Dolbear v. Wilkinson

This is a proceeding to determine who are the directors of California Trona Company, a corporation organized under the laws of this state. The plaintiffs, C.E. Dolbear, R.B. Phillips, and E.I. Bartholomew, claim that they, together with E.H. Merrill and J.P. Potter, were elected directors at a meeting of the stockholders, held on May 3, 1911. The defendants claim that E.J. Boyes, Guy Wilkinson, Lucien Simon, C.S. Goodrich, and F.J. Hanus were duly elected directors at a meeting held on the nineteenth day of May, 1911. The court found in favor of the defendants and entered judgment accordingly. The plaintiffs appeal from the judgment, and from an order denying their motion for a new trial.

The capital stock of the corporation consists of one thousand shares, all of which was subscribed and issued. The by-laws provided that the annual meeting of the stockholders should be held on the tenth day of January in each year, and should be called by ten days' notice printed in a newspaper, and by notice in writing mailed to each stockholder at least ten days before the meeting. Other stockholders' meetings were to be "called by like notice." It is alleged in the complaint, and admitted by the answers, that no annual or other meeting of the stockholders was held on the tenth day of January, 1911. The meeting of May 3, 1911, at which the plaintiffs claim to have been elected, was attended by stockholders claiming to own or represent 991 shares. The defendant Wilkinson claimed to be the owner of 321 shares. Two hundred and twenty shares of these had been transferred to his name on the books of the corporation within ten days prior to the date of the meeting. An injunction restraining Wilkinson from voting one hundred shares of the remaining stock held by him had been issued and served shortly before the meeting. He made no attempt to vote these one hundred shares. The plaintiffs disputed his right to vote the 220 shares which had not been standing in his name for the ten-day period. A motion to adjourn the meeting was made, and Wilkinson was permitted, over the objection of the appellants, to vote his 220 shares in the affirmative. With the aid of his vote, the motion was carried, and the chairman declared the meeting adjourned. The court found that the stockholders who had voted for the adjournment immediately left the room and that the remainder, holding less than half of the stock *Page 368 of the corporation, thereupon proceeded to elect directors, electing the plaintiffs and their associates. This is the election upon which the appellants found their claim.

The parties argue a number of points with reference to the validity of these proceedings. Thus there is much dispute over the question of Wilkinson's right to vote the 220 shares; over the consequent validity of the vote for adjournment; over the question whether the persons opposing the plaintiffs did, in fact, leave the meeting-place before the election of directors, and whether, if they did, a valid election could be held when only a minority of the stock was present or represented. We do not find it necessary, however, to go into any of these questions, as we feel satisfied that the meeting of May 3d was not one at which there could, in the absence, at least, of consent of all the stockholders, be a valid election of directors. The notice for this meeting stated that a special meeting of the stockholders had been duly called and would be held at a place and time designated, "to transact such business as may come before the said meeting." Under the Civil Code (sec. 302) "the directors of a corporation must be elected annually by the stockholders or members," and the time for the meeting is fixed unless provision therefor is made in the by-laws. Here the by-laws did provide that such meeting should be held on the tenth day of January in each year, and there is no provision in such by-laws for an election at any other time: Section 314 of the Civil Code provides, however, that if an election has not been held at the appointed time, it may be held at some other time ordered by the directors or "a meeting may be called by stockholders as provided in section three hundred and ten."