qualified, if there is no other officer present legally authorized

to preside thereat. En. March 21, 1872.

MAJORITY OF STOCK MUST BE REPRESENTED.

Sec. 312, C. C. At all elections or votes had for any purpose there must be a majority of the subscribed capital stock, or of the members, represented, either in person or by proxy in writing. Every person acting therein (in person or by proxy or representative), must be a member thereof or a bona fide. stockholder, having stock in his own name on the stock-books of the corporation at least ten days prior to the election. Any vote or election had other than in accordance with the provisions of this article is voidable at the instance of absent (or any) stockholders or members, and may be set aside by petition to the district court of the county where the same was held. Any regular or called meeting of the stockholders or members may adjourn from day to day, or from time to time, if for any reason there is not present a majority of the subscribed stock or members, or no election had, such adjournment and the reasons therefor being recorded in the journal of proceedings of the board of directors. En. March 21, 1872. Amd. 187778, 79.

Notice of meeting: See ante, sec. 302, C. C.

Postponement: See sec. 314, C. C., post.

Rights of stockholders to vote: See section 307, C. C., ante, and notes.

Setting aside election: See section 315, C. C., post.

Legislative History.

The original section did not contain the words "or any" following the word "absent" in the section as above. Prior to the code, the matter of corporate elections was left almost entirely to be regulated and provided for in the by-laws.

The act in relation to corporations passed at the first session of the legislature of this state (Stats. 1850, p. 347) made different provisions for different kinds of corporations, and also different requirements on the part of the stockholders for the election of directors. The provision generally made in this respect was that the directors should be elected by the stockholders, and that "each stockholder should be entitled to as many votes as he owns shares of stock in the com

pany." (Stats. 1850, secs. 35, 105, 124, 187.) The chapter relating to railroad companies provided (Stats. 1850, sec. 59) that the stockholder must have owned his stock for thirty days next preceding the election in order to entitle him to vote, and that “no stockholder shall vote at any such election upon any stock except such as he shall have owned for such thirty days''; and the chapter relating to bridge companies provided (Stats. 1850, sec. 159) that the stockholder could vote only upon such stock as he had "owned absolutely, or as executor, administrator, or guardian, for thirty days previous to such election." The act authorizing the incorporation of mining and manufacturing companies, passed in 1853 (Stats. 1853, sec. 5, p. 87), provided that "each stockholder, either in person or by proxy, shall be entitled to as many votes as he owns shares of stock," and further provided (Stats. 1853, sec. 11): "Whenever any stock is held by any person as executor, administrator, guardian, or trustee, he shall represent such stock at all meetings of the company, and may vote accordingly as a stockholder.' The statute, so far as it related to the incorporation of railroad companies was revised and re-enacted in 1861 (Stats. 1861, p. 607), and section 5 of that act provided that directors should be elected by a majority of the votes of the stockholders being present in person or by written proxy; and every stockholder being so present, either in person or by proxy, at any election for directors, shall be entitled to give one vote for every share of stock which he may have owned for ten days next preceding such election; but no stockholder shall vote at any such election upon any stock except such as he shall have owned for ten days." In none of these statutes was it provided that the stock owned by the stockholder should stand in his name upon the books of the corporation.

Section Cited.

Stewart v. Mahoney Min. Co., 54 Cal. 149; Wright v. Central Cal. etc. Co., 67 Cal. 533, 8 Pac. 70; Wickersham v. Brittan, 93 Cal. 36, 39, 28 Pac. 792, 29 Pac. 51; Dulin v. Pacific W. & C. Co., 103 Cal. 263, 35 Pac. 1045, 37 Pac. 207; People's Bank v. Superior Court, 104 Cal. 652, 43 Am. St. Rep. 147, 38 Pac. 452; Market St. Ry. Co. v. Hellman, 109 Cal. 588, 589, 599, 42 Pac. 225; San Diego v. Pacific Beach Co., 112 Cal. 63, 44 Pac. 333; Smith v. S. F. & N. P. Ry. Co., 115 Cal. 589, 590, 594, 609, 56 Am. St. Rep. 119, and note, 47 Pac. 582; Krouse v. Dushow, 127 Cal. 683, 60 Pac. 438; Neale v. Head, 133 Cal. 47, 65 Pac. 131, 576.

