Hall v. West Chester Publishing Co.

Opinion by Mr. Justice Fell, By the petition filed in the common pleas the court was asked to set aside a sheriff’s sale of personal property because of the failure of the sheriff to duly advertise the same, and to strike off the judgment by confession under which the sale was made for the reason that the confession was not authorized by a lawfully constituted board of directors. The alleged failure to duly advertise was not sustained by proof. The execution of the judgment note had been authorized by the directors at a regular meeting of the board ten months before the sale. At this meeting four of the five directors were present. It was admitted that the debt for which the judgment note was given was due the plaintiff for money loaned the company. Some of this money had been furnished by him nearly five years before, and a judgment note as to the regularity aud validity of which there could be no doubt, was given by the company to him at the time. This note was canceled and the amount due on it was included in the note in question. The merits are strongly with the plaintiff, who was enforcing a judgment given months before for a debt admittedly due, and for which he could have recovered judgment by action. The apparent informality in the proceedings of the company in maintaining its organization is due to the fact that during the greater part of its existence the board of directors has included all the stockholders, and no distinction has been observed between stockholders’ and directors’ meetings. The last election of directors at a stockholders’ meeting was in 1890, when three directors were elected. At a meeting in 1891, at which all of the stockholders appear to have been present, the number of directors was increased to five, and the appellant — 565 — was chosen one of the additional directors, and on his motion the other one was chosen. Since then all the stockholders have been directors, and vacancies in the board of directors have been filled at the directors’ meetings as they occurred. The action of the board has thus been the action of the stockholders, and whatever has been done has been done with the consent of all. Under the provisions of the Act of May 14, 1891, P. L. 61, the three original members of the board would hold their offices until their successors were chosen, and it was in the power of the stockholders at any time to increase the number of directors to five. The proceedings have been informal and irregular, but the appellant, who has participated in them, and who has served as a director since 1891 under an election not more regular than that of his associates on the board, has no standing as a stockholder of the company to object to the title of the other directors to their offices. Nor had he a standing as a creditor to ask that the judgment be struck off. The judgment could not have been struck off on the application of the defendant, as there was no irregularity on the face of the record. “ A motion to set aside or strike off a judgment must be on the ground of irregularity appearing on the face of the record; a motion to open it is an appeal to the equitable power of the court to let the defendant into a defense: ” O’Hara v. Baum, 82 Pa. 416. The distinction between these rules is very frequently overlooked in practice, and at times, owing to the admission of facts not of record, it has not been observed in the language of the decisions. But as said by Mitchell on Motions and Rules, p. 75: “The rule as stated by Chief Justice Shabswood in O’Hara v. Baum, above quoted, is the true and settled rule, and will always be enforced when the attention of the court is directed to it.” See also France v. Ruddiman, 126 Pa. 259; Adams v. Grey, 154 Pa. 258. The defendant raised no objection to the judgment, and could have raised none; and, as stated by the learned judge of the common pleas, if the application had been to open the judgment, the evidence would not have warranted the court in awarding an issue. The averment of the insolvency of the corporation made in the amendment to the petition, if established by evidence, did not affect the power of the company to make the — 566 — note, and the rights of the creditors in the distribution of the assets could not be determined in this proceeding. The order of the court dismissing the petition is affirmed at the cost of the appellant. Sterrett, C. J., dissents.