State ex rel. Corey v. Curtis

By the Court, Hawley, J. : The board of trustees of the Ophir Silver Mining Company consists of seven members. At a meeting held on the 29th day of June, 1874, there were present six trustees, viz. : Lissak, Locan, Hassey, Baldwin, Grayson and Hall. On motion, a vote was taken to elect a trustee to fill a vacancy occasioned by the resignation of trustee Peart. This vote resulted in a tie; trustees Lissak, Locan and Hassey voting for W. S. Lyle; trustees Baldwin, Grayson and Hall for J. S. Wall; whereupon trustee Lissak, president of the board, having voted as a trustee, claimed the right to give the casting vote under art. VI. of the by-laws, of the corporation, which provides that the president ‘ ‘ shall have the easting vote at all meetings of the stockholders and trustees,” and again voting for W. S. Lyle, declared him duly elected a trustee. — 335 — At the same meeting, motions were made to declare vacant the position of superintendent held by respondent, and to elect a successor. Trustees Baldwin, Grayson and Hall objected to Lyle voting, and claimed that he was not legally elected a trustee, having only received three votes, and further claimed that there was no vacancy, respondent Curtis having been regularly elected superintendent on the 22d day of March, 1874, and never having been legally removed. Notwithstanding these objections the motions were carried in the affirmative and the relator, Corey, was elected superintendent by the votes of trustees Lissak, Locan, Hassey and Lyle; trustees Baldwin, Grayson and Hall voting in the negative. 1. It is contended on the part of respondent that the bylaws of the Ophir company are void. First, because they were adopted by the stockholders instead of the trustees. It appears that they are the only by-laws ever adopted by the corporation. They are found properly recorded in the books kept by the board of trustees, and have been used, acted upon and referred to as the by-laws of the corporation, both by the trustees and stockholders, ever since their adoption in 1860. Under these circumstances, we think they must be considered and treated as the regular by-laws of the corporation. Second, it is claimed that the particular section of the by-laws under which the president is given the casting vote is void, because inconsistent with section 7 of the act providing for the formation of corporations, which declares that: “A majority of the whole number of trustees shall form a board for the transaction of business, and every decision of a majority of the persons duly assembled as a board shall be valid as a corporate act.” General. Laws of California, 1 Hitt. 938. But relator contends that under section 5 of said act, an exception is made in cases where the election is to fill a vacancy. Section 5 provides: “When any vacancy shall happen among the trustees by death, resig — 336 — nation, or otherwise, it shall be filled for the remainder of the year in such manner as may be provided by the by-laws of the company. 1 Hitt. 936. Article III of the by-laws provides that: “Vacancies in the board of trustees shall be filled by the other trustees in office.” Relator also claims that an election to fill a vacancy is not a corporate act and therefore not necessary to be performed by a majority of the board. Is the election of a trustee to fill a vacancy a corporate act? To have perpetual succession and, of course, the power of electing members in the room of those removed by death or otherwise is among the ordinary incidents of a corporation. 2 Kent Com., Sec. 277. “The power to fill vacancies in a corporation and elect officers is a corporate incident.'” Angell & Ames on Corporation, Sec. 144; Kearney v. Andrews, 2 Stockton Ch. (N. J.) 72; Gashwiler v. Willis, 33 Cal. 19. In the general provisions, concerning corporations we find that every corporation has power: “To appoint such subordinate officers and agents as the business of the corporation shall require.” 1 Hitt. 746. In the act, under which the Ophir was incorporated, it is provided that the corporation shall have power, “to appoint such officers, agents and servants, as the business of the corporation shall require.” 1 Hitt. 935. Trustees are elective officers of the corporation; and it follows from the foregoing provisions that their election is a corporate act. Being a corporate act it must be exercised in the manner required by the charter. The act provides that “ a majority of the persons duly assembled as a board shall be valid as a corporate act.” The by-law creates a right of election contrary to the charter. It authorizes an election to fill a vacancy by a less number than the majority. For instance, in the present case, there is an equality of votes; and instead of the election being made by a majority the president really names the trustee. A corporation cannot make by-laws contrary — 337 — to its charter, and it appears to us quite clear that this particular portion of the by-law, if it is susceptible of the construction claimed for it by relator’s counsel, is in violation of the charter under which, and in conformity with which, all corporate powers, all corporate acts, must be exercised. Ye must not be understood as deciding that the power of electing trustees to fill vacancies was delegated to the board of trustees; for upon this we express no opinion; but if so delegated it was not