Thomsen v. Yankee Mariner Corp.

California Court of Appeal Sep 6, 1951 No. Civ. 4244Published

Before: Barnard

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Holding. The court held that the election of the new board of directors was valid because the shareholders voted in person, but that the amendment to the articles of incorporation striking article 6-c was invalid because it lacked the required two-thirds shareholder consent.

Issues

Whether the election of the new board of directors was valid given the status of the stock and proxies.
Whether the amendment to the articles of incorporation striking article 6-c was legally effective without a two-thirds vote.

Disposition. modified and affirmed

Quotations verified verbatim against the opinion

“The Langs and Napier were still stockholders of record, and entitled to vote the stock.”

“Since this amendment was not consented to by the holders of two thirds of the outstanding stock, the finding here attacked is without support in the evidence.”

BARNARD, P. J.

This is an action under section 2236 of the Corporations Code to determine the validity of an election of directors.

The Yankee Mariner Corporation was organized in 1948 for the purpose of purchasing and operating a tuna fishing vessel known as the “Yankee Mariner.” One section of the articles of incorporation, known as article 6-c, provided that before a valid sale of any share could be made the holder must give written notice; that for 40 days the other shareholders would have the right to buy such shares; and that any sale would be void if this condition was not complied with.

This vessel was lost at sea on October 19, 1949. For some months thereafter a claim was pending under an insurance policy covering the loss of the vessel. During this period a difference of opinion arose as to what should be done with the insurance money when collected. The then board of directors announced an intention of using this money to go into the deep freeze business. Some of the stockholders desired to dissolve the corporation and distribute its assets among the stockholders.

On March 8, 1950, the San Diego Packing Company, the largest stockholder, entered into an agreement with a Mr. and Mrs. Lang, by which it agreed to buy 67.5 shares owned by them, subject to the approval of the sale by the Corporation Commissioner. The agreement further provided that upon the dissolution of the corporation the Langs were to receive, in addition to the named purchase price, their full share of any remaining assets. On the same day, San Diego Packing Company entered into a similar agreement with Genevieve Napier for the purchase of 67.5 shares held by her. On the same day, the Langs and Napier gave their proxies to J. A. Donnelley, irrevocable for 90 days, granting him the right to vote this stock for the purpose of removing the then directors of the corporation and electing new directors.

On March 22, 1950, a regularly called meeting of the stockholders was held at the office of the corporation in Long Beach. By votes representing more than a majority of the issued stock, with the use of the Lang and Napier stock, the then board of directors was removed from office and a new board of directors was elected. Mr. and Mrs. Lang and

[456]

Thomsen v. Yankee Mariner Corp.

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BARNARD, P. J.

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