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anyone aggrieved, and is enforceable in a court of competent juris. diction. (Wright v. Central etc. Co., 67 Cal. 532, 8 Pac. 70.)
The fact that a board of directors was illegally elected, and that the persons claiming to be directors are not such, does not affect the validity of the excuse for not making a demand upon the corporation to sue; and the question whether they are legal directors was not bound to be determined at the peril of the plaintiff's bringing the suit; but they have a right to have that fact determined by the court. (Whitehead v. Sweet, 126 Cal. 67, 58 Pac. 376.)
But when an action to set aside the election of directors is brought by stockholders, making the corporation, other stockholders, and the elected directors parties defendant, if the complaint alleges the control of the corporation by a single stockholder, and that it would be of no avail to make a demand upon the directors of the corporation to bring a suit to set aside their election, its averments are sufficient to excuse the necessity of making a demand upon the corporation to bring the action. (Whitehead v. Sweet, 126 Cal. 67, 58 Pac. 376.)
When one of the objects of an action is to set aside a contract made by an illegal board of directors, to remedy a wrong done the corporation, all of the stockholders, whether plaintiffs or defendants, are equally interested in the result of the action in that respect. If the election of a board of directors was illegal and void, a contract made by them is without authority and void, and must be set aside. (Whitehead v. Sweet, 126 Cal. 67, 58 Pac. 376.)
And a complaint to set aside an election of a board of directors of a corporation as illegal, and to annul the illegal action of the directors, and an illegal contract made by them without authority, and also complaining of the violation of a contract made by the defendant controlling the election of directors, with the stockholders of the corporation, to give to one of the plaintiffs, as trustee, for the benefit and protection of the corporation, a transfer of stock, with irrevocable proxy to vote it for the period of five years, is not multifarious. (Whitehead v. Sweet, 126 Cal. 67, 58 Pac. 376.)
No legal obligation rests upon any stockholder to cast his votes for any particular person for director, and the court has no jurisdiction to declare a defeated candidate elected. (Dulin v. Pacific etc. Co., 103 Cal. 364, 35 Pac. 1045, 37 Pac. 207.)
Who May Sue.- The "corporate body'' referred to in section 315 of the Civil Code is the corporation itself and not the board of directors, and the action therein provided for applies to elections by stockholders, and not to appointments by directors. (Wickersham v. Brittan, 93 Cal. 34, 28 Pac. 792, 29 Pac. 51; Wickersham v. Murphy, 93 Cal. 41, 28 Pac. 793.)
And a stockholder in a corporation may maintain an action to set aside an election of directors of the corporations, although at
time of election no stock had stood in his name on books of company sufficiently long to entitle him to vote. (Wright v. Central California etc. Co., 67 Cal. 532, 8 Pac. 70.)
Collateral Attack.–The validity of the election of directors cannot be collaterally attacked, and the act of one who, at the time of the authorization of the note in suit, was a de facto director of the corporation, cannot be impeached by showing any irregularity in his election; and an offer to prove that he was not a director is properly rejected. (Barrell v. Land Co., 122 Cal. 129, 54 Pac. 594.)
FALSE CERTIFICATE, REPORT, OR NOTICE TO MAKE OF
FICERS LIABLE. Sec. 316, C. C. Any officer of a corporation who willfully gives a certificate, or willfully makes an official report, public notice, or entry in any of the records or books of the
corporation, concerning the corporation or its business, which is false in any material representation, shall be liable for all damages resulting therefrom to any person injured thereby, and if two or more officers unite or participate in the commission of any of the acts herein designated, they shall be jointly and severally liable. En. March 21, 1872. Amd. 1873-74, 203.
Liability of officer: Pen. Code, secs. 558, 564, post; secs. 303, 309, C. C., ante, and sec. 3, art. XII, Const., ante.
The original section reads thus: “Sec. 316. Any officer of a corporation who m kes or gives a certificate, official report, public notice, or entry in any of the records or books of the corporation, concerning the corporation or its business, which is false in any material representation, and who knew, or had full opportunity to know, the same to be false, is liable for all the debts of the corporation contracted while he was a stockholder or officer thereof; and if more than one violate the provisions of this section in concert, they are jointly and severally liable.”
Similar provisions to the above are found in the corporation act of 1853, page 90, section 19, the railroad act of 1861, page 626, section 55, and the insurance act of 1866, page 747, section 16.
Liability of False Entries. The fact that the bookkeeper of a corporation was appointed by the president and not by the manager, and the books were actually kept by such bookkeeper, cannot relieve the manager from liability for false entries in the books and defalcations made by such bookkeeper, where it appears that the manager connived at and procured for his own improper ends, and himself corruptly embezzled funds, which were concealed by such false entries, and the fraud and defalcations were made possible by the man. ager's own fraud. (San Pedro Lumber Co. v. Reynolds, 121 Cal. 74, 53 Pac. 410.)
Where defective bookkeeping shows a loss, it is at least prima facie evidence that a loss existed; and the manager is properly chargeable with losses so appearing, where there is no proof to the contrary. (San Pedro etc. Co. v. Reynolds, 121 Cal. 74, 53 Pac, 410.)