the intention of the legislature to invest the trustees with the power to exercise such a right in any other manner than other corporate acts are exercised; and no right of performing any corporate act unless by a majority vote having been given by the charter, it was not within the power of the stockholders or trustees to change this provision by adopting a by-law giving to the president a double vote. The manner of the election might be regulated by the by-laws, but the substance must be in conformity with the charter. The State v. Adams, 2 Stew. (Ala.) 237; Kearney v. Andrews, supra. Again: it is conceded that the president would not have the right in all cases to give the casting vote and respondent’s counsel contend, for this reason, that the by-law is void; that a single entire clause of the by-laws cannot be good in part and bad in part. We think that this objection is also fatal to this particular clause of the by-laws. In The King v. The Steward, etc., of Faversham, Lord Kenyon, Ch. J., said: “Though a by-law may be good in part and bad in part, yet it can be so only where the two parts are entire and distinct from each other.” 6 T. R. 356. “If a by-law be entire, so that the part which is void influences the whole, the entire by-law is void.” Ang. & A. on Cor., Sec. 358, The same doctrine has frequently been announced in the construction of statutes. It is true, as was said by Shaw, C. J., in Fisher v. McGirr, that “there is nothing inconsistent in declaring one part of the same statute valid and an — 338 — other part void.” 1 Gray, 22. This is sustained by the decisions of this Court. Evans v. Job, 8 Nev. 342. But in all the cases brought to our notice where this principle has been applied, it is where the respective portions of the statute were wholly independent of each other. Judge Cooley says: “The constitutional and unconstitutional provisions may even be contained in the same section, and yet be perfectly distinct and separable, so that the first may stand though the last fall. The point is not whether they are contained in the same section, * * * but whether, they are essentially and inseparably connected in substance.” Cooley’s Con. Lim., 178. This distinction is always recognized in the authorities. Lathrop v. Mills, 19 Cal. 530. 2. Was Lyle such a de facto officer as to make his acts valid and binding? What is an officer de facto? “One who has the reputation of being the officer he assumes to be, and yet is not a good officer in point of law.” Parker v. Kett, 1 Lord Raymond, 658; The King v. The Corporation of Bedford Level, 6 East, 368. “One who actually performs the duties of an office, with apparent right and under claim and color of an appointment or election.” Brown v. Lunt, 37 Maine, 428. “ One who has the color of right or title to the office he exercises; one who has the apparent title of an officer de jure.” Brown v. O’Connell, 36 Conn. 451. “On the one hand he is distinguished from a mere usurper of an office, and on.the other from an officer de jure.” Mallett v. Uncle Sam G. & S. M. Co., 1 Nev. 197; Plymouth v. Painter, 17 Conn. 588. Such in brief arc the general definitions under which we are asked to declare Lyle a de facto trustee. We do not deem it necessary to examine minutely all the points with the numerous subdivisions which were ingeniously and elaborately argued by the respective counsel with a citation of authorities indicative of an extended and praiseworthy research; but shall confine ourselves to what we deem the controlling points in this branch of the case. — 339 — The principle of sustaining the acts of persons as officers de facto is designed as a shield for the protection of the public and of third persons, who are not cognizant of the true state of the facts and are not required by the law to inquire into the title of one who is found exercising the duties of a public office. In order to protect third persons transacting business with such officers under such circumstances as to induce them to believe that they were dealing with legal officers, the law has reached out its strong arm to a dangerous extent, upon the principle that although not officers de jure, they were officers in fact whose acts public policy required should be considered valid. Such a principle certainly ought not to be extended to a case where the rights of the public are not affected, nor where all the parties interested have knowledge that the person pretending to be an officer is not an officer de jure; for in such a case the reason of the rule no loffger exists and the law should not be invoked for protection. As was argued for the crown in the case of the King v. Lisle, decided in the court of king’s bench in 1738, “As an officer de facto is a notional creature only, erected by the law in order to answer the ends of justice and equity under particular circumstances, his power ought not to be extended further than what is absolutely necessary for that purpose.” Andrews, 166. In the case of The King v. The Corporation of Bedford Level, Lord Ellenborough, C. J., said: “In this case Gotobed was never more than deputy; and therefore after the death of his principal he never could have had the reputation of being more than deputy; but such reputation must necessarily have ceased with the knowledge of the death of his principal. When that fact was notorious to the owners of land-in this level, no one