Page images
PDF
EPUB

A corporation cannot create or declare a lien upon its stock by a by-law, nor refuse to permit a transfer until the indebtedness of the stockholder to the corporation be paid. (Anglo-Cal. Bank v. Grangers' Bank, 63 Cal. 359. Citing Bullard v. Bank, 18 Wall. 589, and Driscoll v. C. M. Co., 59 N. Y. 96.)

DIRECTORS, ELECTION OF, ETC.

Sec. 302, C. C. The directors of a corporation must be elected annually by the stockholders or members, and if no provision is made in the by-laws for the time of election, the election must be held on the first Tuesday in June. Notice of such election must be given, and the right to vote determined as prescribed in section 301. En. March 21, 1872.

Postponing election: Post, sec. 314, C. C.

Section Cited.

Wickersham v. Brittan, 93 Cal. 36, 28 Pac. 792, 29 Pac. 51.

Annotation.

Notice of Meeting.- Notice of day, hour and place of annual meet. ing of stockholders must be given to elect a board of directors, or such meeting cannot be legally held, unless the stockholders are all present, and consenting either in person or by proxy. (San Buena. ventura Mfg. Co. v. Vassault, 50 Cal. 534. To same effect: Thompson v. Williams, 76 Cal. 155, 9 Am. St. Rep. 189, 18 Pac. 153; Smith v. Dorn, 96 Cal. 83, 30 Pac. 1024, with respect to directors' meetings.)

Fact that by-laws fix day upon which such meeting shall be held is not sufficient notice of time and place of meeting. (Id.)

Contest of Election.- An election of directors, made under this sec. tion, may be contested by a party aggrieved, in accordance with section 315, Civil Code. (Wickersham v. Brittan, 93 Cal. 34, 28 Pac. 792, 29 Pac, 51; and see sec. 315, C. C., and note.)

BY-LAWS MAY PROVIDE FOR WHAT.

Sec. 303, C. C. A corporation may, by its by-laws, where no other provision is specially made, provide for:

1. The time, place, and manner of calling and conducting its meetings, and may dispense with notice of all regular meetings of stockholders or directors.

2. The number of stockholders or members constituting a quorum.

3. The mode of voting by proxy.

4. The qualifications and duties of directors, and also the time of their annual election, and the mode and manner of giving notice thereof.

5. The compensation and duties of officers.

6. The manner of election and tenure of office of all officers other than the directors; and

7. Suitable penalties for violations of by-laws, not exceeding, in any case, one hundred dollars for any one offense.

8. The newspaper in which all notices of the meetings of stockholders or board of directors, notice of which is required, shall be published, which must be some newspaper published in the county where the principal place of business of the corporation is located, or if none is published therein, then in a newspaper published in an adjoining county; provided, that when the by-laws prescribe the newspaper in which said publication shall be made, if from any cause, at the time any publication is desired to be made, the publication of such newspaper shall have ceased, the board of directors may, by an order entered on the records of the corporation, direct the publication to be made in some other newspaper published in the county, or if none is published therein, then in an adjoining county. En. March 21, 1872. Amd. 1873-74, 201; 1889, 365.

By-laws of: Post, secs. 305, 308, 323, 344, 599, C. C.
Nature and effect of by-laws: See ante, sec. 201, C. C.
Powers of corporations: See post, sec. 354, C. C.

Legislative History.

This section is similar to section 7 of the incorporation act of 1850, page 347. The section as amended in 1873-74 did not contain the eighth subdivision above. Subdivision 1 ended with word “meetings," and subdivision 4 did not contain the words “the qualifications and duties of directors, and also." The original section as enacted in 1872, contained nine subdivisions, the first of which is the same as in the amended section of 1873-74. The second was as follows: “2. The number of stockholders or members, or the quantity of stock constituting a quorum.” The third was as follows: "3. The number of shares which entitles the stockholders respectively to one or more votes.” The fourth was the same as the third above. The fifth was the same as the fourth as amended in 1873-74, with the words and place” after the word “time. The sixth was as follows: “6. The mode of selling shares for the nonpayment of assessments or installments." The seventh was the same as the fifth above. The eighth read: “8. The terms of office of subordinate officers." The ninth was the same as the seventh above. The number of shares a stockholder votes is now regulated by section 307 of the Civil Code; the place of meeting for election of directors is fixed by section 319 of the Civil Code; the sale of shares for de. linquent assessments is regulated by sections 331-349, inclusive, cf the Civil Code.