MEETING BY CONSENT TO BE VALID.
Sec. 317, C. C. When all the stockholders or members of a corporation are present at any meeting, however called or notified, and sign a written consent thereto on the record of such meeting, the doings of such meeting are as valid as if had at a meeting legally called and noticed. En. March 21, 1872.
Section 10 of the corporation act of 1850, page 348, is the basis of this section.
Consenting in Person or by Proxy.-Notice of day, hour and place of annual meeting 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 Buenaventura Mfg. Co. v. Vassault, 50 Cal. 534.)
PROCEEDINGS AT MEETING TO BE BINDING.
Sec. 318, C. C. The stockholders or members of such corporation, when so assembled, may elect officers to fill all vacancies then existing, and may act upon such other business as might lawfully be transacted at regular meetings of the corporation. En. March 21, 1872.
Section 11 of the corporation act of 1850, page 348, is the basis of this section.
Transactions at Stockholders' Meetings.- A resolution purporting to authorize a fraudulent transaction, passed at a stockholders' meeting, controlled by the parties to the fraud, is of no consequence. (Woodroof v. Howes, 88 Cal. 184, 26 Pac. 111.)
A corporation is not bound by the acts or admissions of its stockholders, otherwise than in stockholders' meetings, unless they act by its express authority. (Shay v. Water Co., 6 Cal. 73.)
MEETINGS, WHERE HELD.
Sec. 319, C. C. The meetings of the stockholders and board of directors of a corporation must be held at its office or principal place of business. En. March 21, 1872.
Changing place of business: See sec. 321a, C. C.
SPECIAL MEETINGS, HOW CALLED.
Sec. 320, C. C. When no provision is made in the by-laws for regular meetings of the directors and the mode of calling special meetings, all meetings must be called by special notice in writing, to be given to each director by the secretary, on the order of the president, or if there be none, on the order of two directors. En. March 21, 1872.
Granger v. Original Empire M. & M. Co., 59 Cal. 681, 682; Thompson v. Williams, 76 Cal. 154, 9 Am. St. Rep. 187, 18 Pac. 153; Smith v. Dorn, 96 Cal. 79, 82, 30 Pac. 1024; Stockton C. H. & A. Works v. Houser, 109 Cal. 9, 10, 41 Pac. 809; Curtin v. Salmon River etc. Co., 130 Cal. 347, 80 Am. St. Rep. 132, 62 Pac. 552; Relley v. Campbell, 134 Cal. 177, 66 Pac. 220.
Notice.-In the absence of a provision in the by-laws, section 320, Civil Code, designates the secretary as the person who shall give notice of special meetings of the directors, and the acts of a special meeting without such notice, and the minutes of which were never subsequently ratified as required by the by-laws, are not valid acts of the corporation. (Curtin v. Salmon River etc. Ditch Co., 130 Cal. 345, 80 Am. St. Rep. 132, 62 Pac. 552.)
So, also, 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.)
But notice of meeting is sufficiently proved by evidence that secretary sent written notices of all meetings. (Younglove v. Steinman, 80 Cal. 375, 22 Pac. 189. To same effect: Stockton etc. Works v. Houser, 109 Cal. 10, 41 Pac. 809.)
And notice of such mreetings is presumed to have been received if sent. (Stockton etc. Works v. Houser, 109 Cal. 1, 41 Pac. 809. To same effect: Barrell v. Land Co., 122 Cal. 132, 54 Pac. 594.)
And the fact that the secretary had given notice of a special meeting to each of the directors by sending to them, by messenger, a written notice, at least twenty-four hours prior to the meeting, is sufficient notice of a special meeting of board of directors. (Balfour Investment Co. v. Woodworth, 124 Cal. 169, 56 Pac. 891.)
Where the by-laws do not designate the person by whom notice of a special meeting is to be given, such notice must be given by the secretary; and the acts of a mere majority of directors present at a special meeting, of which no such notice was given the absentees, are not valid. (Curtin v. Salmon River etc. Co., 130 Cal. 345, 80 Am. St. Rep. 132, 62 Pac. 552.)
A notice that specifies in substance that the purpose of the meeting was to consider and act upon a proposition to create a bonded in. debtedness of a certain amount, a portion thereof to be used in retiring an existing bonded indebtedness and to increase the bonde: indebtedness to a certain amount and to mortgage the property, and a resolution to the same effect, are sufficient, and are not indefinite and uncertain. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)
Under this section it is not necessary that the notice of a special meeting should specify the purpose of the meeting. A notice that the meeting will be held, the place where, and the time when, it will be held, will be sufficient. (Granger v. Oriental etc. Co., 59 Cal. 678.)
A regular meeting adjourned to some future day, the hour of which is not fixed, becomes a special meeting, of which notice is required to be given to the absentees at the regular meeting. (Thompson v. Williams, 76 Cal. 153, 9 Am. St. Rep. 187, 18 Pac. 153.)
Where by-laws 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.)
The execution of a mortgage in the name of a corporation, upon property belonging thereto, cannot be authorized at a special meet