National Stone Tile Corp. v. Voorheis

Mandamus. The plaintiff, through its alleged officers, is seeking by this proceeding to obtain possession of its books, records, and files, etc. Its pleading sets forth a double claim.

Its first claim arises by reason of the following matters. The petition alleges the due incorporation of the plaintiff; that it has five directors, giving their names; that on February 23, 1928, a meeting of the board of directors was duly had; that at said meeting W.P. Stanton was removed as president and C.C.H. Thomas was appointed president of the corporation; that J.T. Voorheis was removed from the office of vice-president and that W.P. Thomas was appointed as vice-president; that A.L. Shannon was removed from the office of secretary and A.L. Whittle was appointed as secretary; that after said meeting of the board of directors the newly appointed officers duly demanded of the former officers the possession of the books, records, files, etc.; and that the respondents refused to deliver them. The foregoing allegations show a complete cause of action in favor of the petitioners and against the respondents as of the date of the demand, to wit, February 23, 1928. The respondents have not even offered any defense thereto.

The second theory on which the petitioners rely and the answer made thereto will be discussed as we proceed. This action was not commenced until March 30, 1928 — a little over a month after the reorganization of the board of directors above referred to. In the meantime the annual meeting of stockholders was held. Growing out of the proceedings of that annual meeting, another element was injected into the controversy. That element arose as follows: On the 18th of June, 1924, the commissioner of corporations of the state of California authorized the plaintiff to issue 200 shares in addition to those already outstanding. By the terms of that permit the plaintiff was authorized "to sell and issue 200 shares of its capital stock at par for cash, lawful money of the United States, for the uses and *Page 741 purposes recited in its application." Thereafter, on May 15, 1925, the board of directors sold to J.T. Voorheis 97 shares for $2,000 cash and his promissory note in the principal sum of $7,700, payable five years from date, bearing six per cent interest. Said stock was represented by certificate No. 43. On the date the board of directors was reorganized, and immediately after the reorganization had taken place, a resolution was adopted and ordered spread on the minutes, by the terms of which resolution the board attempted to rescind its former resolution authorizing the issuance of certificate No. 43 and returning to J.T. Voorheis the $2,000 which he had paid in. Thereafter he was tendered the $2,000 and demand was made on him to surrender certificate No. 43, but he refused to surrender it and refused to accept the tender. The date of the annual meeting of stockholders, as fixed by the by-laws, would have fallen on February 24, 1928. By consent of all parties interested the meeting was, by unanimous consent, postponed from time to time and was held on March 20, 1928. Each and all of the foregoing facts stand of record or would stand of record on the books and papers of the plaintiff corporation except in so far as any of them have been prevented by reason of the controversy between the stockholders. At the stockholders' meeting when J.T. Voorheis attempted to vote certificate No. 43 for 97 shares the attempt was challenged and the presiding officer ruled that the purported certificate No. 43 was a void transaction and in law constituted no evidence of issued capital stock. Acting upon that ruling certificate No. 43 was not recognized and the said 97 shares were not counted. Omitting said 97 shares, E.J. Thomas, C.C.H. Thomas, W.P. Thomas, J.T. Voorheis, and W.P. Stanton were elected directors. Immediately thereafter the board was again organized as follows: President, E.J. Thomas; vice-president, C.C.H. Thomas; secretary, A.L. Whittle; assistant secretary, W.P. Thomas; treasurer, A.L. Whittle. If the presiding officer had received certificate No. 43 the result of the election would have been that C.C.H. Thomas would have been defeated and A.L. Shannon would have been elected in his place. If such had been the case it will be conceded that the election of each of the corporate officers would have been otherwise. It is alleged by the respondents that in April, 1925, J.T. Voorheis was *Page 742 induced to resign a lucrative employment and to purchase the stock represented by certificate No. 43 on the terms hereinabove mentioned, and as a part of the arrangement he was to become manager of the plaintiff corporation at $400 per month. On May 15, 1925, that arrangement was slightly changed so that his salary was fixed at $450 per month. The latter arrangement continued down to the twenty-third day of February, 1928, when he was discharged. Respondents allege that on February 24, 1928, J.T. Voorheis "paid to said corporation, in cash, the full par value of said 97 shares, which payment was thereupon duly and regularly received by said corporation and duly and regularly converted and applied to its own use in the ordinary course of its business, and has been paid out, and the whole thereof, by said corporation upon current obligations of said corporation; that said payment by said respondent Voorheis and said receipt thereof by said corporation as aforesaid, was in strict accordance with the valid, binding and subsisting agreement between said corporation and said J.T. Voorheis whereby said corporation agreed to and did sell to said J.T. Voorheis said 97 shares, and which said agreement was independent of and in addition to the said resolution of May 15, 1925," which resolution is attached to the pleading and is the contract of purchase and employment hereinabove referred to.