Case ID: ad_134/html/0442-01.html
Source: Caselaw Access Project
Author: {"author": "Laughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Application of Elise Scheel, Respondent, to Intervene in a Proceeding Instituted by Hans Ferdinand Barnes to Declare Invalid an Alleged Election of Directors of the Cottonwood Creek Copper Company. Noah E. Barnes and the Cottonwood Creek Copper Company, Appellants.
    First Department,
    November 12, 1909.
    Corporation — annulment of election of directors — party — when right to intervene in proceedings not shown.
    A stockholder is not entitled to intervene in a proceeding to annul an election of directors where she merely alleges that ,she is a stockholder at the time ¿>f the motion and does not show that she was a stockholder at the date of the election or that the former holder of her stock did not vote for the directors whose election is sought tobe set aside.
    The statute permitting the annulment'of an election of directors is intended only for the benefit of a person aggrieved by or complaining of an election or of a proceeding,.act or matter relating thereto.
    
      Appeal by Noah E. Barnes and another from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 3d day of August, 1909, permitting the petitioner, Elise Scheel, to intervene in a proceeding instituted by Hans Ferdinand Barnes to declare invalid an alleged election of directors of the Cottonwood Creek Copper Company, and making her a party thereto.
    
      Lewis H. Saper, for the appellants.
    
      Lynn W. Thomson, for the respondent.
   Laughlin, J.:

The proceeding in which the petitioner has been permitted to intervene was instituted under the provisions of section 27 of the General Corporation Law (Gen. Laws, chap. 36; Laws of 1892, chap. 687), now section 32 of chapter 23 of the Consolidated Laws (Laws of 1909, chap; 28), on the 18th day of January, 1909, by Barnes who was a stockholder of the Cottonwood Creek Copper Company, a domestic corporation, to annul an election of directors held in the month of October, 1908. The statute under which the proceeding was instituted provides as follows:

“ The Supreme Court shall, upon the application of any person or corporation aggrieved by or complaining of any election of any corporation, or any proceeding, act or matter touching the same, upon notice thereof to the adverse party, or to those to be affected thereby, forthwith and in a summary way, hear the affidavits, proofs and allegations of the parties, or otherwise inquire into the matters or causes of complaint, and establish the election or order a new election, or make such order and give such relief as right and justice may require.”

The petition upon which the order from which the appeal was taken was made was dated and verified the 24th day of July, 1909, and in it the petitioner shows that she was on the dote thereof the owner of twenty shares of the capital stock of the corporation. The petitioner does not show when she became a stockholder of the corporation otherwise than by showing that she was a stockholder on the 24th day of July, 1909. She does not show from whom she obtained her stock or whether, if she owned it at the time of the alleged election of the directors, she had notice of the meeting or participated therein; or whether if she was not the owner, her assignor, if the stock she now holds was then outstanding, had notice and participated in the meeting or whether the then holder of the stock which she now owns voted on this stock for the directors whose election it is sought to set aside. She does show that certain persons held a pretended meeting at the time for the election of directors and that perhaps other persons, unknown to her, participated therein; but she does not show but that she derived her stock from one or more of them. It is manifest that the statute was not intended to authorize a stockholder to institute a proceeding of this nature if he was not a stockholder at the time of the alleged election of directors. It is not necessary to decide whether it might be instituted on showing that the person from whom he received his stock could have instituted it, for that is not shown. The provisions of the statute were only intended for the benefit of a person aggrieved by or complaining of an election or of a proceeding, act or matter relating to the same. A stockholder cannot be aggrieved by an election in which neither he nor his assignor had a right to participate. (Matter of Syracuse, Chenango & New York R. R. Co., 91 N. Y. 1.)

It must be shown that he or his assignor was either deprived of that right or opposed the action taken or refrained from exercising the right on the assumption that the proceedings would be conducted legally, and instead of being so conducted, they were taken illegally. We are of opinion, therefore, that the petitioner fails to show either that she was aggrieved by the action taken or that she had a right to complain thereof.

It follows that the order should be reversed, with ten dollars costs and disbursements, and application denied, with ten dollars costs.

Ingraham, Clarke, Houghton and Scott, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.