Pratt-Low Preserving Co. v. Jordan

California Supreme Court Jan 27, 1933 No. Docket No. S.F. 14691.Published

Before: Seawell

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Holding. The court held that a corporation's 1919 increase in the number of directors, performed in compliance with the then-existing Section 361 of the Civil Code, was valid despite the failure to formally amend the articles of incorporation under Section 362, as the latter was permissive rather than mandatory. Consequently, the corporation is entitled to a writ of mandate compelling the Secretary of State to file a certificate of amendment to decrease the number of directors.

Issues

Can a corporation that increased its number of directors in 1919 under former Civil Code section 361, without amending its articles under former section 362, now decrease that number under current law?
Were the provisions of Civil Code section 362 as it read in 1919 mandatory or permissive regarding the amendment of articles of incorporation to change the number of directors?

Disposition. granted

Quotations verified verbatim against the opinion

“the provisions of section 362, supra, so far as pertinent here, were permissive only and not mandatory, and compliance therewith necessarily was not a condition precedent to increasing or diminishing the number of directors.”

“The petition for a writ of mandamus is granted, and the writ heretofore issued is made peremptory.”

SEAWELL, J.

Petition for a writ of mandate compelling the Secretary of State to accept for filing a certificate of amendment of articles of incorporation of the Pratt-Low Preserving Company decreasing the number of its directors from nine to seven. The respondent Secretary of State has demurred generally to the petition.

As originally incorporated in 1905 petitioner corporation had seven directors. Thereafter in 1919, pursuant to sec

[294]

tion 361 of the Civil Code as it then read (repealed in 1929), steps were taken to increase the number of directors to nine. Accordingly, there was filed with the respondent Secretary of State on April 5, 1919, a certificate purporting to show such an increase of directors. It is admitted that the provisions of section 361,

supra,

were fully complied with by petitioner. Since 1919 and until April, 1932, petitioner purported to act by and through a board of nine directors. At this latter date, and under and pursuant to the provisions of section 362 of the Civil Code as enacted in 1929, petitioner took steps to decrease its board of directors to the original number of seven. Pursuant to the provisions of that section petitioner presented for filing with the Secretary of State, a certificate showing such decrease in the number of directors, and indicating that the articles of incorporation had been amended accordingly. The respondent Secretary of State concedes that the certificate satisfies the requirements of section 362,

supra,

as it now stands, but has refused to file said certificate on the ground that the attempt to increase the number of directors from seven to nine in 1919 was abortive and to permit a purported decrease from nine to seven now would be an idle act. Respondent contends that the purported increase in 1919 was ineffectual for the reason that although petitioner complied with all the provisions of section 361,

supra,

as it then read, it failed to formally amend its articles in accordance with section 362, as it then read.

Pratt-Low Preserving Co. v. Jordan

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SEAWELL, J.

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