*1 us, we affirm the judgment appel- is not before late court.
Judgment affirmed. (No. 58735. al., et AGENCY, INC.,
ROANOKE v. JIM Appellees, EDGAR, State, Appellant. 23, 1984.
Opinion March filed *2 SIMON, J., dissenting. Harris,
Wayne Whalen Daniel Brown & Mayer, Platt, of for Chicago, appellant.
Morton John Barnard, Barnard, Barnard & of Chi- for cago, appellee Agency, Roanoke Inc.
Charles Murdock, W. General, Deputy Attorney Jeffrey Finke, W. Assistant General, both Attorney Chicago, intervenor-appellee General Attorney Neil F. Hartigan.
JUSTICE UNDERWOOD delivered the opinion court:
Roanoke Agency, (Roanoke), Inc. an Illinois corpora tion, delivered amendments to its articles of incorpora to tion Jim Edgar, of State Secretary of Illinois. Based his upon determination that of issuance non shares of corporate stock as in provided amendments would be to section 8 of contrary the Tran sition Schedule our of 1970 Constitution to relating cu mulative voting rights, the refused to Secretary approve and file the amendments. Roanoke leave of sought this court to file a petition for an of mandamus writ original against to Secretary and compel approval filing, and filed a for simultaneously complaint review judicial of action in the circuit court of Secretary’s Cook Stat. County. (Ill. Rev. par. 157.148.) We action, denied leave to file the original but ordered that in the circuit court administrative review proceeding expedited. be curiae, as amicus Illinois, Attorney General in in the circuit court proceedings support
participated That court entered judgment Roanoke’s position. file the ar ordered the corporation and this case as Because ticles amendment submitted. corpora questions concerning presents significant motion for direct tions, ap we granted Secretary’s Court Rule Supreme to this court pursuant peal also the Attor 302(b)). granted Ill. 2d R. We 302(b) (87 in the proceedings General leave to intervene ney court. this case surrounding and circumstances facts interpreta- involve constitutional
are not disputed, here, As the Illinois tions. pertinent provided: law, shall Assembly provide, by
“The General managers incorporated for Directors or elections vote, stockholder shall have companies every or for the number shares stock person proxy, him, as persons for as there directors many owned shares, elected, to cumulate said managers or or to be many as the number of give one candidate as votes stock, of his shares by the number multiplied principle them distribute on same shall equal, fit; as he think and such many candidates shall among as any not elected in other shall managers directors or XI, 3.) art. sec. manner.” Const. votes for respective to cast
By allowing
them
two or more
among
distribute
candidate or
single
enable mi
designed
candidates,
to gain representation
of a corporation
stockholders
nority
*4
to
its
in proportion
on
board
v. Avery
320 Illinois XIII, The net effect is that the 6.) present
art. sec. of di that, in the election no longer requires rectors, share stock share voting must be every his votes. each entitled to cumulate shareholder be were not these matters determined Significantly, instead left to legislature new constitution but were under Thus, the statutes which had been enacted address. 1870, which necessarily provided the Illinois Constitution of share, in effect rights for each remained voting cumulative no See longer constitutionally required. even though Schedule, 1970, Transition sec. Const. mandate of cumulative
In constitutional eliminating however, the of the Illinois Constitution drafters voting, cor- to existing 1970 included another addressed provision 1970 Schedule of the Section of the Transition porations. Constitution provides: organized corporations heretofore
“Shareholders of cumulative requires law of this State which any under retain their directors shall of shares for directors.” cumulatively such to vote to all provision applies This constitutional the new 1, 1971, the effective date of July existence on constitution. statutory to retain the also chose legislature 1981. Effective Sep- until voting requirements of the Business 1981, Corporation section 28
tember the following provisions: to include Act was amended incorporation any corporation The articles “(b) 31, 1981, limit or elimi- may after December incorporated or circum- voting rights specified in all nate cumulative to any as stances, may voting rights entirely, eliminate or corporation; of such classes or series stock class or shall or thereof that one class of shares series provided of all matters rights in respect always have every corporation. January incorporated before
(c) corporation A to eliminate incorporation articles of amend its may circum voting rights specified under all or stances, entirely, as to voting rights any eliminate corporation; class or classes or series of stock of such that one shares or series thereof shall provided class of all matters in always voting rights respect have the articles every No such amendment to corporation. any corporation approved shall valid unless unan imously the holders of all shares of all classes and se outstanding ries of stock issued and and entitled to vote at an election directors.” Rev. Stat.
pars. 157.28(b),(c).) These alternatives modified the statu permissive previous that each tory requirements outstanding share entitled to one each vote on matter to a at a submitted vote meet of ing shareholders and of voting that cumulative election of directors. Rev. Stat. ch. par. 157.28(a).
