This case originated with the petition of the Rockwood Water Company, a corporation, for an alternative writ of mandamus against Irvin Wolf and H. P. Berkebile, requiring them to deliver up all the books, papers, records, money and other property of petitioner now in their possession or control. The petition, in the name of the company, signed and sworn to by Levi Wolf, president, J. P. Baine, treasurer, and M. T. Stewart, secretary, without the corporate seal thereto affixed, alleges its corporate existence; that prior to Feb
To this writ respondents filed an answer, admitting the company’s corporate existence, notice to the stockholders of the annual meeting on February 21,1938, number of shares outstanding; denying the legality of the organization of said meeting and the election of directors and petitioners’ election as officers, the refusal of respondent, H. F. Berkebile, to produce bylaws, stock ledger or stock certificate book, or other records in his possession or control; admitting that only one of the chosen judges of election, J. R. Shanks, was present at said meeting, and denying the election of Dr. C. T. Saylor and M. T. Stewart to act as judges of election, and the qualification of the latter to act as such; admitting the demand and refusal to surrender up the books and records of the corporation to petitioners; averring that there was a conspiracy between petitioners and others to conduct said election in an unlawful and disorderly manner to prevent respondent, H. F. Berkebile, from voting the shares owned and represented by himself or by proxy; that after the conclusion of said meeting the said H. F. Berkebile cast his votes, representing 500 shares, and elected Irvin Wolf, Emma Evans, Albert C. Berkebile, and H. F. Berkebile as direc
Preceding this answer, respondents’ counsel filed a motion to dismiss the petition and quash the alternative writ of mandamus, and a motion to withdraw the action and discontinue the proceedings, as being unauthorized by the company. The latter motion is supported by the affidavit of respondents and has the corporate seal affixed thereto. Petitioners also filed motions for judgment and peremptory mandamus, to strike off respondents’ motion to dismiss petition and quash writ, and to strike off motion to withdraw and discontinue proceedings.
From the pleadings and the evidence it appears that the Rockwood Water Company now has two sets of de facto directors and officers, resulting from the election of directors at the stockholders’ meeting held on February 21, 1938, immediately followed by the newly-elected directors’ meeting electing new officers. This impossible and intolerable situation at once calls into question, first the legality of the election of directors held at the stockholders’ meeting, and, second, the legality of the election of officers at the meeting of the new board of directors. These questions cannot be determined in this proceeding. Quo warranto and not mandamus, is the appropriate remedy when any question arises as to the title to office in a corporation, or the validity of an election: Commonwealth v. Straus, 32 Pa. Superior Ct. 389; Jenkins et al. v. Baxter et al., 160 Pa. 199; Commonwealth ex rel. v. Stevens et al., 168 Pa. 582; Bedford Springs Co. v. McMeen et al., 161 Pa. 639; Commonwealth ex rel. v. Jankovic, 216 Pa. 615; Matthews’ Petition, 238 Pa.
It is probable that quo warranto proceedings will bring before the court practically the same evidence now in the record, but in this manner the legality of the election and the title to the offices in the corporation can be raised and determined. Disputed questions of fact may be tried before a jury, or may be tried, by agreement of the parties, without a jury under the Act of April 22,1874, P. L. 109: Kann v. Kann et al., supra. Without attempting presently to pass upon the questions involved, it may be indicated, however, that it is doubtful whether a legal election was held, either of directors or officers, because of many irregularities in the conduct of the election. It is conceded that the annual meeting of the stockholders was regularly convened pursuant to a proper notice, and that the stockholders present in person or by proxy constituted a quorum; and the method of conducting the election is prescribed by the Business Corporation Law of May 5,1933, P. L. 364, which is a codification of and supplement to the prior law on the subject: Bowman v. Gum Inc., et al., 321 Pa. 516. Section 504 of said act requires that every proxy shall be filed with the secretary. This was not done. Many were filed with the judges of election. Section 510 requires the officer (secretary) having charge of the transfer books for shares of the corporation to make, at least five days before the meeting of shareholders, a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, with the address of and number of shares held by each, which list shall be kept on file at the registered office of the corporation, and shall be subject to the inspection of any shareholder during the whole time of the meeting. This requirement of the law was not complied with. Section 512 provides for the appointment of judges of election. Admittedly, two
Assuming, however, that the persons named in the petition were duly elected directors, their election as officers seems to have been premature. The answer avers that under the bylaws, rules, and custom of the company, the president, secretary, and treasurer are not elected by the directors until their last meeting in June, each year; and that they do not assume the duties of office until the first day of July. Unfortunately, the bylaws have been lost or destroyed and could not be produced, which would be the best evidence of this fact. In their absence, secondary evidence was admitted to prove their contents as to the time of election and taking office, which was corroborated to some extent by the minutes of meeting for the election of officers for several years past. If this be true, then the terms of the present officers will not expire until June 30, 1938; and the application for writ of mandamus was prematurely made. In view of the foregoing irregularities in the conduct of the election at the stockholders’ meeting, and the doubtful right of the persons named to take and hold offices in the corporation, a writ of peremptory mandamus cannot issue at this time.
This case presents a contest between two rival groups or factions of stockholders of a corporation in an effort to gain or retain control of the management of its corporate functions, through the election of directors and officers, intensified by considerable personal feeling. Because of this fact, it may be doubted whether the stockholders can hold a fair, orderly, and lawful election with
“This act shall not be deemed to curtail in any manner whatsoever the law or equity jurisdiction of the courts of this Commonwealth.”
The power of supervision and control of corporations conferred by the Act of June 16, 1836, P. L. 784, upon courts of equity may be invoked to supervise and control corporate elections, where by reason of fraud, violence, or other unlawful means a fair and honest election cannot be held: Tunis et al. v. Hestonville, Mantua & Fairmount Passenger R. R. Co. et al., 149 Pa. 70; Jenkins et al. v. Baxter et al., supra; National Transit Co. et al. v. United States Pipe Line Co., 180 Pa. 224; Lutz v. Webster, 249 Pa. 226. The discontinuance of the office of master in chancery has not affected the authority of a court of equity to supervise and control a corporate election: Deal v. Erie Coal & Coke Co., 248 Pa. 48 (Somerset Co.).
In conclusion, it may be suggested as a solution of the present controversy that a special meeting of the stockholders be called, after due notice, for two purposes: First, the adoption of a new set of bylaws prescribing the time and place for holding the annual meeting of stockholders, and the meeting of the board of directors for the election of officers, etc.; and second, the holding of a. new election of a board of directors, to be followed by the election of officers for the ensuing year. If this is not done, the court, in the exercise of its equitable powers, will, upon a proper bill of complaint by stockholders, supported by satisfactory evidence, order a new election to be held and appoint a master to conduct the same to the end that a fair, orderly, and lawful election by the stockholders may be held.
Now, May 31,1938, a peremptory writ of mandamus is refused and the petition for an alternative writ is discharged, without prejudice to the right of petitioner to institute quo warranto proceedings, or stockholders to file a bill in equity for a decree ordering a new election and the appointment of a master to conduct the same.