Section Cited.

Wickershanr v. Brittan, 93 Cal. 38, 39, 28 Pac. 792, 29 Pac. 51; Smith v. Dorn, 96 Cal. 82, 30 Pac. 1024; People's Bank v. Superior Court, 104 Cal. 653, 43 Am. St. Rep. 147, 38 Pac. 452; Market Ry, Co. v. Hellman, 109 Cal. 599, 42 Pac. 225.

Annotation.

Subd. 1. Meeting – Notice of.-In the absence of a different provision in the charter or by-laws of a corporation, formed under the general laws of this state, a special meeting of the trustees must be called by giving personal notice to each member of the board. (Harding v. Vandewater, 40 Cal. 77. Distinguished: Granger v. 0. E. M. & M. Co., 59 Cal. 682; Stockton etc. Works v. Houser, 109 Cal, 11, 41 Pac. 809.)

And the fact that by-laws fix a time, upon which annual meeting of stockholders shall be held, is not sufficient notice of time and place of such meeting. (San Buenaventura Mfg. Co. v. Vassault, 50 Cal. 534.)

So, also, where a regular meeting of directors of a corporation, from which some members are absent, is adjourned to a future day, the hour of which is not fixed, the meeting held on the day to which the adjournment was had is a special meeting of which notice is required to be given to the absentees at the regular meeting. If no such notice be given an assessment levied at the adjourned meet. ing, in the absence of former absentees, is invalid. (Thompson v. Williams, 76 Cal. 153, 9 Am. St. Rep. 187, 18 Pac. 153.)

A recitation in a resolution, passed at a special meeting of board of directors, that notice had been served on each director, is insufficient to sustain action of board taken at such meeting. In the absence of proof to the contrary, notice of meeting will be presunred, though fact of giving such notice is not recited in record of meeting. (Granger v. M. & M. Co., 59 Cal. 678.)

If rules of church require trustees to be elected on particular day in the year, after notice being given on preceding Sunday by pastor, board elected on different day without notice are not trustees de jure. (Zion M. E. Church v. Hillery, 51 Cal. 155.)

Where by-laws of a corporation provide that special meetings shall be called by special notice, and that such notice shall "be given upon the order of the president, or if there be none, on the order of two directors," a meeting called by two directors, while there is a president competent to act, is illegal. (Smith v. Dorn, 96 Cal. 74, 30 Pac. 1024.)

On the other hand, where the by-laws do not designate the person by whom notice of a special meeting of directors is to be given, section 308 of the Civil Code applies, and the notice must be given by the secretary; and the acts of a mere majority present at a special meeting, of which no such notice was given to the absentees, are not valid. (Curtin v. G. M. & D. Co., 130 Cal. 345, 80 Am. St. Rep. 132, 62 Pac. 552.)

Subd. 2. Quorum.— The rule of stockholders' meetings is that the majority governs; and every stockholder contracts that such shall be the rule. (San Diego etc. Co. v. Pacific Beach Co., 112 Cal. 53, 44 Pac. 333.)

Quorum of Directors: See title “Quorum and Meetings" in notes to section 305, Civil Code, post.

Subd. 3. Voting by Proxy.– This statute gives the corporation the power through its by-laws, to regulate the exercise of the right to vote by proxy, but no power to either qualify or limit the right, and certainly no power to so shackle the right as to result in its nullification. (People's Bank v. Superior Court, 104 Cal. 654, 43 Am. St. Rep. 147, 38 Pac. 452. To same effect: Smith v. S. F. etc. Ry. Co., 115 Cal. 606, 56 Am. St. Rep. 135, 47 Pac. 582. Note citation: Bloede Co. v. Bloede, 57 Am. St. Rep. 384.