Annotation.

Manner of Electing Directors.-This section, read in connection with section 307 of the same code, provides the manner in which the annual election of directors may be held. (Wickersham v. Brittan, 93 Cal. 36, 28 Pac. 792, 29 Pac. 51.)

Majority of Subscribed Capital Stock.-A majority of the subscribed capital stock must be represented at all elections, and, where a majority of the stock is not represented at a meeting for the election of trustees, the election is void. (Stewart v. Mahoney Min. Co., 54 Cal. 149.)

When shares of a corporation or a majority of shares are spoken of in a statute it usually refers to the subscribed or issued or outstanding shares. (Market St. Ry. v. Hellman, 109 Cal. 588, 42 Pac. 225.)

And in ratification as in the grant of original authority the rule is that the majority governs, and every stockholder contracts that such shall be the rule. (San Diego v. Beach Co., 112 Cal. 63, 44 Pac. 333.)

Bona Fide Stockholder.-A person to whom stock has been issued as trustee, without the knowledge or consent of the owners, is not a bona fide stockholder within the meaning of this section. (Stewart v. Mahoney Min. Co., 54 Cal. 149. To same effect: Smith v. S. F. etc. Ry. Co., 115 Cal. 594, 56 Am. St. Rep. 126, 47 Pac. 582.) Under this section, only those who are bona fide stockholders, having their names on the stock-book of the corporation at least ten days prior to the election of directors, are entitled to vote at such election. Holders of stock standing in their own names, who do not hold it in a representative capacity, or as trustees of an express trust, or as pledgees, and who have no interest in the stock, and are only dummies for the real owners, are not bona fide stockholders within the meaning of the section, and can neither vote the stock nor give proxies therefor. (Smith v. S. F. & N. P. Ry., 115 Cal. 584, 56 Am. St. Rep. 119, 47 Pac. 582.)

Certificates of stock issued to a creditor of a corporation, or to a trustee for him as a pledge to secure his debt, are illegally issued and cannot be voted by any person. (Brewster v. Hartley, 37 Cal. 15, 90 Am. Dec. 237. To same effect: Smith v. S. F. etc. Ry., 115 Cal. 592, 56 Am. St. Rep. 126, 47 Pac. 582. Distinguished: Illinois Trust etc. Bank v. Pacific Ry. Co., 117 Cal. 344, 49 Pac. 197.)

The election of directors of all corporations having a capital stock, including mining corporations, is regulated by sections 307 and 312, Civil Code; and no person is qualified to vote at such an election, unless he is a bona fide stockholder, having stock registered in his name on the stock-books of the corporation at least ten days prior to the election. (Krause v. Deerbrow, 127 Cal. 681, 60 l'ac. 438.)

But the real owner of stock may vote it, although it stands on the books in another's name. (People v. Hill, 16 Cal. 113. To same effect: Smith v. S. F. etc. Co., 115 Cal. 591, 56 Am. St. Rep. 119, note, 47 Pac. 582.)

And an election is not void because determined by the vote of a person who appeared in books of company as owning certain

stock which he had personally transferred by assignment of certificate. Appearing on books of corporation as owner of shares he was the proper person to vote them. (People v. Robinson, 64 Cal. 373, 1 Pac. 156. To same effect: Smith v. Railway Co., 115 Cal. 594, 36 Am. St. Rep. 119, and note, 47 Pac. 582.)

Held, Before the Code, that a surviving partner was privileged to vote stock belonging to the partnership. The real owner of stock is entitled to represent it at the meetings of the corporation, and the mere fact that he does not appear as the owner upon the books of the company should not exclude him from so doing. The New York cases, establishing a different doctrine, are based upon a statute making the books of the corporation the only evidence as to ownership. (Allen v. Hill, 16 Cal. 114. To same effect: Smith v. Railway Co., 115 Cal. 591, 56 Am. St. Rep. 123, 47 Pac. 582.)