Roanoke was under in 1963, Illinois law incorporated and, in accordance with the then-applicable constitutional mandates, its articles statutory incorporation autho- rized the stock, issuance of one stock, class common holders of which enjoyed full cumulative voting rights. The proposed amendments to its articles of which incorporation it delivered to the of State Secretary grant corporation to issue authority two classes of shares lieu of its ex- common shares. isting Class A shares were be nonvot- B ing. Class shares were full afforded rights, includ- voting voting for the election of directors. The class B shares were to be issued ex- changed for the existing shares, common thereby allowing all common of the existing to re- corporation tain their vote for the election of di- cumulatively rectors. The articles amendment had been approved all of unanimously by existing Roanoke’s shareholders. of State concedes Roanoke has com with the plied applicable of the Business provision Corpora tion Act as amended Rev. Stat. par. refused to Nevertheless, approve the Secretary
157.28(c)). amendment, contending the articles of and file Transition 8 of the violative of section is invalid as statute the traditional cumula- to preserve in that it fails Schedule in exist- that were for Illinois corporations rules tive of the Illinois Constitution the effective date ence before General, re- the Attorney Roanoke and The appellees, existence of that, notwithstanding by arguing spond Constitu- Schedule, Illinois 8 of the Transition cumu- the constitutional eliminated tion of completely those including mandate for all corporations, lative rely upon date. The appellees its effective before organized XIII, section article general language the earlier quoted their con- 1970 to support 6, of the have been relating tention that matters section 8 Under this theory, the legislature. left to to insure merely was intended Transition Schedule re- voting requirements existing statutory other- enacted laws the legislature in effect until mained amend- the 1981 enacting Thus, argue, by appellees wise. Act, legislature to the Business Corporation ment the Transition Sched- this section effectively superseded *7 of the 1981 that, fact, light argue In appellees ule. Schedule the Transition amendment, section 8 of statutory of as a part no remains longer “executed” and been has not agree. We do the Constitution. Transi- of the eliminate
First, provision in order to any requires to that schedule introduction Schedule, the tion the Secretary certify must General Attorney that the cer- No such “executed.” has been State provision we Nor do believe in this record. tification appears the circumstances under appropriate would be certification that all provides Schedule of the Transition here. 9 Section the 1970 Constitution conflict with not in which are laws or limitation their own they expire remain in force until 323 Thus, or 8 of altered section repealed. interpret Transition Schedule as would to ren be appellees suggest der it superfluous. This court has previously recognized “ '*** word, the fundamental rule that each clause must, sentence if given some reasonable mean possible, to constitutional inter especially apropos [citations] ” pretation.’ Coalition Honesty Political v. State Board for 453, Elections 65 Ill. (1976), 466, 2d quoting Hirschfield v. 224, Barrett 40 Ill. (1968), 230, 2d cert. denied (1969), 706, 393 U.S. 21 L. Ed. 2d 89 S. 716. Ct.
