ent, is contradicted by the testimony of persons who were at the meeting, fails to prove any such proceedings by the company. A corporation is not bound, as to third persons, by interpolations fraudulently inserted in its records, if the third persons have not acted on or seen or known of the existence of the matters interpolated and appearing to be a part of the records.

§ 296. Irregularities.-The courts will not readily listen to complaints respecting the regularity of the proceedings of corporate meetings. "Looking at the nature of these companies, looking at the way in which their articles are formed, and that they are not all lawyers who attend these meetings, nothing can be more likely than that there should be something more or less irregular done at them." If the thing complained of is a thing which, in substance, the majority of the members are entitled to do, or if something has been done irregularly which the majority are entitled to do regularly, or if something has been done illegally which the majority are entitled to do legally, there can be no use in having a litigation about it, the end of which is only that a meeting has to be called, and then ultimately the majority gets its wishes. If it is a matter of that nature it only comes to this, that the majority are the only persons who can complain that a thing which they are entitled to do has been done irregularly.1 Accordingly, in an action against a corporation upon a note signed by its officers, where it appears that the execution of the note was expressly authorized at a meeting of the board. of directors, it will be presumed, in the absence of any proof to the contrary, that the board was rightfully in session at the time the authority was given. A shareholder who has re1 Brown v. Dibble, (1887) 65 Mich. v. Potts, (1851) 23 N. J. 66; Harden520. burgh v. Farmers' &c. Bank, (1834)

5

2 Holden v. Hoyt, (1883) 134 Mass. 3 N. J. Eq. 68; Gorham v. Campbell,

181.

3 MacDougall v. Gardiner, (1875) 1 Ch. Div. 13, 25; People v. Peck, (1834) 11 Wend. 604; s. c. 27 Am. Dec. 104; In re Wheeler, (1886) 2 Abb. Pr. N. S. 361; People v. Wickham, (1829) 1 Paige, 590; Hughes v. Parker, (1849) 20 N. H. 58; Downing

(1852) 2 Cal. 135.

4 MacDougall v. Gardiner, (1875) 1 Ch. Div. 12, 25, citing Mozley v. Alston, 1 Phill, Ch. 790; Foss v. Harbottle, 2 Hare, 461.

3 Hardin v. Iowa Ry. & Const. Co., (1889) 78 Iowa, 726.

ceived notice of the purpose of a corporate meeting by means of circulars will not be heard to question the legality of proceedings taken thereat on the mere ground that the company omitted to advertise the meeting in the public prints as required by the articles of association. And it does not lie in the mouth of a member who has participated in the irregular proceedings to question their legality. One who has failed at the time to challenge illegal votes has no equitable right to have the result set aside. And generally, the right to object to irregularities in the proceedings of a corporate meeting may be lost by laches, either by attending and remaining silent at the time or by failing to protest promptly upon learning of the doings of the meeting. And this rule applies

1 In re British Sugar Refining Co., (1857) 3 Kay & J. 408, 417.

2 In re British Sugar Refining Co., (1857) 3 Kay & J. 408; Wiltz v. Peters, 4 La. Ann. 339. Nor can his transferee raise the question. In re Syracuse &c. R. Co., 91 N. Y. 1. In Reed v. Hayt, (1888) 109 N. Y. 659, a president of a corporation, to whom stock had been issued for services and advances, sold his stock, including the shares so issued, to defendant, who refused to pay the purchase money on the ground of defect of title, because only three of the five directors (of whom the president was one) were present at the meeting which ordered the issuing of the stock. Neither the company, as then constituted, nor after the resignation of the president and the election of defendant as his successor, nor any stockholder, made any objection to the issue; and defendant, with full knowledge of the facts, used the other stock purchased of plaintiff, the former president, took an extension of time for the performance of the contract of sale, and neither the president nor stockholder made any attempt to annul o avoid the acts of the board. It was held that the facts amounted to

a ratification thereof by the company, and that defendant, by his conduct, was estopped from denying plaintiff's title to the stock. And it was further held in the same case that the stockholders and interested parties having full knowledge also of the fact that the directors not present had no notice of the meeting, and countenancing plaintiff's dealing with the shares as his own, and taking no steps to disaffirm the action of the board in issuing the stock, will be presumed to have ratified the action, and the title of plaintiff to the stock will be validated thereby.

