Rancho La Sierra, Inc. v. Bixby

ROTH, J.,

pro tem.

Respondent corporation was organized in 1924 with a board of seven directors. Its articles of incorporation provided at that time, and at the time appel

[343]

lant became a stockholder some time prior to 1929, that its stock was assessable. There was, however, no specific provision for the collection of such assessment by action in court. Under the law, as it then existed, when stock was assessable, assessments could be collected by direct action, even though the articles of incorporation did not specifically so provide.

(Alameda City Land Co.

v.

Mortimer,

92 Cal. App. 113 [267 Pac. 895];

Marshall

v.

Wentz,

28 Cal. App. 540 [153 Pac. 244].)

In August, 1931, by written declaration and consent of more than two-thirds of all the stockholders, in accordance with sections 362, 362a and 362b of the Civil Code, the articles were amended reducing the board of directors from seven to five. In the same certificate of amendment a provision authorizing the levy and collection of assessments in the manner provided by chapter 9 of title 1 of part 4 of division first of the Civil Code of the state of California, was also made. This latter amendment was made as a substitution for article eighth of the articles of incorporation. As it originally read, said article eighth provided for the levy and collection of assessments “in the manner provided by article 2 of chapter 2 of title 1 of the Civil Code of the state of California”. The amendment with reference to article eighth was undoubtedly made because section 336 of the Civil Code, as adopted in 1931, specifically changed the law theretofore existing with reference to bringing actions for collection of assessments, providing “ . . . The only remedy for the collection of an assessment on fully paid shares shall be by sale or forfeiture unless the remedy by action is expressly authorized in the articles ...” Realizing that the amendment made of article eighth in 1931 might lack vitality, because of its nonspecific nature, the directors thereafter on January 26, 1932, again amended article eighth of the original articles of incorporation and provided specifically that the directors at their election “may collect any such assessment in any court of competent jurisdiction ...” This latter amendment was adopted by the written consents of more than two-thirds of all the stockholders, defendant herein being one of the consenting stockholders. Thereafter, respondent levied assessments in 1932 and in February, 1933. Except as hereinafter pointed out, all proceedings in connection with such levies were regular and in accordance with law. Respondent obtained judgment