#### In the Matter of the Petition to Set Aside the Elections of Directors of George Ringler & Company. George Ringler & Company and Others, Appellants, Respondents; Anna Hachemeister and J. Edward Jetter, as Administrators with the Will Annexed of Henry Hachemeister, Deceased, and Others, Petitioners, Respondents, Appellants.

First Department,

June 9, 1911.

Corporation — directors — qualification — stockholder of record — stock held by estate — standing of administrators with will annexed to question eligibility of directors.

Where there is no evidence of a fraudulent intent a'person is qualified to be a director of a corporation, (other than a bank or insurance company) if he is a stockholder of record; it is not necessary for him to be also the beneficial owner of the qualifying stock.

The statutory provision that directors of corporations must be stockholders is satisfied if they are ■ stockholders of record, although • they have indorsed the certificates issued to them and delivered the same to the beneficial owner.

Where it appears that during a long period of time all parties interested in a company had recognized the eligibility of persons who were mere *362stockholders of record and had no beneficial interest in the qualifying stock to he trustees of the company, administrators with the will annexed of an estate owning one-half of the stock cannot , question the eligibility of trustees chosen at an election participated in by the executor of the estate, since deceased, and at which he voted the stock upon which the petitioners now move, in favor of the trustees whom they now seek to oust, unless it appears that the election was fraudulent or part of a scheme to injure the estate.

Under such circumstances the administrators with the will annexed cannot be said to be parties aggrieved by the election of the trustees.

Laug-hmw, J., dissented, with opinion.

■ Cross-appeal's by George Ringler & Company and others, and by the petitioners, Anna- Hachemeister and J. Edward Jetter, as administrators, etc., and others, from parts of an order of the Supreme Court, made at the Hew York Special Term and entered in the office Of the clerk of the county of New York on the 8th day of May, 1911. :

■ *W. Ii. Van Benschoten [Charles H. Edwards*with him on the brief], for George Ringler & Company .and others.

*David Leventritt [Maxwell C. Katz*with him on the brief], for the petitioners.

Scott, J.:

We have here presented cross-appeals from an order of the Special Term setting aside the election of Isaac' Kugeiman, Arthur'' Strauss and George F. Trommer as trustees of the corporation George Ringler & Company, and denying, for want of power, a motion to set aside the selection of John T. Wilson as trustee to fill a vacancy in the. board.' The application for the order was made by Anna Hachemeister and J. Edward Jetter, 'as administrators. *cum testamento, annexo*of Henry Hachemeister, deceased, and by J. Edward Jetter as substituted trustee under the will of said Henry Hachemeister, deceased, and by Anna Hachemeister individually. It is made under section 32. of the General Corporation Law (Consol. Laws, chap. 23; Laws of 1909, chap. 28) which authorizes the Supreme Court upon the application of any person or corporation aggrieved by or complaining ,of any election of any corporation, to summarily, inquire into the matters com*363plained of and establish, the election or order a new election or make such order and give such relief as justice may require. The particular cause of complaint was that the aforesaid Trom-mer, Strauss, Kugelman and Wilson, when elected trustees, were not *bona fide*beneficial owners of stock in the corporation, being merely the record holders of stock in which they had no beneficial interest. The essential facts, which are undisputed, are as follows: The corporation of G-eorge Ringler & Company was incorporated in the year 1889 under the Manufacturing Corporations Act of 1848 (Chap. 40, as’ amd.). The certificate of incorporation provided that there should be five trustees, and the by-laws provided that no person should be a trustee “who is not the holder or owner of at least one share in the capital stock of this Company.” As a matter of fact the whole capital stock, amounting to 6,000 shares, was wholly owned, in equal proportions, by Henry Hachemeister and Ceorge Ring-ler from 1904 until the death of Henry Hachemeister on July 5, 1907. Thereafter the whole capital stock was owned in equal proportions by William C. Ringler individually and by William G. Ringler as executor of and trustee under the will of Henry Hachemeister, until the death of William G. Ringler in January, 1910. During all this period, therefore, from 1904 to 1910, since there were never more than two *bona fide*beneficial owners of the stock, there were always three trustees who were nominal stockholders by virtue of stock transferred to them upon the books of the company, the beneficial ownership of which, however, rested in Ringler or Hachemeister or the estate of the latter. After the death of William G. Ringler in January, 1910, dissensions arose among the owners of the stock. Mrs. Hachemeister and Jetter were appointed administrators *cum testamento annexo*of the will of Henry Hachemeis-ter,- deceased, and Jetter was appointed substituted trustee under the will, George Ehret, Jr., and George F. Trommer were appointed and qualified as executors of the will of William G. Ringler, deceased.

