Gallagher v. McAdams

Opinion by Beaver, J., The appellant states the question herein involved as follows: “Whether an injunction will be granted to enjoin against the voting of stock in a building association, which was taken for the exclusive purpose of obtaining control at an election by parties acting at the instance of candidates for office, intending to withdraw afterward.” It is expressly admitted, in answer to a question suggested by the court: “But as I understand it, there was no objection or protest at the time the stock was issued against the issuing of the stock.” Mr. Miller: “I think that is so. It was issued with all regular forms.” In answer to a question by defendant’s attorney, in the cross-examination of one of the plaintiff’s witnesses who was on the stand: “Q. If, as you state, Mr. Doyle said that [at] this protest meeting, that the stock was to be held, how did you come to swear to a bill which says that this stock was taken for the purpose of being withdrawn after the election? A. That is our inference. Mr. Doyle at the meeting said otherwise.” These admissions, therefore, would seem to negative any substantial ground upon which the question involved, as stated by the appel — 86 — lants, is based. The testimony does not establish the fact, which was assumed in the question, that the stock referred to was taken for the exclusive purpose of obtaining control at an election by parties acting in the instance of candidates for office, or that it was taken with the intention of withdrawing it afterwards. Under the testimony, therefore, as appeared before the court at the hearing, the question for decision was, Will the court, by a decree in equity, restrain the holders of stock in a building association, regularly taken in accordance with the by-laws of the corporation, from voting said stock at a regular election for officers of the association, there being no evidence of fraud or of any intention on the part of the takers of the stock to use it in' any way contrary to law or the by-laws of the association? The purchase of stock in a regular way, under the rules of the building association, was open to all subscribers, and even if it were clearly proved that the defendants purchased the stock for the purpose of using it at a regular election for officers, we cannot say that that was either illegal or irregular. All the parties had a perfect right, as we understand it, to do this. Whether the stock so used changed the result of the election from what it would have been, if it had not been so used, it is not, therefore, important to inquire. In Com. v. Dalzell et al., 152 Pa. 217, it was held: “The right of voting stock at corporate elections is an incident of ownership, to be exercised, of course, in the mode and under the restrictions prescribed by the charter and by-laws; but nevertheless a part of the stockholder’s property, inherent in him by virtue of his title. As said by the present chief justice in Tunis v. Hestonville, etc., R. R. Co., 30 W. N. C. 96, The right of voting stock is inseparable from the right of ownership. The one follows as a sequence from the other, and the right to vote cannot be separated from the ownership without the consent of the legal owner.’ ” The stock in question, therefore, having been regularly — 87 — issued, in accordance with the rules of the association, and the 200 shares, the voting of which by the bill is specially sought to be enjoined, having been subscribed by authority of those to whom it was issued, we can see no reason why the owners thereof did not have a perfect legal right to vote the number of shares held by them, at the election on October 21, 1910. The order of the court, refusing the preliminary injunction, therefore, on affidavit and argument, and refusing the permanent injunction, after testimony and hearing, was, we think, entirely proper. The first and thirteenth assignments of error are, therefore, overruled. Upon the hearing, several questions relating to the admissibility of testimony are raised in the second, third, fourth, fifth and sixth assignments of error. The plaintiffs offered to prove by Peter J. Gallagher, one of the plaintiffs then on the stand, in answer to a written statement of the plaintiffs’ case, made at the request of the court, which was afterwards sworn to and is on file, that Mr. Rhoads, counsel for the defendants, arose, and, addressing the court, in the presence and hearing of Mr. Doyle and the other defendants in this case, said: “We admit that this stock was taken with a view to the election.” We think the offer was properly rejected. It was immaterial and, if to be relied upon, should have been taken down at the time and not made the subject of verbal testimony, based upon the recollection of an interested witness, likely to give rise to an immaterial and irrelevant issue. So as to the offer to ascertain by the cross-examination of Charles Resch, as shown in the third, fourth, fifth and sixth assignments of error, that he was a working man, dependent upon his wages, and the salary received from the Prosperity Building & Loan Association, as its secretary, to support himself and family; that he had a family, consisting of wife and children, and other questions concerning his ability to pay the dues upon the stock in the association for which he had subscribed and upon which he was regularly paying the regular dues of the association. — 88 — This was entirely irrelevant to the issue, as we regard it. Whether he borrowed or begged the money with which he paid his dues was in no sense a question which the plaintiffs had a right to raise at that stage of the hearing. That was a question solely for the association and, if the witness declined or refused to pay his dues, the remedy was with the association under its by-laws. We are unable to see how the status of the witness as a