3 In re Chenango &c. Ins. Co., (1838) 19 Wend. 635. Cf. Schoharie Valley R. Case, 12 Abb. Pr. N. S. 394.

4 State v. Lehre, (1854) 7 Rich. 234, 325; Prettyman v. Tazewell Co., 19 Ill. 406; s. c. 71 Am. Dec. 230; King v. Trevenen, (1819) 2 Barn. & Ald. 339; Musgrave v. Nevinson, (1737) 2 Ld. Ray. 1358.

5 State v. Lehre, (1854) 7 Rich. 234, 325; Pretty man v. Supervisors, (1858) 19 Ill. 406; King v. Trevenen, (1819) 2 Barn. & Ald. 332; Musgrave v. Nevinson, (1737) 2 Ld. Ray. 1358.

not only to participating shareholders but also to persons subsequently deriving their shares through them.' The proceedings of a meeting are not invalidated by the president requesting a person to call it to order and to preside over it. in his absence therefrom. The request is a sufficient authority to that person to act in the president's stead."

3

§ 297. Trick, secrecy, or surprise and bribery.— While mere irregularities in the proceedings of corporate meetings do not necessarily constitute a ground for equitable interference, any acts done by a portion of the members which bear the appearance of trick, secrecy or fraud, are invalid and will constitute grounds for avoiding an election, or other proceedings of the meeting. Accordingly, the members are entitled to full information concerning any matter upon which action is to be taken, and to notice, of the purpose for which the meeting is to be held; unless it be a regular general meeting for the transaction of all or any business within the corporate powers; and any variation from the usual course of business,

5

Where a plan for reorganization of a railroad company is not prohibited by law, one who purchases stock, after the plan is adopted, from a stockholder who voted for it, can not object that it is ultra vires. Hollins v. St. Paul, M. & M. R. Co., (1890) 9 N. Y. Supl. 909.

2 People v. Albany & S. R. Co., (1869) 55 Barb. 344, 361, holding that the person called to preside need not be a stockholder. It is sufficient if he hold a proxy to vote at the meeting.

3 People v. Albany & S. R. Co., (1869) 55 Barb. 344, 363, citing Wiltox on Corporations, 51; Rex v. Gaborian, 11 East, 77; Grant on Corporations, 204; People v. Peck, (1834) 11 Wend. 611; In re Pioneer Paper Co., 36 How. 108.

4 In a case in point in New York, there was a contract between two companies whose lines were parallel, by which tributary territory was pre

served to each, to prevent an unprofitable war of construction. After the directors of one of the contracting companies had passed resolutions to construct branch lines in violation of the contract, a meeting of the stockholders passed a resolution ratifying all the acts of the directors during a period of time covering the dates of the resolutions referred to, but it did not appear that those resolutions were read at the meeting, or the attention of the stockholders called to them, and there was evidence that some of the assenting stockholders were actually misled. Accordingly, there was held to be no such ratification of the directors' resolutions as would preclude the stockholders from insisting that the contract be performed. Ives v. Smith, (1889) 19 N. Y. St. Rep. 550. 5 Vide supra, § 283.

