San Buenaventura Commercial Mining & Manufacturing Co. v. Vassault

By the Court: The general question to be determined concerns the validity of the election of Yassault and others as members of the board of trustees of the corporation plaintiff. Several minor questions, supposed to affect the principal question stated, were made at bar. It is claimed that the by-laws of the corporation do not provide for an annual meeting at which less than a majority of the entire stock is [537] represented, and that such a by-law, even if attempted, is not authorized by the statute. The views we entertain as to the necessity of notice, and the sufficiency of the notice under which the stockholders’ meeting in this instance was held, render it unnecessary for us to express an opinion upon the other questions referred to. The statute (Hitt., Sec. 936) requires that the board of trustees shall be “annually elected by the stockholders, at such time and place, and upon such notice * * * as shall be directed by the by-laws of the company.” The plain meaning of this is that the annual meeting cannot, unless all the stockholders be actually present and consenting in person or by proxy, be legally held until after notice of the time and place thereof first be given in some authentic and legal mode. Here, there was none given, unless we consider that the first clause of the twelfth by-law of this corporation of itself operated the requisite notice. That clause is as follows: “The annual meetings of the stockholders shall be held on the third Monday in April, at the office of the company, in San Francisco.” Conceding that this by-law is notice per se that the annual meeting of stockholders will be held on the third Monday in April of each year, it is insufficient as a notice of the point of time during that day at which the meeting is to be held. Had the by-law in question provided that the annual meeting should be held in the third week of the month of April of each year, it would have been clearly insufficient as a notice of the time at which the meeting would be held, and would have been construed as merely directing the proper officers to give notice of a meeting to be held at some specified time during the designated week. The fact that the by-law here names a day upon which, instead of a toeelc within which, the annual meeting is to be held, while it may diminish, does not remove the uncertainty as to the time at which it is to be held. A meeting held on that day, at any time within the business hours customarily observed in San Francisco, might be fairly claimed to have been held pursuant to the notice. A body of the stockholders might meet at ten o’clock A. m. of that [538] day and proceed to transact the business of the annual meeting, including the election of trustees; at a later hour of the same day—say at twelve o’clock H.—another body of the stockholders, it maybe representing the actual majority of the stock, might convene and proceed to elect a different board of trustees, and each of these bodies might equally claim to have proceeded pursuant to the notice contained in the by-law of the corporation. In view of the frequent and constantly recurring struggles by different combinations of stockholders to obtain control of the corporate direction, often resulting in serious embarrassment to the corporate interests, it is highly important that the notice should be so definite and certain in its character as to leave no room for controversies such as the one now before us. The court below held that a meeting of a portion of the stockholders convened on the third Monday of April, 1873, without notice, other than such notice as was operated by the' first clause of the twelfth by-law already recited, was regular and legal. The opinion of the court, sent up in the record, refers to the case of Warren v. Mower (11 Vermont, 385), as an authority in support of its conclusion in this respect. But an examination of that case will show that the question here was not involved there. It could not have been, because the notice to the stockholders giveii in that case was precisely such a notice as we have determined to be necessary in this case. The charter of the “Green Mountain Woolen Manufacturing Company” provided that the annual meeting of stockholders should be held on the jfirst Wednesday of April of each year, and it appeared “that the said annual meeting (in question in that case) was notified by the clerk of the company by leaving at the usual place of business of each member of the company, or by addressing to him by mail, at least ten days previous to said meeting, a written notice that the annual meeting of the stockholders of said company would be held at their counting-room on Wednesday, the 5th day of April then next, at ten o’docta in the forenoon. The only question considered in that case was as to whether at an annual meeting of the stockholders, conceded [539] to have been regularly held, the proceedings could extend to other than the business usual at such meetings—in that instance the making of a general assignment of the real and personal estate and choses in action of the corporation. It results from these views that the judgment of the court below was erroneous. Judgment reversed, and cause remanded with directions to the court below to render judgment for the plaintiffs upon the findings of fact; and for such further proceedings as may be proper, and not inconsistent with this opinion.