Mayo v. Interment Properties, Inc.

California Court of Appeal Jul 29, 1942 No. Civ. 13557Published

Before: York

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Holding. The court held that a corporate director who has submitted a resignation to take effect at a future time may participate in the election of their successor, and that the board of directors may fill such vacancies pursuant to Civil Code section 306.

Issues

Whether a director who has submitted a resignation to take effect at a future time may vote on the election of their successor.
Whether the election of a director by a board majority including the resigning director is valid under Civil Code section 306.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The board of directors has power to accept the resignation of a director, and to elect his successor at the same meeting”

“a director who has tendered his resignation to take effect upon acceptance does not cease to be a director until acceptance of his resignation, and may therefore participate in a meeting and fill out a quorum.”

“The method of filling vacancies in the boards of directors of private corporations is controlled by the provisions of section 306 of the Civil Code”

YORK, P. J.

The instant action was brought by Marguerite Madeleine Mayo, a minority stockholder, for an injunction, for declaratory relief and for the removal of di

[655]

rectors of respondent Interment Properties, Inc., pursuant to subdivision 3, section 310 of the Civil Code.

From a judgment rendered against her, she prosecutes this appeal upon the grounds:

(1) A resigned director cannot vote upon the choice of his successor;

(2) The affirmative vote of one of two remaining directors does not constitute a majority;

(3) “Inasmuch as an interested officer and director may not himself vote that corporate funds be paid to him, the acts of his substituted director, chosen by him to fill his own vacancy, for the purpose of voting on such resolution, are likewise void.”

The following brief résumé is taken from the findings of fact of the trial judge:

Interment Properties, Inc., a California corporation, was organized September 12, 1938, and is engaged in the cemetery business deriving its principal income from the sale of cemetery lots by Roosevelt Memorial Park Association. The total authorized capital of said corporation is 2,500 shares of stock issued August 5, 1940. Appellant is the owner of 1,218.75 shares, and the remainder of the issued and outstanding shares of stock is owned by Fred A. Ballin, Jr., Clayton L. Howland, Everett V. Prindle, Aileen Brown and Iola G-. Orton. Between July 12, 1939, and February 4, 1941, the directors of the corporation were Fred A. Ballin, Jr., Everett V. Prindle and Luther T. Mayo. Luther T. Mayo did not own any stock and the articles of incorporation provided that no person should be qualified to act as a director unless he was a stockholder of the said corporation. On and prior to February 4, 1941, the officers of the corporation were Everett Y. Prindle, president, Fred A. Ballin, Jr., secretary, and Luther T. Mayo, vice-president.

Respondent Prindle is an attorney associated in the practice of law with respondent Howland under the name and style of Howland & Prindle, and on or prior to February 4, 1941, respondents Ballin and Orton were or had been clients and personal friends of respondent Prindle.

Mayo v. Interment Properties, Inc.

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YORK, P. J.

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