6 Warner v. Mower, (1839) 11 Vt. 385, 391, 394.

490

ceived no
of circul

ceeding
omitte

quire

the

pro

a'

CORPORATE MEETINGS AND ELATIONS.

or from such matters as have been

legally made at a

[$ 297.

mentioned in the notifica

does a clause in the charter declaring that all or any business tion, will render the proceedings pro tanto voidable.1 Nor of the corporation may be transacted or acted on at special meetings, nor a by-law passed in pursuance of the charter, prescribing how notice of special meetings shall be served Thus an assessment upon shares already fully paid can not be ing in such a case, the purpose in the notice of the meeting. objects of the meeting, so that they can attend and vote upon been duly notified of the proposed assessment as one of the meeting was to amend the by-laws, an election of officers can a matter of such importance. And where the object of the not be held at the same time. But a notice of a corporate meeting is not bad because it states as one of the purposes of the meeting the consideration of a matter which the company could not lawfully act upon; and resolutions passed at the meeting in respect of things within the corporate powers are not rendered invalid by reason of resolutions regarding other matters ultra vires. In a well considered English case it is held that notice of an intention "to remove any of the present directors" would justify a resolution removing all of them." Where the constitution of a society prescribed a different order of business for different meetings, and further declared that any of those orders might be suspended at any time by

special meeting, unless the stockholders have

1 Atlantic De Laine Co. v. Mason, (1858) 5 R. I. 463, 471, 472, per Ames, C. J. Cf. People v. Albany & S. R. Co., (1869) 55 Barb. 344; Smith v. Erb, 4 Gill, 437; Warner v. Mower, (1839) 11 Vt. 385. At a meeting of pew-owners called by a justice of the peace, on application to him therefor, for the purpose of organizing a corporation, the pew-owners have no power to pass votes making repairs, or controlling the meetinghouse, the meeting being called before the corporation was organized. Mayberry v. Mead, (1888) 80 Me. 27.

2 Atlantic De Laine Co. v. Mason,

(1858) 5 R. I. 463, 471, 472, per Ames,
C. J.

3 People's Ins. Co. v. Westcott, 14
Gray, 440.

4 Cleve v. Financial Co., (1873) L. R. 16 Eq. 363, 377, 378.

the vote of the majority of the members present at any meeting, but with the proviso that this should not be construed so as to justify the introduction into any meeting of business which did not properly belong to it and for which special provision was made in the constitution, it was held that the suspension of any particular order could take place only on the evening to which that order was specially assigned.' The selling of votes or of proxies to vote at corporate meetings is prohibited by statute in New York, and a person offering to vote may be required by the inspectors of the election to take an oath that he has neither directly nor indirectly received. any promise or sum of money, or anything of value, to influence his vote. So on the other hand the person offering to vote as an agent, attorney or proxy may be required to swear that he has not induced the giving of the authority by bribery.3

§ 298. Elections.-The manner of electing directors and officers of corporations is regulated largely by custom, and in the absence of any positive law on the subject, all that is necessary is that the will of the members be accurately ascertained. The presumption omnia rite acta is applicable to corporate elections, and in the absence of positive proof of irregularities amounting to a suppression of the will of the electors, the courts are reluctant to question the validity of the proceedings. Although it is not lawful to open the poll

6

1 Weatherly v. Montgomery Co. Medical & Surgical Society, (1884) 76 Ala. 567.

2 N. Y. Laws of 1890, ch. 564, § 54. 3 N. Y. Laws of 1890, ch. 564, § 54. 4 In re Chenango County Ins. Co., (1838) 19 Wend. 634; Fox v. Allensville &c. Turnpike Co., 46 Ind. 31; Philips v. Weckham, (1829) 1 Paige, 590. At a meeting of stockholders called to elect directors under Ohio Rev. St. § 3246, the right to choose the inspectors of election is vested in the stockholders and not in the directors. State v. Merchant, (1881) 37 Ohio St. 251.

5 Hathaway v. Addison, 48 Me. 440. In an election for directors, where

there is no proof that there were not enough votes cast to elect, and the directors elected received all the votes cast, there is no presumption that the votes cast were not sufficient to elect. Beardsley v. Johnson, (1888) 49 Hun, 607.

6 On an information in the nature of a quo warranto, to test respondents' title to the office of trustees of an incorporated religious society, it appeared that notice was given for the regular election after the morning service; that, owing to some disturbance, the chairman of the board of trustees adjourned the meeting of his own motion; that several members announced that there would be