Case ID: ad_116/html/0058-01.html
Source: Caselaw Access Project
Author: {"author": "Smith, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Application of Jasper N. Keller, Respondent, to Set Aside an Alleged Election of Directors of the Co-operant Telephone Company, Held at Whitehall, N. Y., December 20, 1905. James H. Caldwell and Others, Appellants.
    Third Department,
    November 14, 1906.
    Corporation—election of directors at special meeting—when notice thereof insufficient —when no waiver of defects.
    When after a failure to vote, for directors of a corporation at the regular annual meeting, a special meeting is called for that purpose, the notice required by section 20-of the. Stock Corporation Law must be given, together with such other notice as is prescribed by the by-laws.
    When the by-laws require in addition to the statutory notice á written notice mailed thirty days before the meeting, a notice of. only twelve days is insufficient and. entitles a stockholder who has not appeared of waived his rights to •in order vacating the election. .
    It is no answer to say that the vote on the stock owned by such stockholder would' not have changed the result of the election for he has a right' to be present to advocate the'election of his candidates.
    The petition or notice of -motion to vacate stich irregular election need not specify the. irregularity, not being governed by General Rule of Practice. 87. •
    No waiver of such irregularity by an .absent stockholder can. ho predicated on the fact that his attorneys'were present at the meeting.
    Appeal by James IE Caldwell and others from an order of the Supreme Court, made at the Clinton Special Term and entered in the office of the cleric of the county of Washington on the 21st day of May, 1906* setting aside the election of directors of - the Co-operant Telephone Company'at a meeting held on the 20th day of .December,. 1905.
    
      J. Sanford Potter, for the appellants.
    
      Otis A. Dennis, for the respondent.
   Smith, J.:

The regular annual meeting at which directors of the Co-operant , Telephone. Company should have been chosen in 1905 was held on the thirteenth day of ¡November. The election was not then held, by reason of the fact that the notice required by the statute had not 'been served. Subsequently a.meeting was called, to be held upon the 20th day of December, 1905, for the election of directors, ¡Notice of such meeting was mailed to the various directors upon December eighth, thus giving them twelve days’ notice of such election. By section 24 of the General Corporation Law it is provided : If the election has not been held on the day so designated, the directors shall forthwith call a meeting of the members of the corporation for the purpose of electing directors, of which meeting notice shall be given in the same manner as of the annual meeting for the election of directors.'’'’ By section 20 of the Stock Corporation Law it is provided: “ Notice of the time and place of holding any election of directors shall be given by publication thereof, at least once in each week for two successive weeks immediately preceding such election, in a-newspaper published in the county where such election is to be held, and in such other manner as may be prescribed in the by-laws.” The by-laws of the company prescribe: “ In addition to the notice of such meeting required to be given by law, _a notice of such meeting, either written or printed, or partly written or partly .printed, shall be mailed 30 days before such meeting to each stockholder * * *.” At the meeting of the stockholders of which notice was thus given the appellants here were elected directors. The petitioner, although the owner of .over 800 shares of stock, was not present. The appellants were elected by ' the vote of the owners of 1,095 shares out of 2,000 shares. This proceeding is brought under section 27 of the General Corporation Law, which gives authority to the court summarily to order -,a new election or make such order and give such relief as right .and, justice may require. The court below has set aside the election and directed a new election.

The appellants first object that the giving of the prescribed notice was an irregularity which was waived because not specified in the petition or notice of motion. This objection would seem to be based upon • rule 37 of the General Rules of Practice, which rule is not applicable to this application.

That this requirement of a thirty-day notice might have been waived by the respondent here' is unquestionably true. If he had appeared and taken part in the election without objection as to the notice given he could not be heard thereafter to object that notice was insufficient. But lie did not appear' at the election. It is true that some attorneys representing him upon this proceeding did appear. . They took no part, however, in the election and did' not vote. They were themselves the owners of a small number of shares of the stock of the company and' in no way assumed to represent him. So that no waiver can he predicated as against the respondent upon any acts of theirs. The respondent then having chosen to-rest upon his legal rights, may legally complain that he has not been given the notice which the by-la-ws require. It is no answer to say that the result will be the same upon another election. The length of the notice required by the by-laws may have been for the very purpose of allowing a stockholder to convince his fellow-stockholders of the desirability of the election "of the directors whom he favors, or perchance of negotiating for the purchase of their stock that lie may vote upon it for those whom he desires to act as directors. The failure to give the notice required by the by-laws is a substantial omission which should not be disregarded unless upon clear waiver by the stockholder.

The Special Term rightfully held that the election should be set aside and a new election ordered. Other objections aré riiade to the regularity of the election which it is not necessary here to consider. The final' order must, therefore, be affirmed, with costs.

All .concurred.

Final order Unanimously affirmed, with costs. 
      
      See Laws of 1892, chap. 687.— [Rep,
     
      
       See Laws of 1892, chap. 688, as amd. by Laws of 1901, chap. 354.— [Rep,