Our review of section 8 of language history the Transition Schedule us to leads conclude that this pro- vision was to ensure that shareholders clearly designed then-existing retained their corporations cumulative voting rights notwithstanding elimination of the constitutional guarantee of such rights for shareholders corporations June incorporated after 1971. The of this sec- language tion itself that such plainly provides shareholders retained to vote for cumulatively Further, directors. constitutional debates establish that this clearly section was intended ensure that remained consti- tutionally protected those corpora- tions which were existence when Constitution took effect. See 1815-26; Pro- generally Proceedings ceedings
In balancing desire to attract new more allowing flexibility corporate structure and control against the generally desirable protec- minority-shareholder tion afforded by cumulative the drafters voting, need There was no adopted compromise. attract for they businesses were already incorporated in existence and to operate were content under apparently But, Illinois’ cumulative in an effort voting requirements. to facilitate the attraction of out-of-State or new corpora- tions, the burden constitutionally required In light eliminated. prospectively *8 324 the
and in to construction with order avoid retroactive rights, the contract impairing shareholders’ potential Committee, which the General Government convention’s the article for the drafting corporations responsible the effect summarized as voting requirement of the elimination of cumulative follows: it is perspective, the issue in place proper
“In order to of the manda- point to out that elimination important voting from Constitu- requirement tory not, view, tion, rights in the Committee’s affect will existing to cu- corporations of minority shareholders *** Thus, any their in director elections. mulate votes voting will have requiring in the laws change only. Accordingly, speaking effect when prospective on representation corpo- protection minority issue of directors, to are corporations referred rate boards of date of the new the effective organized those to be after Proceedings 625. original.) (Emphasis Constitution.” that, given even if section is argue also appellees shareholders effect, it those applies only substantive rights cumulative voting shares and enjoyed who owned date, shareholders of effective as opposed before its time, includ- which were existence at after This who stock June ing purchased those under the facts significance distinction assumes particular two classes of this case. issue proposes Roanoke class stock, one voting nonvoting. nonvoting one would, cumulative vot- course, the constitutional violate How- corporations. if guarantee pre-1971 it applies of Roanoke shareholders ever, existing say, appellees ex- voting rights by retain their cumulative effectively will for a allot- shares existing proportionate changing Thus, although corporation shares. voting ment of new man- to the cumulative subject would no longer their cumula- date, would retain existing 8 of Tran- satisfy tive thereby *9 sition as We ac- interpreted by appellees. Schedule cannot this cept interpretation. 8 is
We concede language capable the it proposed appellees, for is not indis- interpretation by clear the to ex- whether the putably rights preserved apply to isting or the shareholders of such existing made corporations. When reference is to the constitutional debates how- surrounding provision, adoption ever, for the focus is evaporates, any ambiguity clearly rather upon existing corporations, than existing It us that shareholders. is to the framers of the apparent Constitution intended to distinguish between corporations, not between shareholders of the same corporation. This conclusion is also dictated by Un- practical considerations. der the appellees’ interpretation, the holders of identical shares would potentially possess differing voting de- rights their pendent upon when were shares acquired. Corporate management and State’s oversight duties would be complicated by necessity inquire into stock- acquisition dates. It does not seem reasonable attribute this intent to the constitutional drafters. hold
We
that section 8
accordingly
Transition
Schedule
all
guarantees
shareholders of all Illinois corpo
rations
1, 1971,
in existence
prior
right to vote
July
directors,
cumulatively
corporate
notwithstanding
time
such
when
shares were
Because this
acquired.
guaranteed
provision,
constitutional
sharehold
ers
not be
of their cumulative
may
deprived
voting rights
action,
against
statute,
their
bywill
otherwise.
See,
v.
This does not end our inquiry. The statute here involved amendment to provides any the articles of of a be- corporation organized incorporation which restrict January purports
fore “unless unani approved would be invalid voting rights series of all classes and the holders of shares mously by to vote at an issued and and entitled outstanding stock Stat. par. election directors.” Rev. that, unani requiring submit 157.28(c).) appellees to eliminate cu of the shareholders order mous consent regarding validity voting rights, question mulative any con however, The Secretary, of the statute is obviated. from waiv tends policy precludes is therefore un and that the statute constitutional. the Secre
Earlier of this court clearly support decisions *10 rel. Askren People In Durkee v. ex contention. tary’s 354, contract pur 155 Ill. this court invalidated a (1895), v. In Luthy to bondholders. grant voting rights porting held stock Ream 170, 178, 270 Ill. this court (1915), trust be not an irrevocable holders could create exercised for can be cause to vote power “[t]he *** or and cannot be they deprived stockholders only by ex People Further, of this deprive power.” themselves v. Telephone rel. Watseka Co. Emmerson (1922), 200, this the of State’s refusal upheld court file imple a articles amendment permit corporation the purport resolution menting adopted by stock, one of which condition provide preferred the to vote. shares was the waiver of the none of these cases involved While we note that here, it is clear unanimous approval required shareholder that, even of those cases reasoning from the and language constitu with their the shareholders’ unanimous approval, re could not be voting rights protected tionally that reasoning underlying or The policy stricted eliminated. and in the honest control interest public’s was found in the 1870 Consti in the corporations, embodied management ex voting. (People provisions regarding tution’s v. Telephone (1922), rel. Watseka Co. Emmerson 302 Ill. 300, 170, 310-11; Luthy 177-78; v. Ream 270 Ill. (1915), v. ex People (1895), 354, Durkee rel. Askren 155 Ill. 368- cases, In 69.) each of these in sec grounded policy tion 3 of 11 of article the Illinois Constitution 1870 and the statutes implementing policy. a State must its con public policy sought be
stitution, enactments and legislative judicial decisions. v. Stroh Blackhawk Ill. 2d Holding Corp. (1971), 483; People Telephone ex rel. Watseka v. Co. Emmerson (1922), 302 Ill. 310.
