Los Angeles herald., 1892-09-02
THEY COULD NOT GIVE A DEED,
The Southern California Motor
Roads Appeal Dismissed.
.Dorn's Acquisition Of the Property
Is Now Cancelled.
what the Supreme Court opines-The
San jose Land and Water Com
pany rs worsted in Favor
of the County.

~.ceived an lmp0rJant opinion by the
superior court, yesterday, affirming the
Judgment aud order in the case of J. H
Smith, respondent, vs. D. s. Dorm and
the Southern California Motor Road
company, appellants. The opinion says
''The Southern California Motor Road
company is a corporation organized in
this state, which, on April 15, 1890,
owned railroad leading from the city
of San Bernardino to the city of River
side, in the, county OF San Bernardino,
in this state, with equipments and other
real and personal property.
cat specially called meeting OF it's
directors, held on the 10Th day OF April,
1890, it was resolved to sell the road and
equipments, with ali other property Of
the corporation, to the defendant, D. s.
Dorm; and accordingly. on the same
day, q deed was executed to Dorm pur-
porting to convey to him all the roads,
franchises, rights OF way, equipments,
lands and personal property Of the cor
poration, including all debts owing, and
money belonging to the corporation !;
and possession of all the tangible prop
erty wss then given to Doran.
''Th0 plaintiff, as amere stakeholder OF
the corporation. brought this suit to set
aside and cancel the deed to Dorm, on
the grounds OF fraud, and that, the
speciill meeting of the board at which
the sale of the property is claimed to
: have been authorized, was not called ac-
cording to law; and therefore that the
directors who acted at that meeting
we're not lawfully assembled as board.
Judgment was rendered in favor of
Al t.ss 1t a. l.
appealed from the judgment and from
Aan order denying their motion for new
trial."
After stating that the lower court did
not err in denying motion of the de-
'fendants to answer or demur to an
amended complaint, the amendment
consisting only of the signature of
plaintiff to an amended complaint. the
court thus discusses the Gaze:
"The resolution authorizing the sale
OF the corporate property to Dorm, re-
cited, among other thinge, that the cor
poration is Indebted in the Gum of about
0,000, in addition to it's bonded in
debtednees of $3.50, 600. and is unable to
meet the same, and has no prospects of
being able to liquidate said demands
from its own resources; and the deed to
Dorm, which is set out in the complaint,
contains substantially the same recital.
The complaint negatives these recitals
by an allegation that it is not true that
said corporation had no means at its
command to meet said outstanding in
debtednees, as stated in said instrument
OF conveyance to defendant d. s. Dorm
and then proceeds to chow that, for the
purpose OF paying said Indebtedness, the
corporation had previously levied an
assessment amounting to $31. $50, which
must have been paid, or the delinquent
stock sold, on the 10Th day OF April (the
day after the execution of the deed to
DORM and that the owners of major
ity of the stock were ready, able and
willing to pay that assessment. and
would have paid it on April 16, 1890, If
the assessment had not been repealed
and annulled, as it was, by a resolution
of the directors at said rpecial meeting
of April 18th; and further alleged that
the delinquent stock would have been
cold on April 10Th, 80 that the full
amount of the asse ssment would
have been paid and applied to the debts
of the corporation. And also alleged
that.no sale of the property OF the cor
poration was necessary for the pay ment
of corporation debts, as all such debts
means of assessments on the stock, etc.
All these allegations were denied by the
defendants in their amended answer.
Each of several distinct questions
asked witnesses for plaintiff, pertinent
to the issues thus taken upon these alle-
cations, was objected to by counsel for
defendants, on the ground that twas
irrelevant and immaterial to any of the
issuee in the case. Appellants insist
that the court erred in overruling these
objections"
The court then holds the questions to
have been relevant and material, the
plaintiff having right to show that the
debts could and would have been paid
by assessments and other means than
by sale of all the property.
It having been contended that the ap-
pellant, as mere stockholder, is not en-
titled to maintain the action, because it
does not appear that he ever sought or
demanded remedy for the wrongs COM
planned of through the board of direc-
tors, the court finds that the board con-
sisted of seven members, and that four
of them then controlled, and now con-
troll the action of the board, and partici-
pated in the matters complained of by
the plaintiff.
Upon the point alleged, that r. W.
Button and E. J. Gilbert, who executed
the instrument of conveyance to Dorm.
had no authority to do go, the court
finds that the president, vice-president,
and secretary having declined to call
the meeting, at wi ich the resolution
directing the sale was adopted, two di-
rectors, r. W. and H. W. Button, them
selves called the meeting of April 10Th
and did not state for what purpose i
was called. TIE meeting was held by
four directors, the two Buttons, Ferris
and Hays, in the absence of the othel
three, also in the absence OF the secre
tary, and without the minute book Q
the board. They first declared the off
.ces of president, Weep resident ant
acretary vacant, and then elected
r w. Fulton pre- sident, Ferri
vice.president, and 4. j.. Gilber
secretary. Then they repealed tn
order levying an assessment. A
the afternoon session they passe
the resolution authorizing the Hale, tn
other directors protesting.
The court holds that the director
were not lawfully assembled as boar
at the time the resolution was adopted
and for this reason the lower court pror
erly found it was not corporate act
and conveyed no authority for the sale
and after citing numerous authorities
finds that the evidence is clearly suff
cicnt to iustifv all the other fndiuo