It is accordingly held that a by-law cannot restrict the selection of proxies to stockholders; a stockholder may appoint as his proxy one who is an entire stranger to the corporation. (People's Bank v. Superior Court, 104 Cal. 654, 43 Am. St. Rep. 147, 38 Pae. 452: Affirmed: Smith v. Railway Co., 115 Cal. 606, 56 Am. St. Rep. 135, 47 Pac. 582. But see Dulin v. Pacific W. & C. Co., 103 Cal. 363, 35 Pac. 1045, 37 Pac. 207.)

"The modern law-writers upon corporations, without exception so far as we have observed, recognize the right of a private cor. poration, in the absence of any statute to the contrary, to provide by by-law for stockholders to vote by proxy.” (Market Street Ry. 5. Hellman, 109 Cal. 598, 42 Pac. 225.)

Subd. 4. Directors: See sec. 305, C. C.
Subd. 5. Compensation and Duties of Officers.

President-Powers and Duties of.-One not elected as a director is not eligible to the office of president, and neither the board that was elected nor the court can make him president. (Dulin v. Pacific ete. Co., 103 Cal. 357, 35 Pac, 1045, 37 Pac. 207.)

recover

A resolution of the board of directors of a corporation conferring on the president, as “the agent and chief executive of the board,” the power “to incur indebtedness, to negotiate loans, to enter into contracts and agreements, and otherwise to act as the agent of the corporation," is within the power of the board and confers upon the president the power to execute the note of the corporation. (McCormick v. Stockton etc. R. R. Co., 130 Cal. 100, 62 Pac. 267.)

The president of a private corporation has no authority by virtue merely of his official position to make contracts binding the corporation, except in relation to matters arising in the ordinary course of the business of the corporation. (Blen v. Bear River etc. Co., 20 Cal. 602, 81 Anr. Dec. 132; Bank v. Bailhache, 65 Cal. 332, 4 Pac. 106.)

The president or other head of a corporation has authority to employ attorney when necessary, and when payment has been made to an attorney for services rendered, without objection on part of corporation or any officer thereof, a subsequent assignee in insol. vency of the corporation cannot

the money

so paid. (Streeten v. Robinson, 102 Cal. 542, 36 Pac. 946. Distinguished: Pacific Bank v. Stone, 121 Cal. 206, 53 Pac. 634.)

Person signing promissory note in his own name, with the addition of the word “President” to his signature, without anything on face of note indicating the principal, if any, for whom he is acting, is individually liable on the note. In such a case the ad. dition of the word “President" is a mere descriptio personae. (Hobson v. Hassett, 76 Cal. 203, 18 Pac. 320, 9 Am. St. Rep. 193, note, 196. To same effect: Kerry v. Marine Co., 121 Cal. 570, 66 Am, St. Rep. 70, 54 Pac. 89. Note citations: Peterson v. Homan, 20 Am. St. Rep. 565; 29 Am. St. Rep. 650; 36 Am, St. Rep. 899; 46 Am. St. Rep. 151; 49 Am. St. Rep. 719; 48 Am. St. Rep. 918.)

A note signed “D. P. S., President of the Pacific Wool Growing Company,” is a note of “S.,'' and not of the company, and the words following the signature are merely descriptio personae. (Chamberlain v. Pacific Wool Growing Co., 53 Cal. 103.)

Note signed “G. A. Colby, President Pacific Peat etc. Co., D. K. Tripp, Secretary pro tem.,” held to be the note of the corporation. (Farmers' etc. Bank v. Colby, 64 Cal. 352, 28 Pac. 118. To same effect: Hobson v. Hassett, 76 Cal. 205, 9 Am. St. Rep. 195, 18 Pac. 320. Note citations: Hall v. Crandall, 89 Am. Dec. 69; 48 Am. St. Rep. 919.)

Corporation note, signed by president officially and personally, is binding upon the corporation, the president having powers to bind the corporation. (McCormick v. Stockton etc. R. R. Co., 130 Cal. 100, 62 Pac. 267.)

But officers of a corporation have no power to authorize the execution of a note as surety for another in respect to a matter having no relation to the corporate business, and in which the corpo

« PreviousContinue »