The election which has been declared invalid was held on ' October 30, 1909, during the lifetime of. William G. Ringler. At that meeting Ringler voted 3,000 shares of stock held by him as executor of the estate of Henry Hachemeister, deceased, *364and 2,980 shares owned by him indivktually, and there were elected as trustees William G-. Ringler, George F. Trommer, Arthur Strauss, Anna Hachemeister and Isaac Kugehnan. Each of these persons, except Ringler, was the holder of record of 5 shares of stock, which concededly had been transferred to him solely to qualify him to become a trustee, hut, éxcept Anna, Hachemeister, none ■ of them claimed to he the beneficial owners, of the shares, the certificates, for which they indorsed as soon as issued, and intrusted to Ringler, who placed them in his safe, where they were found when he died. Anna Hachemeister alone claims that the 5 shares were given to her, and that claim is the subject of another litigation, although she too had indorsed her certificate and had handed it to Ringler. The court below held that under the statute law of the State, whenever it is required that a trustee or director of a corporation must be a stockholder of the corporation, he must own the beneficial interest in the stock standing in his. name, and that the mere record ownership of what- are known as qualifying shares is not sufficient. (70 Misc. Rep. 581.) It is somewhat surprising that there are so few authorities dealing with this' question, because,, as every lawyer knows, it has long been the practice .to elect as directors of corporations persons whose sole ownership of stock was that of. qualifying shares standing in their names of record, but in which they had no beneficial interest. Especially has this been the case of late years where so. many business corporations have been formed which are in effect nothing more than incorporated partnerships. The statutes have uniformly provided down to 1901 that directors of .corporations must be *stockholders,*and still so provide unless it be otherwise specified in the certificate of- incorporation or the by-laws, but they cast little light upon what shall constitute a stockholder for the purpose of qualification. That he miist be a stockholder of record there is no doubt, because the stock book is the primary evidence to the corporation who its stock holders are. *(New York & N. H. R. R. Co.*v. *Schuyler,*34 N. Y. 30, 76.) This, however, does not answer the question whether or not he must also be the beneficial owner,' for the term *“*stockholder ” is as appropriate a description of one who holds stock in which another has the beneficial interest, as it is of *365one who both, holds and owns the stock. The only indication we have of what the Legislature meant by the use of the word “ stockholder ” as a qualification for a director of an ordinary corporation, is the provision which has been made with reference to certain designated corporations. Thus by section 69 of the Banking Law (Consol. Laws, chap. 2; Laws of 190.9, chap. 10) it is provided that no person shall be eligible as a director “unless he is a stockholder * * *' owning *in his own right*an amount 3⁄8 3⁄8 7⁄8 of stock.” So the Insurance Law (Consol. Laws, chap. 28 [Laws of 1909, chap. 33], § 110, as amd. by Laws of 1910, chap. 168), prescribing the qualifications of directors of fire insurance corporations, provides: “If a stock corporation,” a majority of the directors must be “ *the owner in his own right*of at least five hundred dollars of the stock,” and a like provision is made as to directors of marine insurance companies by section 150 of the Insurance Law (as amd. by Laws of 1909, chap. 240, and' Laws of 1910, chap. 168). All of those provisions have been in force since prior to 1901. (See Banking Law [Gen. Laws, chap. 31; Laws of 1892, chap. 689], § 50, as- amd.; Ins. Law [Gen. Laws, chap. 38; Laws of 1892, chap. 690], §§ 110, 150, as amd.) It would seem that in making the foregoing special provisions respecting particular classes of corporations, the Legislature considered that merely requiring that a director must be a stockholder was not equivalent to requiring that he must own stock in his own right. And we are justified in referring to these particular requirements as shedding light upon the meaning in which the Legislature used the word *‘ ‘*stockholder ” in other acts. *(Smith*v. *People,*47 N. Y. 339. See, also, *State of Nevada*v. Leet, 16 Nev. 242.) In *Matter of Argus Printing Co.*(1 N. *D.*434; 12 L. R. A. 781), a case which arose in North Dakota, the statute required directors to be stockholders and the court pointed out the distinction between a stock *holder,*who was a holder of record, and a stock *owner*who owned stock not registered in his name on the books of the corporation, holding that the first was eligible to be a director even if the transíer had been made to him solely for qualifying purposes, while the latter was ineligible. To the same effect is *Matter of Leslie*(58 N. J. L. 610) where the question was as to the eligibility of a *366registered, shareholder, who had parted temporarily with his stock certificate. The court said: “The registry of his stock is *prima facie*evidence of his qualification for the office of director, and his right to he a director can he impeached only hy showing that the title of the stock was put in him colorahly with a view to qualify him to he a director *for some dishonest purpose, in furtherance of some fraudulent scheme*touching the organization and control of the company.” In *Rosevelt*v. *Brown*(11 N. Y. 148) it was attempted to hold the defendant liable as a stockholder for the debts of the com--pany. In undertaking to lay down a rule as to who should be considered stockholders the court said: “A corporation, although it is an artificial existence, - must 'be composed .of natural persons who manage and administer its affairs and receive its benefits. These persons are not generally named in the charter of incorporation, .and there must be some way of ascertaining who they are. In a joint stock company they are, and they necessarily must be, those who hold the evidence that they are the owners of the stock; they are called the stockholders, and not the stock owners, and they are generally those who appear upon the transfer books of the company to be stockholders. This must be so in the case of corporations which are subject to the provisions of the Revised Statutes. (1 R. S. 604, § 8.) As between himself and third parties, the person who appears upon the transfer books to be a stockholder may have parted with all his interest in .the stock, .but as between himself and the corporation, such person, and he only, is treated as a stockholder. This is his relation as regards- the-management of the company, and the benefits to be derived from it; and the question is presented here, whether he, is so as regards the liabilities of the company.” '

