Beatty v. Rianda

KERRIGAN, J.

The plaintiff Margaret 'Jane Beatty, joining with her husband, brought suit to have declared null and void the sale by defendant Clark Colony Water Company of stock owned by her in said corporation made by reason of the nonpayment of an assessment levied by the corporation upon the stock. Andrea Rianda, the codefendant, was the purchaser at such sale. Judgment was rendered in favor of plaintiffs annulling said sale and reinstating Margaret Jane Beatty as a stockholder of the corporation, from which the defendants have appealed.

The principal ground of attack upon said delinquent sale is that the special meeting at which the assessment was levied was not regularly called in accordance with the by-laws of the corporation. In that behalf one of said by-laws provides: “Article XIII. . . . Special meetings of the board may be called at the option of the president or two directors, upon notice in writing being mailed at Greenfield at least three days prior to the day of meeting, or upon two days personal notice to each director. Such service of notice shall be entered upon the minutes of the corporation, and the said minutes upon being read and approved at a subsequent meeting of the board shall be conclusive upon the question of service. ’ ’

The facts as to the call of the special meeting as found by the court are: A regular meeting of the board of directors of the corporation was held on October 8, 1912. After the adjournment of the meeting the four directors present decided to call a special meeting for October 11, 1912. The secretary thereupon sent a written notice to one Whiting, a director of the corporation who was not present at said regular meeting, but served no notice whatever upon any of the other four directors, under the impression, apparently, that as they had ordered the calling of the special meeting it would be superfluous to serve upon them any notice thereof. One of these four who received no notice, Director Franscioni, was not present at the special meeting, nor was Director Whiting. The remaining three directors attended and levied the assessment under attack.

[182]

The holding of special meetings of directors or stockholders of corporations is of such importance in the conduct of corporate business that it has been made the subject of express statutory regulation. Section 320 of the Civil Code provides: “When no provision is made in the by-laws for regular meetings of the directors and the mode of calling special meetings, all meetings must be called by special notice in writing, to be given to each director by the secretary, on the order of the president, or if there be none, on the order of two directors. ’ ’