stockholder could be affected by any of the facts sought to be shown in the inquiries, as contained in the specifications of error above mentioned. In view of the final disposition of the case, and the ground upon which it was ruled, we are of opinion that the refusal of the court to allow the plaintiffs to examine the minute book of the association, which was produced by the secretary, was proper, the view of the court being, “My view is that this is not the right proceeding for remedy, and therefore'it is immaterial what they (the minutes) show in this proceeding.” The eighth and ninth assignments of error relate to the decree of the court, and its refusal to change it upon motion, the decree being as follows: “And now, to wit, December 16, 1910, this cause came on to be heard at this term and was argued by counsel, and upon consideration thereof, and it appearing upon the hearing of the said case that the complainants have not sustained the case made in the bill, and that the subject-matter of the said bill is not properly the foundation of an action in equity, it is ordered, adjudged and decreed, pursuant to rule 68 of the equity rules, that the complainants’ bill be dismissed with costs.” It is not necessary, therefore, to refer at length to the tenth and eleventh assignments of error, which deal with the refusal of the court to strike out passages of the defendants’ answer, as therein set forth, inasmuch as the refusal to do so in no way injured the appellants or could have influenced the action of the court, even if the changes asked for had been made. — 89 — It follows also that the fourteenth assignment of error, which is scarcely in accordance with our rule, in that it does not set forth the decree in totidem verbis of which it complains, is also overruled, which practically alleges that the court erred in not decreeing “that Charles Knorr, John M. Lutz and Michael Francis Doyle had not been validly elected for the offices of president, treasurer and solicitor respectively of said association, but that Peter J. Gallagher, James McIntyre and Thomas H. McCaffrey, plaintiffs, were duly and validly elected to fill said respective offices of said Association.” It was held, in the opinion of Judge Ferguson, which covers the entire ground upon which the bill was dismissed quite fully and satisfactorily, that “So far as the bill relates to the election which was held in October, 1910, we are of opinion that the complainants have an adequate remedy at law by a proceeding quo warranto. In view of the fact, however, that the bill prays that the stock, which is the subject-matter of the complaint, shall be enjoined from future exercise of the voting privilege, we are obliged to say there is nothing in the evidence which would justify the court in entering the decree prayed for. The exceptions are dismissed.” In Updegraff et al. v. Crans, 47 Pa. 103, Mr. Justice Thompson, delivering the opinion of the court: “A bill in equity for an injunction to restrain borough officers from entering upon official duties, under an alleged illegal appointment of town council, will not lie, though they had not exercised or attempted to exercise the duties of their offices; the remedy is at law, by quo warranto, and to be invoked after entry into, or exercise of authority under, their appointment.” So in Jenkins et al. v. Baxter et al., 160 Pa. 199, the present chief justice delivering the opinion: “The power of supervision and control of corporations, conferred by the Act of June 14, 1836, P. L. 621, upon courts of equity will be used to supervise and control corporate elections, where it is shown in advance that, by reason of fraud, vio — 90 — lence or other unlawful means, a fair and honest election cannot be held, but it will not be exercised to set aside an election regularly held. ■ “Where a corporate election is held at the proper place and the appointed time, and the meeting is regular, quiet and orderly, the only way to contest the validity of the election is by writ of quo warranto, as provided by the Act of June 14, 1836, P. L. 621.” So in Bedford Springs Co. v. McMeen, 161 Pa. 639: “A bill in equity to compel the surrender of the property of a corporation cannot be sustained where it appears that the real question in controversy is the validity of the election of the defendants as officers of the corporation. In such a case, quo warranto is the appropriate remedy.” See also Goldsworthy et al. v. Boyle et al., 175 Pa. 246; Brower v. Kantner, 190 Pa. 182. Even more directly in point is the case to which we are referred by the appellee, of Paynter et al. v. Clegg et al., which was a case decided by Judge Paxson when on the common pleas bench, 9 Philadelphia, 480, in which it was decided: “An injunction will not be continued against a corporation merely because a dispute has arisen as to the election of directors who have not yet taken their seat,” in which it was also held, that “If hereafter any person shall be found usurping the functions of an officer of this corporation, the writ of quo warranto is a convenient and fitting remedy. . . . It has the advantage of not bringing the entire business of the corporation to a standstill, pending an unimportant election contest.” The present practical question raised by this appeal is, whether or not the officers elected in October, 1910, and possibly re-elected since, although that does not appear in the case, are the bona fide officers of the Prosperity Building & Loan Association. The proper remedy, as pointed out in the several cases to which we have referred to determine this question, is by a writ of quo warranto, which is not only a proper and con — 91 — venient remedy but is, under the circumstances of this case as we view it, the only one. The decree of the court below is, therefore, affirmed, and the appeal dismissed at the costs of the appellants.