The leading text book writers, or at-least many of them, are agreed in the opinion that the requirement that a director shall be a stockholder is satisfied if he is the registered owner of record, On the books of the company, of shares of stock, even if he is'not the real or beneficial owner of the stock. Oook on Corporations (§ 623) says: “If the charter or statutes require a director to be a stockholder, one who holds stock transferred to him in trust for the express purpose of qualifying him for the *367position may serve, and where a person has the right to vote as such a stockholder, he is eligible to any corporate office to which any stockholder is eligible, and accordingly may be elected a director, even if an assignee in bankruptcy has been appointed of his estate. He 'may obtain stock in any way and become thereby qualified. ” Morawetz on Private Corporations (§ 506) says: “The directors of a corporation are generally required to be shareholders by express provision of the company’s charter or articles of association. A person is a shareholder within the meaning of a provision of this description if he holds shares on the books of the company, but not if he is merely the holder of a certificate.' It has been held that a transferee on the books is eligible although he is not the real owner of the shares and the transfer was executed for the sole purpose of making him a director; a different rule might apply where the statute expressly requires directors to be the owners of shares.” In Thompson on Corporations (2d ed. 1908), in discussing the question of stock transferred to a person to qualify him for a director, it is stated in section 919 as follows: “Sec. 919. Stock Transferred to Qualify a Person for Director— Effect. As a general proposition the only qualification or requirement of a person for the office of director is that he shall be a stockholder. If the statute, the articles of association or the by-laws provide any other or different qualification, this must be respected. But where it is required that a director shall be a stockholder, in the conduct of the election the inspectors or the persons holding the election are not required to look beyond the books of the corporation for the purpose of determining how the stock is held. If the transfer on the stock book shows that the person who is a candidate is the owner of the stock, this is sufficient so far as the inspectors are concerned. On this principle the holder of the stock which has been transferred to him in trust for the express purpose of qualifying him for the office of director is qualified. So, it has been held that stock may be given to a person to qualify him as director. This doctrine was carried to the extent of holding that shares transferred by the corporation itself to a person qualified him for the office of director where he agreed to return the shares on the expiration of his office.” In Machen on the Modern Law *368of Corporations, section 1424 is in part as follows: “ Sec. 1424. In General — Ownership as Trustee — Executor, etc. A regulation requiring directors to own one or more of the corporation’s shares is satisfied, in the absence of express provision to the contrary, by an ownership as trustee without any beneficial-interest or even by ownership as executor, and conversely it is not satisfied by a mere unregistered equitable title to shares. But where the requirement is that a director shall own stock ‘in. his own right,’ it seems clear that a different result should be - reached and that beneficial ownership would be necessary. * 3⁄8 3⁄8

