The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-12-04
WATT is ON TOP.
Will Be the Peoples Bank
Attorney.
No Bylaw of Corporation Is Valid
Which Interferes With Express
Provisions of the Code.

The Supreme Court has granted the pc
tition of James Alva Watt to be substi-
tuted for the firm of Delmas 81 Shortridge
as attorney for the Peoples Home Savings
Bank in the suit now pending in the Su-
perior Court of the city and county of San
Francisco.
The trouble arose out of suit COM
menced by L. II. knight. creditor,
against the bank and its directors, for the
purpose of enforcing his demand, and ask
ing that the directors be enjoined from the
further transaction of business. be re-
moved from Office, that a receiver be ap-
pointed and the bank thrown into liquida-
ton. Fraud was also charged. john f.
Sheehan was appointed receiver, and he
retained Watt as his attorney therein.
After this the Peoples Bank made an ap-
plication to the Supreme Court for writ of
prohibition asking that the proceedings of
the Superior Court be annulled as regards
the appointment of a receiver. The ap-
pIlcation was made by the bank through
its regularly appointed attorneys, Delmas
and ShorIidge. Thereafter this motion
for substitution OF attorneys was made,
based upon showing that subsequent to
the Inception of the prohibition proceed
ings the directorate of the bank had been
changed at a stockholders election, and
that the new board of directors appointed
James Alya Watt as the banks attorney,
Tevoking the authority of Delmas and
S1Ortridge. The latter firm resisted the
substitution, claiming that Watts election
was invalid, just as the election of the new
directorate was also invalid.
The Supreme Court says:
The legality OF Watts appointment depends
upon the validity of the election OF the board
OF directors appointing HIM, and the only seri-
Gus question presented as 10 the validity OF
such election involves The right OF person not
slockhoder TO participate in the election by
virtue OF his position as a proxy of bona fide
StocKholder, and TO this question we shall di-
rect our attention.
While 1t is provided by section 312 of the
civil Code that stockholders of corporations
may be represented al all elections by proxies,
yet the iby-aws Of the petitioner bank provide
that no proxy shall be voted by any one
not stakeholder of the corporations and
it is upon the validity of such bylaws
that The merits of this case hinge
1t Is suggested in argument of counsel that all
banking corporations have bylaw OF similar
import, but Notwithstanding this general prac.
lice, we have arrived at the conclusion, after
careful consideration, hat The making of such
a law is without the power of the corporation.
Corporations have no power TO create bylaws
that are unreasonable in their practical appll-
cation, or that are yoatlve OF the statute Of
the State; and we think this bylaw an in
fringement upon the statute. and most sub.
stantial limitation upon the rights OF stock.
holders granted by section 312 Of the Civil
Code.
The stockholders of many of our CORPORA.
tons are limited In number, and the case
would undoubtedly often arise when the absent
STOCKHOLDERS DESTROYS of being represented at an
election would be unable 10 find friend among
Them IN whom 10 trust his interests, The
statute contemplaIes no such conditions and
neither says nor intended 10 say that such a
stOckhoder would be deprived of his right to
vote by proxy.
The principle of cumulative voting has been
authorized and approved IN the interests of
| hVy-t our
squarey strikes at the principle which has
| been carefully fostered The substantial
rights of a stockholder under the law cannot be
taken from him. or even abridged by the by.
laws: the right TO vote by proxy is most sub
slantial right, and this bylaw handicaps IL out
granting OF the motion for substitution it is in
| sisted that James Alva Watt by reason Of his
relations 10 the respondent as attorney Is dig.
quallhed 10 represent the petitioner in the pro.
| h1bitiOn proceedings. We attach but little i'm
! pOrtance TO this contention and do not deem 1t
necessary to enter into discussion of the queS.
| lions, namely: First-Are the interests of the
! receiver and the bank antagonistlc? Second
| Is Watt attorney for the respondent In the
| above entitled cause?
The conclusion we have arrived ar uDon the
| preceding question discussed declares the
| business Citations heretofore existing between
| the bank and Its attorneys, MesSrs. Delmas &
Sh0rtrldge, were severed by virtue of the ac-
| tlon of The newly ana legally elected board of
| directors, and such being the case, the attor-
| Deys opposing this motion stand before us as
strangers TO the proceeding having no interest
! or standing in the litigation; and we are unable
| 10 see that IL Is of any concern 10 them who
| represents the various parties in this pro.
| ceeding.
| As to Mr.. Watts conduct In the litigation,
! all that he has done has been open and upon the
| record. There has been no coDcealment, no I'm
! position practiced upon the court, but, upon
| the contrary, all that he has done in the past
| and all that he proposes TO do In the future he
| has done ana proposes 10 do under a claim of
| right, supported by the law These things
! being so, until some party TO the litigation OBJ.
| lects, we will not investigate. Ii all parties 10
the litigation are satisfied we know OF no proper
| party to object. We might suggest In conclusion
sires TO be substituted as attorney for the petit
| toner bank in order that be may dismiss the
| prohibition proceeding The bank retains him
| as Its attorney TO dismiss the proceeding, and
| there Is no reason why it has not right TO do So
such dismissal IN no aspect of the case prejll-
! dices the interests OF The respondents, aud Tie
bank. the petitioner, has The right to dismiss
| lts petition If It deems such the proper course.
The motion for substition as prayed for is
| granted.
The courts opinion was written by JUS
lice Gar0utte, and concurred in by JUS
tlces Mcfarland, Van Fleet, Harrison and
| Chief Justice Beatty. Justice de Haven,
ueemlng himself disqualified, did not par
| ticipate IN tbs decision.
| CHRISTMAS cards, booklets, calendars now
ready Sanborn, Vail s. Co.. TAI Market.