferred to him as president, in trust to sell them for the benefit of the corporation. That these shares were equitably and substantially not his own, but the property of the company, is a fact that can admit of no controversy, and the question arising out of it, is, how and in what form, the company could have voted on them in case they had not been transferred in trust.' Belonging to the company they belonged to each and every stockholder in proportion to his interest in the capital of the bank; an interest that could be represented only in fractions. As there are no fractions of a vote, the real otoners could not possibly exercise the privilege; nor could it devolve on the directors, because they are not the owners of it; they are no more than trustees, like the president himself. The shares are so circumstanced, that the real owners cannot vote, and the necessary consequence is, that.they can be voted upon by nobody. This principal is virtually established by the third section of the act of 1825, that if a company purchase or take stock iij payment, it shall not vote in virtue thereof, at any election of directors. It is necessarily so at the common law, without tbe aid or corroboration of this statute. In 5 Cowen, 435, Ex parte Holmes and others, the point was fully considered and determined, that stock belonging to the whole company cannot be voted upon in choosing directors for that company by any body. This determination is the only one that can rationally be adopted and it shows that these fifty votes were illegally received.
Having considered the right of voting upon stock owned and held by the company, and the bearing of forfeited shares upon
Cited in Downing v. Potts, 3 Zab. 84.