“There is nothing illegal in transferring shares into another’s name in order to - qualify the latter as director, but with the understanding that he shall hold for the benefit of the’ transferror.”

In *Budd*v. *Monroe*(18 Hun, 316) it appeared that stock in a corporation had been transferred to one Murray simply to qualify him as a director, and it was sought to obtain a ruling from the court that the loan of the stock to Murray simply to qualify him to become a director was against public policy. The court,however, declined to accept this view; but upheld the transfer as legal and proper. In *State*v. *Ferris*(42 Conn. 316) it was held that a stockholder of record was entitled to vote at a corporation meeting and to be elected to office, notwithstanding he had become a bankrupt and the ownership of his stock had passed to his assignee in bankruptcy, who had not yet caused a transfer to be made on the books. The court said: “It has been repeatedly held by this Court that the books and records of a cbrporation determine who are its stockholders for the time being, and who have the right to vote on the stock, although the same may have been sold or pledged as collateral security. In’such cases the party who appears to be the owner by the books of the corporation has the right to be treated as a stockholder and to vote on whatever stock stands in his name. 3⁄8 • 3⁄8 3⁄8 He was a stockholder so far as the corporation was concerned, and §o was R. M. Ferris, inasmuch as the stock stood in their names on the books of the Company; consequently they were eligible to office.”

The motion was decided at Special Term, principally upon *369the authority of *Chemical National Bank*v. *Colwell*(132 N. Y. 250), and there certainly are some expressions in the prevailing opinion in that case which, read without regard to the context, would seem to he opposed to the general trend of authority. The defendant had been a stockholder and director of a corporation holding eighty shares which stood in his name on the books. He wished to surrender all connection with the company, and to that end indorsed his certificate over to Jones, the secretary, stating that that ended his connection with the company. He asked for the transfer book in order to make the transfer oh the books, but was informed that'the company had none. In a few days a transfer book was obtained and the transfer made, but Jones, without Colwell’s knowledge only transferred seventy-five shares to himself, taking out a certificate for five shares in Colwell’s name. The company was then solvent. It afterwards became insolvent and the action was to hold Colwell liable as a director. The statute - required that the directors “ at their election and throughout their term of office shall be stockholders in such corporation .to at least the extent of five shares.” (See Laws of 1815, chap. 611, § 10, as amd. by Laws of 1881, chap. 422, and also by Laws of 1890, chap. 23.) The question was whether Colwell had disqualified himself and ceased to be a director when' he assigned the shares over to Jones, although he had not actually transferred them on the books. The court was of opinion that he had, and that his attempt to make a transfer on the books, which he was unable to do because there was no transfer book, coupled with his notification to the officers that he severed all relations to the company, presented a sufficient case of disqualification to relieve him of liability as a director. The general question whether the holding on the record of qualifying shares transferred to the holder only for the purpose of qualifying him was sufficient to render the holder eligible to be a director was not discussed or considered. In the fight of authority we are, therefore, of the opinion that where there is no evidence of a fraudulent intent it is a sufficient qualification of a person to be a director or trustee of a corporation (other than a bank or insurance company) if he is a stockholder of *370record, and that the court will not inquire whether he or some other person is the beneficial owner of the qualifying stock. We are, therefore,, of opinion that Trommer, Strauss, Kugel-man and Wilson, having been stockholders of record when they were elected trustees of the Ringler Company, were eligible to election and that their election was, therefore, valid.

