Curtin v. Salmon River Hydraulic Gold Mining & Ditch Co.
Before: Harrison
Synopsis
Corporations—Special Meeting of Directors—Notice—Invalid Meeting.—Where the by-laws of a corporation do not designate the person by whom notice of a special meeting of the board of directors is to be given, the requirements of section 320 of the Civil Code apply, and the notice must be given by the secretary; and the acts of a mere majority of the directors present at a special meeting, of which no such notice was given to the absentees, and the minutes of which were never subsequently ratified as required by the by-laws, are not valid acts of the corporation.
Id.—Quorum—Director Interested in Transaction.—The provision of section 308 of the Civil Codeeto the effect that a majority of the directors of a corporation is a sufficient number to form a board for the transaction of business, is to be construed in connection with the provision of section 305 of that code, to the effect that unless a quorum of the board is present and acting, no business performed or act done is valid as against the corporation; and each of these provisions is limited by the principle that a director shall not participate in any act in which his personal interest is antagonistic to that of the corporation.
Id.—Mortgage to Interested Director.—A meeting of the directors of a corporation, at which there is a mere majority of the members of the board, cannot authorize the execution of the corporate note and mortgage to one of the directors present, as security for a past indebtedness due to him from it. And it is immaterial whether the director personally interested did or did not vote for the resolution authorizing such action.
Id.—Mining Coepoeation—Ratification of Invalid Moetgage.—The stockholders of a mining corporation, organized under the laws of the state of California, have no power under the provisions of the act of April 23, 1880, to ratify an attempted mortgage of the mining property of the corporation, which is invalid by reason of a want of authorization of the board of directors.
HARRISON, J.
This action was brought for the foreclosure of a mortgage upon certain mining property, executed to the plaintiff’s assignor by the president and secretary of the defendant. The defendant denied its execution of the note and mortgage, and upon this issue the court found in favor of the plaintiff and rendered judgment accordingly. The defendant moved for a new trial upon the ground that the decision was not sustained by the evidence, and, this motion having been denied, has taken this appeal.
The defendant is a mining .corporation organized under the laws of this state, having a capital stock of one hundred thousand shares, and is controlled and managed by a board of five directors. The promissory note and mortgage upon which the action was brought were executed to Thomas W. Wells, the assignor of the plaintiff, July
24,
1897. Wells had previously advanced moneys to the defendant, and had taken therefor its promissory note for five thousand dollars, all of which, together with eleven hundred and twenty-five dollars of interest thereon, was then unpaid, and he had also, subsequent to the execution of said note, advanced to it the further sum of seven hundred and sixty dollars. The note and
[347]
mortgage were executed in pursuance of the following resolution which had been adopted on the previous day at a special meeting of the board of directors, at which there were present only three of the directors, of whom Wells was one:
“Resolved, that this corporation will borrow from Thomas W. Wells the sum of nine thousand five hundred dollars and execute its promissory note therefor, and that the president and secretary of this corporation be and they are hereby authorized for and on behalf of this corporation to execute said promissory note, payable three months after date, and that said corporation secure the payment of its promissory note for the sum aforesaid by a mortgage on all the property owned by this corporation.
“The above loan is for the purpose of paying note and interest held by Thomas W. Wells, and for moneys advanced to protect overdrafts.” .
The first objection made by the appellant to the validity of the mortgage is that the meeting at which its execution was directed was a special meeting, and that the directors there present were not “duly assembled,” and, therefore, could not perform any corporate act. Section 303 of the Civil Code, authorizes a corporation by its by-laws to provide for “the time, place, and manner of calling and conducting its meetings,” and section 320 of the Civil Code provides that when no provision is made in the by-laws for 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.” It is "provided in the by-laws of the defendant that “the president or two of the directors may call special meetings of the directors at any time, and notice shall be given of such called meeting by leaving a written or printed notice at the last known place of business or of residence of each director at least one day before the time of meeting. Such service of notice shall be entered on 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.” This by-law embodies the provision of section 320 in so far as it designates the persons who are authorized to call a special meeting, but
More from California Supreme Court
- People v. Wende (1979)
- People v. Watson (1956)
- People v. Superior Court (Romero) (1996)
- People v. Kelly (2006)
- Auto Equity Sales, Inc. v. Superior Court (1962)
- Aguilar v. Atlantic Richfield Co. (2001)
- People v. Lewis (2021)
- In Re Estrada (1965)
- Denham v. Superior Court (1970)
- People v. Marsden (1970)