So, also, a trustee of stock is the legal owner thereof, and as against the corporation and all the world, except his cestui que trust, he may vote the stock for all purposes, including the purpose of consolidating the corporation. (Market Street Ry. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

And an attempt to prescribe a qualification for voting stockholders in particular corporations, different from that prescribed for corporations generally is special legislation and void. (Krause v. Durbrow, 127 Cal. 681, 60 Pac. 438.)

Proxies: See title "Proxies," in notes to sec. 307, C. C., ante. Under this section, stockholders of a corporation may be represented at all elections by proxies of their own selection; and a bylaw of a banking corporation providing that no proxy should be voted by anyone not a stockholder of the corporation is void, as being an infringement upon the statute; the substantial rights of a stockholder cannot be taken from him, or be abridged by by-laws. (People's etc. Bank v. Superior Court, 104 Cal. 649, 43 Am. St. Rep. 147, 38 Pac. 452. To same effect: Smith v. Railway Co., 115 Cal. 606, 56 Am. St. Rep. 119, 47 Pac. 582. Note citation: Bloede Co. v. Bloede, 57 Am. St. Rep. 384.)

And it is not illegal to separate the voting power from the ownership of stock, by an irrevocable proxy given upon a sufficient consideration, when it is not appointed for an unlawful purpose, or where no unlawful end is attempted to be effected by the exercise of the voting power. (Smith v. S. F. & N. P. Ry., 115 Cal. 584, 56 Am. St. Rep. 119, 47 Pac. 582.)

It is the legal right of every stockholder to vote his stock as he pleases in the election of directors, and, though he may confer upon another stockholder the right to vote his stock by a written proxy for that purpose, yet the court cannot compel him to do so in the absence of an agreement upon or for a valuable consideration that he would give such proxy. (Dulin v. Pacific W. & C. Co., 103 Cal. 357, 35 Pac. 1045, 37 Pac. 207.)

And under this section every stockholder may be represented at all elections by a proxy of his own selection; and a by-law of a corporation providing that no proxy should be voted by anyone not a stockholder of the corporation is void, as an infringement upon the statute. The substantial rights of a stockholder cannot be taken from him or even abridged by a by-law. (People's Bank v. Superior Court, 104 Cal. 649, 43 Am. St. Rep. 147, 38 Pac. 452. To same effect: Smith v. Railway Co., 115 Cal. 606, 56 Am. St. Rep. 135, 47 Pac. 582. Note citation: 57 Am. St. Rep. 384.)

Setting Aside Election.-While a petitioner may have been disqualified from voting at an election, he is not prevented from instituting proceedings to set aside such election, if it was voidable. "Any absent or other stockholder" may institute such a proceeding. And the jurisdiction to entertain such a proceeding has been transferred from the district to the superior court, which court has jurisdiction as a court of equity to set it aside if not made in conformity with law. (Wright v. Central etc. Co., 67 Cal. 532, 8 Pac. 70. To same effect: Wickersham v. Brittan, 93 Cal. 39, 28 Pac. 792, 29 Pac. 51.)

STOCK, HOW REPRESENTED.

Sec. 313, C. C. The shares of stock of an estate of a minor, or insane person, may be represented by his guardian, and of a deceased person by his executor or administrator. En. March 21, 1872. Amd. 1873-74, 203.

Legislative History.

The original section reads thus: "The shares of an estate of a minor, insane or deceased person, may be represented at all elections and meetings of the corporation by the legal representative of the person holding the same. The incorporation acts of 1850, scetion 159, and of 1853, page 89, contain a like provision.

Section Cited.

Market St. Ry. Co. v. Hellman, 109 Cal. 590; Smith v. S. F. & N. P. Ry. Co., 115 Cal. 590, 56 Am. St. Rep. 119, 47 Pac. 582.

Annotation.

No Transfer on Books Necessary.-The provision of this section that the shares of stock may be "represented"-that is, voted, by a guardian or executor or administrator-indicates that these of. ficers would be entitled to vote the stock without having it transferred to their own name. (Smith v. Railway Co., 115 Cal. 591, 56 Am. St. Rep. 119, 47 Pac. 582.)

Corporation Laws-12