“When sovereign power by the the State has written constitution declared the public policy of the State on a particular subject, legislative judicial departments of the government must accept declaration as final. When legislature declared, law, public has pol State, icy of judicial department must remain si lent, and if change policy a modification or in such is de sired the law-making to, must department applied not judiciary, whose function is to declare law but (Collins not to it.” Metropolitan make v. Insurance Life 37, 44, Co. (1907), 232 Ill. with quoted approval Stroh v. Holding Corp. (1971), 483.) Blackhawk 48 Ill. 2d are to Voluntary agreements be honored unless they are to a clearly Constitution, declared contrary policy or court legislature decisions unless are mani they festly welfare. v. injurious Stroh Blackhawk 48 Ill. 2d Holding Corp. (1971),
We believe that the of this State public policy regarding cumulative voting by corporate shareholders underwent a dramatic with the of the 1970 change adoption Constitu- tion. The cumulative have voting guarantees been deleted Constitution, from the which left the matter to the legisla- ture, it has amended the to elimi- statutes applicable nate voting cumulative in prospectively rights. Clearly, judgment, our no public policy longer requires in voting the election of directors or di- corporate prohibits the Thus, underpin thereon.
rect or indirect limitations been substan of this court’s decisions have nings previous This to eroded, eliminated. is not completely if not tially man however, corporate interest say, public proper it cumula Rather, has diminished. indicates that agement for that tive is no deemed essential voting longer purpose. sec now Existing guaranteed by the are to waiver un tion 8 of Transition Schedule subject 1981, 32, der amended statute Rev. Stat. ch. (Ill. par. the and, change public 157.28(c)) considering profound above, to hold that compelled discussed we are policy action. of State no longer prohibits policy however, at of such rights, We that the waiver emphasize, least insofar as in existence applied corporations prior 1, 1971, consent July contingent is unanimous upon shareholders as statute. required by As The have advised this court that General parties the law this State govern has rewritten recently sembly 1983, Act Corporation Business corporations. 1025, 1, will July Public Act effective become 83— limita to allow the (1983 6597.) purports Ill. Laws That act tion amendment or elimination cumulative any existing incorporation. (Pub. articles corporation’s 6597, 83-1025, Act 7.40(c), 6636-37.) sec. Laws Such an unanimous require approval amendment would not 1025, if sec. (Pub. these Act provisions valid. 83— aware, too, of 10.20, 6597, 6655-56.) 1983 Ill. Laws areWe recent authorizing existence of legislation fill Stat. vacancies on Rev. corporate boards provisions of none of those 157.36). par. validity thereon. case, an in this no opinion issue we express hold section 8 stated, For the reasons we Transition Schedule existence to all shareholders
guarantees cumulatively vote prior to July dates directors, notwithstanding acquisition *12 However, in change of such shares. of the light pub lic of this such State, be waived policy may upon entitled to at unanimous shareholders vote approval Section the Business 28(c) an election of directors. Cor Act Stat. is par. 157.28(c)) Rev. poration therefore constitutional that the elimination or limitation is such voting rights conditioned unanimous upon Since Roanoke has satisfied this re approval. unanimity of State refused to quirement, Secretary erroneously and file the articles of tendered approve amendment it. by of the circuit is judgment court af- accordingly firmed, and the of State is ordered to file tendered articles amendment of the upon payment ap- fee as propriate filing provided by law.
