Wright v. Commonwealth, No. 302

No. 302 | Pa. | Oct 5, 1885

Mr. Justice Paxson

delivered the opinion of the court

This record presents the single question whether where an election is held for seven directors of a private corporation created under the Act of 1871, at which the cumulative plan of voting is employed, and five only, composing a legal quorum, of the candidates receive a plurality of votes, is such ■election valid as to the five so chosen ?

It is not denied that the election was regularly and legally ■held on the day appointed by the charter; nor that the votes were properly counted. When, however, the result was made •known, the stockholders’ meeting had been adjourned,' and it was found that in consequence of a tie vote for three of the .candidates five only had received a plurality. There was no attempt to complete the number by a second ballot as the stockholders, not anticipating such a result, had left for their homes, mor was a subsequent special meeting called for that purpose. 'The .five .directors receiving a majority proceeded to organize the new board, and the vacancies have not been filled in any manner. The old board claim to hold over upon the ground that the board must be elected as an entirety, and that the election of. a portion only of the number is a nullity.

The election was for seven directors. That they are called a board has no significance. There were seven places to be filled. When the polls closed the five persons who received a plurality of all the votes cast were either elected or they were not. Did the failure to elect the other two • directors at the annual meeting render the election invalid as to the five? If so, we have a principle which is wholly at variance with our entire theory of elections, public and private, political, municipal and corporate. No doubt exists that if the stockholders had not adjourned and had proceeded to another ballot, the result,would have been legal.' Nor is there more room to doubt that had they adjourned the election to a subsequent day, an election for two more directors on that day would have been valid. It is said however, that inasmuch as there was no such ballot and no adjournment, and the Act of 1874 does not provide for filling up the board under such circumstances, the two vacancies cannot be filled at all; and that the five directors who were elected cannot act, and the old board holds over. This conclusion is reached by confusing two distinct questions, — the validity of the election of the five directors, and the filling the vacancies caused by the failure to elect the remaining two. The first question is legitimately before us and must be decided ; the second is not. The five directors having received a majority of votes were elected; their right to their seats does not depend upon the failure of the corporation to fill the vacancies any more than it would had the vacancies occurred from any other cause. The power of a board is never suspended by vacancies unless the number be reduced below a quorum. Here a quorum were elected ; their power to act is not impaired by the neglect of the corporation to fill up the board. It is begging the. question to say that the Act of 1874 does not provide for such a contingency. If the mode of doing so had been prescribed by the Act or by the charter of the corporation, tlie mode thus designated must be followed. See Gowen’s Appeal, 10 W. N. G., 85. But where the Act is silent, and there is no prohibition, the power inheres in the corporation to hold an election. It is a necessity of its corporate existence, and is among the implied powers granted. This is familiar law : Dillon on Corporations, vol. 2, page 768; Angell & Ames on Corporations, § 124 ; People v. Runkel, 9 John., 157.

But the mere power to fill vacancies, or the manner by which it shall be done, has no relation to the power of the other directors, or the validity of their election. Non constat that such vacancy will be filled at all. A stockholder may perhaps by appropriate proceedings compel the corporation to proceed to fill vacancies in the board of directors, but no one has ever supposed that a neglect to fill up the -board would prevent the directors from acting as a board so long as there was a quorum. I have not been able to find a single authority which sustains the position of the plaintiffs in error, while the eases of the Union Insurance Company, 22 Wend., 591" court="N.Y. Sup. Ct." date_filed="1840-05-15" href="https://app.midpage.ai/document/in-re-union-insurance-5515400?utm_source=webapp" opinion_id="5515400">22 Wend., 591; People v. Joues, 17 Id., 81; the Excelsior Ins. Co., 38 Barb., 297" court="N.Y. Sup. Ct." date_filed="1862-08-15" href="https://app.midpage.ai/document/in-re-the-excelsior-fire-insurance-5456740?utm_source=webapp" opinion_id="5456740">38 Barb., 297, are entirely iu accord with the views I have expressed.

The question of the effect of cumulative voting is entirely outside this controversy. When the votes under such a system are east and counted, the validity of the election must be determined precisely as in all othhr cases. Whether the stockholders can cumulate again to fill the vacancies is a matter that must be determined when the case arises. We cannot settle it in advance and therefore will express no opinion. The complications suggested in the argument of the learned counsel for the plaintiffs may not, and 'probably will not ever arise. If they should we will endeavor to grapple with them when they are brought before us.

Judgment affirmed.