Shamel v. Lite Products Sales, Inc.

DORAN, J.

Two separate actions under section 2236 of the Corporations Code were instituted by appellant to determine the validity of election of directors of two corporations. These actions were consolidated for trial, and after taking the matter under submission, respondents’ motion for non-suit was granted, from which judgment appellant now appeals.

Case No. 615707

Lite Products Supply Corporation, later named Lite Products Sales, Inc., was incorporated in California on October 6, 1950, and the outstanding capital stock of 500 shares issued, pursuant to permit, was issued in the name of appellant Shamel, and escrowed with J. G. Moser. No application for transfer of any of such stock was made.

On April 30, 1952, appellant gave to Moser, attorney for the corporation, a signed letter stating that “Although stock . . . has been issued in escrow and stands in my name, I hereby transfer, set over and assign to you (respondent Metcalf) fifty-one percent (51%) of such stock and I specifically designate that you are the owner thereof. 2. Should any additional stock be issued ... it shall be issued on the basis of fifty-one percent (51%) to you and forty-nine (49%)

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to me. . . . The consideration for the foregoing is the moneys heretofore advanced by you to both companies by way of loan, in accordance with the understanding between us at the time such moneys were advanced.”

A stockholders’ meeting was held on February 16, 1953, and the minutes of this meeting, introduced in evidence by appellant, recite that petitioner Shamel and respondent Met-calf were present; that the attorney explained the stockholders’ voting rights, but stated that “he was not in a position to give anyone the answer as to what the court’s opinion might be as to the value of the paper (letter) held by Mr. Metcalf. It was, nevertheless, unnecessary in view of the statement of Mr. Metcalf. Mr. Shamel consented to the foregoing and Mr. Metcalf then called for nominations.”

The minutes of the meeting further recite, as stated in respondents’ brief, that petitioner “nominated himself and Metcalf, Watson, Martin and Tucker; that Metcalf nominated Coleman; . . . that in the subsequent voting petitioner voted for himself and Watson as directors; that Metcalf voted for himself, Tucker and Coleman; that Metcalf announced the election of himself, Coleman, Tucker, Petitioner and Watson as directors.”