Opinion
Argued January 29, 1878
Decided February 5, 1878
William A. Cumming, for appellants.
F.L. Westbrook, for respondents.
The claim of the relator, as a stockholder of the New York Cement Company, to a peremptory mandamus, rests upon the provisions contained in 1 Revised Statues, 604, § 8. This section declares that if the election for directors of any bank or other incorporated company of this State shall not be duly held on the day designated, etc., * * * "it shall be the duty of the president," etc., "to notify and cause an election for directors to be held within sixty days immediately thereafter." The appellants, who are officers of the New York Cement Company, a manufacturing corporation organized under the act of 1848, insist that all provisions as to the elections of officers of the corporation are contained in the last-mentioned act, and that none others have any application. The third section of the act last mentioned (3 Edms. R.S., 733) provides that the stock, property and concerns of the corporation shall be managed by trustees, who shall, except the first year, be annually elected by the stockholders, at such time and place as shall be directed by the by-laws of the company, and public notice of the time and place shall be published as required. The fourth section (3 Edms. R.S., 734) enacts that in case it shall happen at any time that an election of trustees shall not be made on the day designated by the by-laws of said company, when it ought to have been made, the company for that reason shall not be dissolved, but it shall be lawful on any other day to hold an election for trustees in such manner as shall be provided for by the said by-laws. And all acts of trustees shall be valid and binding as against such company until their successors shall be elected. The provision last cited does not, we think, conflict with the provision of the Revised Statutes to which we have referred.
The third section expressly provides for the management of the affairs of the corporation by trustees, and for their annual election after the first year. The fourth section against a dissolution of the corporation in case of a failure to elect trustees and legalize a subsequent election. The provision therein that the election shall be according to the by-laws evidently relates to the notice to be given, the formal proceedings, including the qualification of voters, and other matters which may very properly be regulated, and in this case actually were provided for by the by-laws. The fact that no provision is made by the by-laws for any other than the annual election, of itself, does not prevent such election being had, or in any way interfere with the holding of the same.
If trustees could keep themselves in office by not having an annual election, the stockholders would be powerless and they might perpetuate themselves in power as long as they chose. Such a course would also be in direct opposition to the mandatory provision requiring that trustees to be annually elected shall manage the affairs of the company The enactment (§ 8, 2 R.S., 604, supra) prevents any such arbitrary use of power and protects stockholders of corporations from the misconduct of their officers in this respect. It imposes a duty upon those officers, in case of a failure to elect, to give notice of another election within a time limited by the section cited. This is in entire harmony with the provisions of the manufacturing act, and does not conflict in any way with the right of the officers to make reasonable and prudential rules and regulations for the management and disposition of the stock and business affairs of the company under section eight of the act. To hold that an election of officers of a corporation must utterly fail because those in power, by accident or design, omit to do their duty, and by neglecting to give the proper notice, or by failing to make proper by-laws for that purpose, would be in contravention of the manifest intention of the law and sanction a construction entirely unwarranted. No such power was intended to be conferred upon officers of corporations. And that the provision of the Revised Statutes cited is applicable to manufacturing companies is upheld in the case of Bowen et al. v. Lease (5 Hill, 221). That the law provides that the company shall not be dissolved, because there is a failure to elect officers, does not aid the appellants' case, for such a provision might very properly be made for the protection of stockholders.
As the statute is imperative, the duty of the appellants was entirely manifest and well defined, and a clear case for a peremptory mandamus is made out.
The order should be affirmed.
All concur.
Order affirmed.