Judgment affirmed. SIMON, JUSTICE dissenting: I am baffled on reliance majority’s public policy its justify of shareholders of holding right pre- July (pre-1971) corporations cumulative is waivable. The majority acknowledges shareholders of pre- are post-1971 coiporations treated differently by Constitution, the 1970 and insists that section 8 of both Transition Schedule remains a part of the Illinois Constitu- tion this date and that section 8 provisions consti- a tute guaranteed pre-1971 corpo- To rations. the extent that public policy regarding voting for reflected in Constitution, there are two one policies expressed, relating and one to pre-1971, post-1971, corporations.
A document as intricate as the Hlinois Constitution Rather, not reflect a need a single policy. number different underlie policies various provisions. separate into a parts molded harmonious organiza- whole tion and structure of the final document. The policies can underlying particular provision understood only in- with which provision the context of other sections teracts, wording and of the spirit as a To toward identify public policy whole. Constitution, one the 1970 expressed by which is *13 constitution, including all of must evaluate sections that the Schedule. 8 of Transition underlying The that the holding public policy majority’s the makes cumulative new constitutional which provision for shareholders of voting post-1971 corporations optional the of translates into waivability corresponding defies both and pre-1971 corporations logic shareholders of the the 1970 Constitution. As organization parties made consti- here, a decision was at the point specific out the tutional convention to treat two shareholders groups in favor of and to cumula- opposed The differently. policies The concluded that contradictory delegates tive the and the one set group, of policies applied pre-1971 one to ex- Using policy other set to the post-1971 group. since two illogical, policies other is plain clarify conflict. inherently sight loses rationale which opinion majority court hold that the shareholders’ right
impelled was not voting under the 1870 Constitution the 1970 Con view, waivable. because majority Under a cumu public policy whereby stitution change evidences no considered essential proper lative is longer unani agree can by corporate governance, that only It is axiomatic rights. mous vote to waive their decisions of this a waive it. Earlier right holder of can it to vote cumulatively made clear that right court have not ex belongs which right for the election Holding (Stroh v. Blackhawk to the shareholders. clusively v. Ream Corp. Luthy Ill. 471; (1915), 270 48 Ill. 2d (1971), Co. Corrugated v. Box Gidwitz Lanzit Ill. (1960), 170; Askren ex rel. People Durkee v. 215; (1895), 2d their Therefore, right cannot waive 354.) they unanimous, action. As as exclusive, long ago albeit shareholders’ interest minority this court stated management represented tied to the both corporation, success were interested in man effectively State and also public successful v. ex rel. aged, (Durkee People corporations. this court has Durkee, Askren 155 Ill. Since (1895), 354.) reiterated the theme that shareholders exert consistently through voting rights, control over the corporation deprive and that cannot be nor themselves they deprived v. Blackhawk rights. (Stroh Holding Corp. those voting 471; 170; v. 270 Ill. (1971), Luthy (1915), 48 Ill. 2d Ream (1960), Gidwitz v. Lanzit Box Co. 20 Ill. 2d Corrugated words, In other in 215.) there are interests volved, as the as well interests private minority shareholders, and those interests cannot be waived shareholders. minority that, as a result the 1970 concludes Con majority *14 stitution, no cumulative vot “public policy longer requires *** this court’s [t]hus, the underpinnings pre [and] eroded, if not
vious decisions have been substantially 327-28; eliminated.’’ Ill. 2d at see also 101 completely (101 Ill. 2d at section 328-29.) However, language, its plain of the Transition to the Constitution pro Schedule previously orga vides shareholders of all corporations “shall retain their right nized under the laws of Illinois in the language for directors. Nothing vote cumulatively” in the Transi or of other any provision anywhere Constitution, of the 1970 indicates tion Schedule to exist has with changed respect nature of this been right expressed policies Whatever ing corporations. orga to corporations the 1970 Constitution with respect changes reflects no after the document nized July organized corpo respect previously with public policy which relates specifically rations. Since public policy un- which was unchanged, existing corporations date of the 1970 Constitution waivable before effective I reason, remain after that date. For must unwaivable dissent.
(No. 59134. In re J. CRISEL, EARL Respondent. Attorney, 23, 1984. March
Opinion filed