Apart from the question thus far considered we are by no means satisfied that the petitioners should be heard to question the eligibility of the trustees whose title they attack. It appears that during a long series of years all parties, interested in the company had recognized the eligibility of trustees who were eligible only because they were stockholders of record, the-stock which stood in their name being beneficially owned by Hachemeister or his estate or by Ringler. Indeed in no other way could the corporation have had the necessary number _ of directors unless Hachemeister or Ringler had' departed from their evident policy of holding all the stock themselves. The trustees now sought to be' ousted were elected at the election of October, -1909, by the votes of the very same stock now held by the petitioners and upon the strength- of which they now move. Under the rule laid down in *Matter of Syracuse, Chenango & New York Railroad Company*(91 N. Y. 1) we do not think that the petitioners, representing the estate of Hachemeister, can be said to have been aggrieved by the election of the challenged' trustees, or can call in question the validity-of an election in which the representative , of the same estate-participated in 1909. If it appeared, that there had been any fraud about the election to the detrinient of the Hachemeister estate, or that the trustees whose election is ■challenged were elected as part of a scheme to injure that estate or the corporation, the new administrators might perhaps be heard to question the validity of the election, but\nothing of that sort appears, or is claimed. All that appears is a contest for the present and future control of the company, between two interests each owning an equal number of scares, and the contest as to the eligibility of the challenged trastees seems to be the first move in that contest. Even the petition makes no charge of fraud against William G-. Ringler or any of the challenged trustees, but. rests solely upon the supposed *371ineligibility of the latter to hold office. _ With the petitioners’ contention in this regard we. are unable to agree.

It follows that the order, in so far as appealed from by the petitioners is affirmed, and in so far as appealed from by the defendants-appellants is reversed, with ten dollars costs and disbursements to said defendants-appellants.

Ingraham, E. J., McLaughlin and Clarke, JJ., concurred; Laughlin, J., dissented.

Laughlin, J.

(dissenting):

This is a special proceeding instituted by petition pursuant to the provisions of section 32 of the General Corporation Law (Consol. Laws, chap. 23; Laws of 1909, chap. 28), which are 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 petitioners, in their representative capacity, hold and own three thousand shares of the capital stock of the corporation, which is one-half of the total issue of stock, and the petitioner Anna Hachemeister individually claims to be . the equitable owner of five additional shares, which, however, she permitted to be transferred on the books of the company to the respondents George E. Trommer and George Ehret, Jr., as executors of William G. Ringler, deceased, whereupon they surrendered up the certificate and caused a new one to be issued therefor to said Ehret. The ownership of said five shares of stock is the subject of an action now pending in the Supreme Court in Richmond county, brought' by said Anna Hachemeister against the corporation and others, the issues in which have been referred to Hon. Edward W. Hatch to. hear, try and determine. There can, therefore, be no question with respect to the *372standing of the petitioners to institute this proceeding, and I do not understand that their fight in that regard is questioned.

The three trustees whose election has been set aside were elected at the annual meeting of the stockholders on the 30th ■ day of October, 1909.- The validity of-their' election was challenged by the petitioners on the ground that they were not eligible for such election, in that they were not stockholders of the corporation at the time. The learned justice who heard the application at Special Term sustained this contention, and-1 fully agree with his determination with respect, thereto.

At the time of their said election as directors the record title to five shares of the capital stock, as shown by the books of the corporation,.stood in the name of each of them, but the uncon-troverted evidence shows that they never had any interest or equitable title or ownership therein, and that the only possible legal interest or title that they ever had in the stock was for a moment sometime prior to their election when at the instance of William G-. Kingler, who owned the stock, an attempt was made to pass the legal title through them with a view to having them appear as holders of record and back into' him again. With respect to Strauss and Kugelman, this occurred on the 30th day of July, 1907. William G-. Kingler, who owned stock in the corporation, surrendered ten shares to the company and directed Strauss, who was the bookkeeper, to issue five shares in place thereof hi the name of each of said- Strauss and Kugel-man. A certificate for five shares of the capital stock was thereupon issued to Strauss and a like certificate to Kugelman, and Kingler delivered the stock to them and they immediately executed an assignment thereof indorsed on the back of each certificate to him, and at once delivered the certificates thus indorsed back to him. They gave no consideration for the stock and never had possession thereof, except as stated. The transaction with respect to Trommer was similar, except that it occurred on the 21st day of September, 1909.

