Kinard v. Ward
Before: Lennon
Synopsis
Mining Corporation — Removal of Directors — Failure to Post Monthly Balance Sheet.—Actual Damage Need not be Alleged. A complaint in an action by a stockholder in a mining corporatipn for the removal of its directors for their failure and refusal to post the monthly balance sheets, as required by sections 588 and 590 of the Civil Code, need not allege that the plaintiff has suffered any actual damage by reason of such failure and refusal.
Id.—Pleading Time of Default—Directors Continuing in Office After Expiration of Term.—Under a complaint in such action alleging that the defendants “as a board of directors have failed and refused to cause to- be made for any month, or at any time, or at all, an itemized statement of account or balance sheet, or any statement of account as required by law” the time of default is not limited to the original term for which the defendant's were elected as directors, and they may be removed after its expiration for a default occuring while they continued in office as de facto directors.
Id.—Directors Holding Over Subject to Statutory Liability for Failure of Duty.—The directors of a corporation who hold over must perform the duties enjoined by law with the same fidelity as regularly elected officers, and they are likewise subject to the same statutory liability for any failure of duty occurring during the term for which they may be holding over.
LENNON, P. J.
The plaintiff in this action, as a stockholder in the Socrates Consolidated Mining Company, Incorporated, sought and secured a judgment, removing the defendants as directors of the corporation for the alleged violation of the provisions of section 588 of the Civil Code.
[93]
That section declares it to be the duty of the directors of every corporation, foreign or domestic, formed for the purpose of mining in California, to cause to be made on the second Monday of each and every month “an itemized account or balance sheet for the previous -month, embracing a full and complete statement of all disbursements and receipts, showing from what sources such receipts were derived, and to whom and for what object or purposes such disbursements or payments were made; also all indebtedness or liabilities incurred or existing at the time, and for what the same were incurred, and the balance of money, if any, on hand. Such account or balance sheet must be verified under oath by the president and secretary and posted in some conspicuous place in the office of the company.”
Section 590 of the same code provides: “If the directors fail to have the reports and accounts current made and posted as required by section five hundred and eighty-eight they are liable, either severally or jointly, to an action by a stockholder complaining thereof, and on proof of such refusal or failure, he may recover judgment for actual damages sustained by him with costs of suit. Each of the defaulting directors is also liable to-removal for such neglect.”
The plaintiff’s complaint, among other things, alleges that the defendants * were at all times since the year 1909 the directors of the Socrates Consolidated Mining Company; that the defendants as such directors have failed and refused to cause to be made and posted in the office of the company, as required by the code sections previously quoted, an itemized account and balance sheet for any month or for any time at all during the period of their incumbency as directors. Plaintiff’s prayer for relief was primarily for the removal of the defendants from office as directors of the mining company.
Without denying or attempting to deny any of the allegations of plaintiff’s complaint the defendants answered merely that they-and “ . . . were chosen to be the directors of said company at the regular annual meeting of said company . . . held in the city and county of San Francisco on the 21st day of September, 1909; that such election was for one year, and that the same expired on the 21st day of September, 1910. Wherefore these defendants and each of them say that neither
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