Case Name: State, ex rel Schwartz v. George H. Schwartz et al.
Court: Hamilton Circuit Court
Jurisdiction: Ohio
Decision Date: 1899
Citations: 10 Ohio Cir. Dec. 413
Docket Number: 
Parties: State, ex rel Schwartz v. George H. Schwartz et al.
Judges: 
Reporter: Ohio Circuit Decisions
Volume: 10
Pages: 413–415

Head Matter:
CORPORATIONS — VOTING STOCK.
[Hamilton Circuit Court,
1899.]
Smith, Swing and Giffin, JJ.
State, ex rel Schwartz v. George H. Schwartz et al.
1. Stockholder’s Option as to Manner oe Voting Shares.
Under sec. 3245 Rev. Stat., as amended April 23,1898, 93,0.1?., 230, a stockholder has the option of voting his shares for as many persons as there are directors to he elected, or to cumulate the shares for as many less as he prefers.
2. “Shares” and “.Votes” Used in the Same Sense.
The meaning of the word “ shares” as used in the statute, means “ shares as voted.” A stockholder who owns one share and casts a vote lor each of nine candidates, votes as if he had nine shares; so also does he vote if he casts nine for one candidate. The words “ shares ” and “ votes ” are used in the same sense.
3. President Cannot Throw out Cumulative Votes.
Where, at a regular annual meeting of the stockholders of a corporation, an election for directors is held, the tellers having announced the vote as cast, the president of the corporation has no authority to entertain a motion to throw out cumulative votes, and declare others receiving a less number of votes duly elected.
4. Power oe Court to Order New Election Discretionary.
The power of the court, under sec. 6776 Rev. Stat., to order a new election, is discretionary, and 'where there is nothing in the case to require its exercise, the election held will be allowed to stand.
Quo Warranto.

Opinion:
Giffen J.
From the agreed statement of facts it appears that the Pape Brothers Moulding Company is a corporation duly organized under the laws of the state of Ohio. That on the second Tuesday of August, 1899, at the regular annual meeting of the stockholders of said company there was represented, either in person or by proxy, 1,279 shares, being all the shares issued except two. At said meeting an election for nine directors was duly held. Certain stockholders, representing 624 shares, cumulated the same by giving their votes to five candidates only, and other stockholders, representing 655 shares, voted the same for nine candidates.
None of the candidates for whom the 624 shares were voted cumulatively received less than 1,121 votes, and none of the nine other candidates received more than 656 votes. After the announcement of the vote by the tellers, a motion was made and duly seconded to the effect that, as certain stockholders had cast their shares of stock cumulatively, all such votes be thrown out, and that those persons who had received a majority of the shares of stock of said corporation, be declared to be the directors for the ensuing year, which motion was, by the president, declared to be carried, against tlie protest of tbe stockholders representing the 624 shares. Thereupon, the president announced that the nine persons who had received the vote of said 655 shares, which was a majority of the shares of said corporation, were duly elected as directors f'or the ensuing year, and the latter qualified and are now in possession as such directors.
This action is brought to oust from the management and control of the business of said corporation the five persons receiving the lowest number of votes, to-wit, 655 votes each; and to resort to such management and control the five persons receiving 1,121 or more votes each.
Section 3245 Rev. Stat., as amended April 23, 1898, 93 O. L., 230, is as follows:
"At the time and place appointed, directors shall be chosen, by ballot, by the stockholders who attend for that purpose, either in person or by lawful proxies; at such election and at all other elections of directors, every stockholder shall have the right to vote in person or by proxy the number of shares owned by him for as many persons as there are directors to be elected, or to cumulate said shares, and give one candidate as many "«otes as the number of directors multiplied by the number of his shares of stock shall equal, or to distribute them on the same principle among as many candidates as he may think fit; and such directors shall not be elected fin any other manner. A majority of the number of shares sha! 1 be necessary for a choice, but no person shall vote on any share on which any installment is due and unpaid. At such first election the subscribers of the articles of incorporation, or any of them as may be present, shall be inspectors of such election, and shall certify^ what persons are elected directors, and shall appoint the time and place for holding their first meeting."
Before this section was so amended the Supreme Court, in construing it, held that it did not authorize cumulative voting, but at the same time clearly recognized the right of the legislature to so provide. State ex rel v. Stockley, 45 Ohio St., 304.
The stockholder now has the option of voting his shares for as many persons as there are directors to be elected, or he may cumulate the shares for as many less as he prefers. There is nothing unfair or unjust to the majority in such a provision, because, if they exercise the privilege granted, they will always have control of the board of directors, although the minority may, by a skillful distribution of their votes, have a fair representation thereon, and it is probable the legislature had this latter class in view when the section was amended.
The difficulty arises in the next provision of the section, to-wit: "A majority of number of shares shall be necessary for a choice."
We are of the opinion that the word, "shares," in this connection means "shares as voted." A stockholder who owns one share, and cast a vote for each of nine candidates, votes as if he had nine shares so also he votes if he casts nine for one candidate. Under the former case, in determining who is chosen, each vote is counted as one share in favor of every candidate; while under the latter case nine votes are counted as nine shares in favor of one candidate. The section distinctly provides for both of these modes of voting, and the words, "shares" and "votes, ' 'are there used in the same sense. By adopting this construction we arrive at the true intention of the legislature, otherwise we attribute to it an effort to do a vain thing.
Jacob Shroder and Fred Hertenstein, for the relators:
Burton P. Hollister, H. D. Peck and C. W. Shaw, contra.
The president of the corporation was, therefore, not authorized by law to entertain the motion to throw out the cumulative votes, and declare the defendants duly elected, nor does this holding conflict with article nine of the by-laws of the company.
It is urged, however, that under section 6776, Rev. Stat., "the court may order a new election to be held." This power is discretionary, and there is nothing in this case which seems to require its exercise.
Judgment of ouster against the defendants and of induction in favor of the five candidates receiving 1,121 votes or more.
Affirmed by Supreme Court, Jan. 9, 3900; per curiam 61 O. S. 000.