Under the well-settled law of this State the moment that Strauss, Kugelman and Trommer acquired the- legal title to the stock, if this transfer was effectual to transfer it to them, they- parted with all their right,, title and interest therein both legal and equitable, by the assignment and delivery of the per-*373tificate to Bingler, and he thereupon became the legal and eqnitabie owner of the stock, notwithstanding the fact that he did not require the corporation to transfer the. stock into his name again on its hooks. *(Hill*v. *Newichawanick Co.,*48 How. Pr. 427; *McNeil*v. *Tenth National Bank,*46 N. Y. 325; *Leitch*v. *Wells,*48 id. 585.). In *McNeil*v. *Tenth National Bank (supra),*Bapallo, J., writing for the court, said: “It has also been settled by repeated adjudications that, as between the parties, the delivery of the certificate, with ■ assignment and power indorsed, passes the entire title, legal and equitable, in the shares, notwithstanding that, by the terms of the charter or by-laws of the corporation, the stock is declared to be trans-ferrable only on its books; that such provisions are intended solely for the protection of the corporation, and can be waived or asserted at its pleasure, and that no effect is given to them except for the protection of the corporation; that they do not incapacitate the shareholder from parting with his interest, and that his assignment, not on the books, passes the entire legal title to the stock, subject only to such liens or claims as the corporation may have upon it, and excepting the right of voting at elections, etc.” In *Leitch*v. *Wells (supra)*the Court of Appeals, in deciding the nature of the title acquired by a purchaser of the capital stock of a corporation by a formal legal assignment thereof, without having a transfer made on the books of the company, say: “The assignment of those certificates and the delivery thereof to the company, with the said powers of attorney, vested the *legal title*to the stock in the company. A transfer on the books of the banks was not necessary for such purpose.” I doubt whether these transactions were effectual to constitute Strauss, Kugehnan and Trommer stockholders of the company, for the transfers manifestly were made with a view to circumventing the statute and enabling Bingler to elect dummy directors whose votes he would control (and there was no intention of vesting title in the transferees). (See *Matter of Glen Salt Co.,*17 App. Div. 234; affd., 153 N. Y. 688.)

But the broader question presented for a decision is as to whether these individuals, who once merely and momentarily held the legal title to the stock, but had long since parted with all *374title, were eligible for election as directors merely because the owner of the stock had failed to demand that it be transferred to his name oh the books of the company and permitted it to remain in their names where the passing of the legal title through them and permitting the stock to remain on record on the corporate books in their names was done solely with a view to qualifying them to act as directors. George Bingler'& Company was incorporated in 1889. At that time section 3 of chapter 40 of the Laws of 1848, as amended by chapter 232 of the Laws of 1883, provided that the stock, property and concerns of the company should “be.managed by not less than three nor more than thirteen trustees, who shall respectively be stockholders in such company,” and that annually after the first year they shall be elected “ by the stockholders,” and that “each stockholder shall be entitled to as many votes as he owns shares of stock in the said company.” In 1890 the act of 1848, under which the company was incorporated, was superseded by the Stóck -Corporation Law, being chapter 564, and, the particular provisions in question were substantially incorporated in section 20 thereof, with the additional -provision that if a director shall cease to be a stockholder his office shall become vacant. Said section 20 was amended by chapter 688 of the Laws of 1892, but the amendment made no material change with respect to the point now under consideration. It was again amended by chapter 354'of the Laws of 1901, and therein it was provided that “ Each director .shall be a stockholder unless otherwise provided in the certificate, or in a by-law adopted by a stockholders’ meeting.” (See also § 20, as amd. by Laws of 1906, chap. 238; now Stock Oorp. Law [Consol. Laws^ chap. 59; Laws of 1909, chap: 61], § 25.) The certificate of incorporation of this company contains no provision on the subject, and. manifestly a provision therein dispensing with the statutory requirement that the. trustees should be stockholders would have been a nullity. Doubtless since said amendment to the statute, made in 1901, it would have been competent for the corporation to have provided by its by-laws that other than stockholders might be trustees, but it has not adopted any by-laws to that effect, and on the contrary section 4 of article 4 of its by-laws, as originally adopted and never amended/expressly' *375provided that no person shall he a trustee who is not the holder or owner of at least one share in the capital stock of this company, and section 11 thereof provides that *“*The transfer hy any trustee of his entire stock in the company shall cause the forfeiture hy such trustee of his rights as such, and such transfer shall be equivalent to a resignation of such trustee, and thereupon a new election shall- be held to fill the place of such trustee in the manner hereinafter designated. ” Of course these by-laws are to be construed in the light of the authority to make them as it then existed, and they cannot in view of the recent change in the law be deemed to authorize one not a stockholder to be a trustee. I am of opinion that by these statutory requirements the Legislature plainly manifested an intention that the corporation should be managed by trustees, each of whom in his own right or in a representative capacity should have a personal and pecuniary interest in the success of the corporation. *(Matter of Elias,*17 Misc. Rep. 718; *Chemical National Bank*v. *Colwell,*132 N. Y. 250; *Sinclair*v. *Fuller,*158 id. 607.)