could have registered his deed's with him under a belief that he was acting as the assistant of one, who by the course of nature had ceased to fill the office, in the execution of which he was to be assisted by the deputy.” — 340 — Although the law does not always take into consideration the mode by which the office was obtained, yet in order to make a person an officer de facto it does require that he should in some way be put into the office and that he should also have secured such a holding thereof as to be considered really in peaceable possession and actually exercising the functions of an officer. It is shown by the affidavits of Baldwin and Grayson that “the first time W. S. Lyle ever attempted to act as a trustee-of said company was on the said 29th day of June, 1874, when the president attempted to declare him elected as a trustee.” There was no acquiescence in his election. The three trustees who voted against him endeavored to prevent his voting and protested against his being allowed to vote or to take any part whatever in the proceedings of said board. It is true that subsequent to his pretended election a motion was made and carried by an unanimous vote to allow a certain bill. It is also true that Lyle intruded himself by force and actually voted as a trustee at a subsequent meeting of the board. But these acts did not make him a de facto trustee. In the case of The State v. Wilson it was attempted to be proved that one Evans, who had signed orders as adjutant, was in fact adjutant because he acted as such afterwards at a muster. The court said: “The evidence that Evans acted as adjutant afterwards at the muster cannot have relation back, or prove the existence of the authority at the time the orders were issued. There should have been some evidence that he had acted previously.” 7 N. H. 547. In Golding v. Clark, the court held that “in the case of proceedings of, an ancient date, it might be presumed from the regularity of the subsequent proceedings, from the acquiescence of parties interested or from other circumstances, that the records upon the books of a proprietary were made by the clerk, either duly elected or de facto exercising the office; but no such presumption can be properly allowed where the — 341 — transactions recorded are of recent date and the facts admit of ready proof. It was therefore necessary to introduce some evidence tending to show that the supposed clerk acted as such under claim of an election to the office, beyond the mere fact of mahing the records in question.” 34 N. H. 154. In Hall v. Manchester, the same principle was announced. The record failed to show that the selectmen had been elected and their acts in laying out a highway were attempted to be upheld by showing that they acted as such during the year. The only evidence offered was “that two of them undertook to lay out the highway in.question.” The court said: ‘ ‘ There is nothing else in the whole case tending to show that they acted in that capacity and their authority to do that one act is disputed here, and is the very question now in controversy; and to hold that this act furnished any evidence of their authority to act would be begging the whole question.” 39 N. H. 301. "While it is an established principle that the acts of all public officers having the presumptive evidence of title by law, commission, election, or otherwise, and the actual peaceable possession of office, are valid as far at they affect the interests of the public or of third parties; yet, we think, as was held in Vaccari v. Maxwell, “that the decisions in relation to the acts of officers de facto are reasonably to be restricted to those who hold office under some degree of notoriety, or are in the exercise of continuous official acts, or are in possession of a place which has the character of a public office.” 3 Blatch. 377. If the opposing trustees had acquiesced in the selection of Lyle, and allowed him, without objection, to vote upon the removal of respondent and the election of relator, then it might be claimed with some degree of reason, supported by authority, that he was a de facto officer; and if Curtis had surrenrdered up his authority and allowed Corey to act, then the latter would have been superintendent de facto, and all his — 342 — acts as such, would have been binding upon the corporation, although he had not been legally elected to the position. But by what parity of reasoning can it be said that Lyle had any authority to bind the corporation ? He was not elected trustee. He did not have even the color of an election. The very record offered for the purpose of proving his election shows affirmatively that he was actually defeated, not having received a majority vote. He did not have»even “an apparent or prima facie right ” to act as a trustee. His right to vote was denied. Neither the interests of the public nor the rights of third parties were involved or in any way affected by the proceedings. The whole contest is narrowed down to a proposition between two opposing factions equally divided in number as to which shall have the control and managment of the property owned by the corporation. None of the reasons which invoke the protection of the law in order that the ends of justice may be attained can here be urged. The respondent being entitled to the position he holds, it follows that the writ must be denied. It is so ordered.