Simpson v. Salsbury

SCOTT (Robert H.), J. pro tem.* This is an appeal from a judgment of the Superior Court relating to election of a board of directors of Consolidated Produce Company, Ltd., [796]a California corporation, in an action brought pursuant to section 2236, Corporations Code.

In July of 1947 the corporation had 9,180 shares of its stock outstanding. The beneficial owners and holders of 4,984 of these shares deposited them in trust with a depositary bank and executed a trust agreement naming three trustees to vote the stock for ten years. Each owner in turn received a voting trust certificate covering the number of shares so deposited.

In March, 1953, an amendment to the trust agreement was approved by beneficial owners of 4,616 of these shares extending the term of the trust agreement to the year 1967. Plaintiffs Forbes and White, each owning 184 shares, refused to agree to the amendment.

A meeting of the shareholders of the corporation was called for March 21, 1959, for the purpose of electing nine members of a board of directors for the ensuing year. At that meeting the three trustees, over objection of Forbes and White, voted the 4,984 shares. Nine directors were elected, including three persons named as plaintiffs in this action (Pieper, Smith and Simpson), five persons named as defendants (Boekenoogen, Culver, W. B. Witmer, W. S. Witmer, and Salisbury [erroneously spelled Salsbury]), and one Fennimore who resigned and by vote of the other directors was replaced by Carl W. Barrow. The votes of Forbes and White were cast for Pieper, Smith, Simpson and Forbes, but were disallowed and not counted.

The complaint in this ease was filed on May 28, 1959, alleging among other matters that the voting trust was invalid because the voting trustees had failed to obtain a permit to issue voting trust certificates as required by the Corporations Code of the State of California. Plaintiffs asked that the court declare the voting trust to be void or terminated prior to the March 21, 1959 meeting, that the purported election of directors was invalid, that the appointment of Barrow as director was null and void and that a new election be called.

The case was tried on stipulated facts and, on August 4, 1959, judgment was rendered holding that the election of March 21, 1959, was invalid, that the appointment of Barrow as director was null and void, that a meeting of the shareholders of the corporation be held for the purpose of electing a board of directors not less than ten nor more than thirty days after entry of judgment and at that time the votes of Forbes and White should be recognized. The judgment contained no determination as to whether the voting trust was