The provisions of section 25 of the act under which the brewery was incorporated, to the effect that no transfer of the • capital stock of the company shall be valid for any purpose except to render the person to whom it is transferred liable for the debts of the company according to the provisions of the act until it shall have been entered on the records of the company as therein provided, have, as already observed, no effect on passing the entire title between the assignor and assignee, and it was' so held by the Court of Appeals in construing this identical statutory provision. *(Johnson*v. *Underhill,*52 N. Y. 203.) The only effect of a failure to have the transfer made on the books of the company is to regulate the rights and liabilities of the assignor- and assignee of the stock as between them and the corporation and its creditors, and to protect it in the payment of dividends and in the giving of notices of corporate meetings and in determining who are entitled to vote on the stock, although in such case the assignee could doubtless enjoin the assignor from voting on the stock. *(Johnson*v. *Underhill, supra; McHenry*v. *Jewett,*26 Hun, 453; revd. on another point, 90 N. Y. 58; *Commercial Bank of Buffalo**376v. *Kortright,*22 Wend. 348; *Matter of Long Island R. R. Co.,*19 id. 37; *New York & N. H. R. R. Co.*v. *Schuyler,*34 N. Y. 30, 76, 79; *Shellington*v. *Howland,*53 id. 371; *Sinclair*v. *Fuller,*158 id. 607; *Elyea*v. *Lehigh Salt Mining Co.,*169 id. 29.) Where' the eligibility of a director is called in question by this summary remedy which is in the nature of quo warranto he must, to sustain his right, show something more than that he was formerly for a moment the legal owner of stock.

I do not deem it necessary to consider at length the claim of estoppel, for where the Legislature has prescribed the qualifications essential to eligibility to the office of a director or trustee of a' corporation I think it is the duty of the court on the application of a stockholder to enforce the statute regardless of the prior conduct of the stockholders with respect to-like questions, for the courts should not assist parties in conducting a copartnership with only the liability of stockholders of a corporation. The beneficial owners of the stock now represented by the petitioners should not be held estopped by the action of William 'Gr. Bingler,- whose interest was adverse to theirs in voting their stock as executor.

I am of opinion, however, that the court erred in holding that it was without power to oust the trustees Ehret and Wilson, who were subsequently elected in the place of a deceased director, and in the place of one whom it is claimed ceased to be a director by the transfer of stock. Those two trustees were elected, and could only have been elected by the votes of the three directors whose election was void on the ground that they were -ineligible. The purpose of the statute was to authorize the court to inquire into a corporate election of directors, and to determine the validity thereof, “or any proceeding, act or matter touching the same.” I think that a subsequent election of a director by a board, the majority of whom were illegally elected at a corporate election, is an *act*or *matter touching*the corporate election of directors within the scope of said section 32 of the General Corporation Law. The two directors thus elected were ineligible for the reason that they had no right, title or interest, legal or equitable, in any stock of the corporation at the time, and were merely *377stockholders of record, the same as the others to whom reference has been made, for, the purpose of qualifying them as directors.

I, therefore, vote to reverse so much of the order as is appealed from by the petitioners, and to affirm that part of the order from which the other appellants appeal.

Order, in so far as appealed from by petitioners, affirmed, and, in so far as appealed from by defendants-appellants reversed, with ten dollars costs and disbursements to said defendants-appellants. Settle order on notice.