Opinion ID: 2232325
Heading Depth: 1
Heading Rank: 1

Heading: The Corrigan Annexation.

Text: The total assessed value of real estate in the Corrigan territory was $3,863,796, so that signatures of the owners of at least $1,931,898 of assessed value would be required for a valid petition. However, the trial court found that the petition contained the signatures of the owners of only $1,922,775 of assessed value, and thus there was a deficiency of $9,123. For this reason the annexation ordinance was held invalid by the trial court. There are four principal issues raised upon the challenge to this annexation: 1. Whether the signature on the petition made on behalf of the Evert Container Corporation was properly authorized; 2. Whether the interest of Mary Cudahy Keogh, the owner of a remainder interest in real estate devised to her by her father, John Cudahy, with an assessed value of $30,297.75 was represented on the annexation petition by a sufficient signature; 3. Whether the signature of Mr. and Mrs. Mulholland on the petition was sufficient to commit a tract with an assessed value of $18,800 in favor of the annexation; and 4. Whether real estate owned by two railroads and an electric power company within the area in question should have been added to the total assessed value of real estate in the Corrigan territory. We conclude that the assessed valuation of the Evert Container Corporation, in the sum of $231,375, was improperly included in the computation of the total assessed value for which owners had signed on the annexation petition. No determination of any of the other issues, or any combination of such issues, in favor of Brown Deer, could alter the result of invalidation which attends our conclusion that the assessed value of the real estate of the Evert Container Corporation was improperly included on the annexation petition. Accordingly, we do not reach the other issues stated above. The Evert Container Corporation has an 11-member board of directors. Charles Evert is president of the corporation, the majority stockholder, and a member of the board of directors. Although he discussed the question of his signing the petition with a majority of the members of the board of directors before he actually signed, the evidence is clear that Mr. Evert purported to sign on behalf of the corporation without obtaining either formal authorization from the board of directors or informal authorization as permitted under sec. 180.91, Stats. Brown Deer contends that Milwaukee has no standing to challenge the authority of the president, Mr. Evert, to sign the petition on behalf of the corporation. As a general rule, if a corporation does not raise the objection that an officer lacked authority to do an act on behalf of the corporation, such objection may not be raised by a third person. 2 Fletcher, Cyc. Corp. (perm. ed.), p. 523, sec. 490. However, we believe that when a corporation purports to perform a political act, as opposed to a business act, other interested parties may be heard to challenge the validity thereof. Milwaukee is a vitally interested third party. Milwaukee has adopted a valid ordinance consolidating Granville; Brown Deer has adopted an ordinance purporting to annex territory in Granville. Such ordinance takes precedence over Milwaukee's consolidation. We conclude that an interested municipality may raise the question of the lack of authority of a person purporting to sign an annexation petition on behalf of a corporation. Certainly Milwaukee could challenge the legal title of a person who signed an annexation petition as an owner of real estate. We see no difference in principle. Sec. 180.30, Stats. 1955, provides: The business and affairs of a corporation shall be managed by a board of directors. . . . Sec. 180.91, Stats. 1955, provides as follows: Any action required by the articles of incorporation or by-laws of any corporation or any provision of law to be taken at a meeting or any other action which may be taken at a meeting, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the shareholders, subscribers, directors, or members of a committee thereof entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote, and may be stated as such in any articles or document filed with the secretary of state under this chapter. Sec. 180.91, Stats., was adopted in order to permit informal action by the board of directors. Corporations owe their existence to the statutes. Those who would enjoy the benefits that attend the corporate form of operation are obliged to conduct their affairs in accordance with the laws which authorized them. In 2 Fletcher, Cyc. Corp. (perm. ed.), p. 227, sec. 392, it is stated: By the overwhelming weight of authority, when the power to do particular acts, or general authority to manage the affairs of the corporation, is vested in the directors or trustees, it is vested in them, not individually, but as a board, and, as a general rule, they can act so as to bind the corporation only when they act as a board and at a legal meeting. The legislature having specified the means whereby corporations could function informally, it becomes incumbent upon the courts to enforce such legislative pronouncements. The legislature has said that the corporation could act informally, without a meeting, by obtaining the consent in writing of all of the directors. In our opinion, this pronouncement has pre-empted the field and prohibits corporations from acting informally without complying with sec. 180.91, Stats. One of those who helped draft the Wisconsin Business Corporation Law, Dean George Young, has discussed this section in 1952 Wisconsin Law Review, 5, and he says, at page 19: In addition, informal action may be taken without any meeting under sec. 180.91 by either directors or shareholders upon the unanimous written consent of all entitled to vote upon the subject of the action taken. Permitting corporate action based solely upon written assent, of course, sacrifices whatever wisdom there may be in requiring that decisions be made only after face-to-face discussion, but the advantage of flexibility probably outweighs any disadvantage. In any event, we all know that in fact many corporate meetings are held without the requisite formalities and the waivers and minutes are later prepared ex post facto to show compliance with the law. Such subterfuges should no longer be excusable under the new provision. The presence of apparent authority and estoppel which might prevent the application of this rule in matters which flow in the normal course of business cannot apply where the action of the directors relates to a political determination and is outside of the ordinary course of normal business operations. In DeBauche v. Green Bay (1938), 227 Wis. 148, 154, 277 N. W. 147, the court stated that when an elector signed an annexation petition he was discharging his duty in shaping and influencing this particular affair of government. The signing of a petition which would change the local government under which the corporation functions is more closely analogous to such unusual acts of the corporation as the disposition of its assets, as opposed to acts in the ordinary course of business. In deciding whether to sign an annexation petition, we believe it is clear that the corporation may not validly act in an informal manner unless it be in compliance with the statutes. 2 Fletcher, Cyc. Corp. (perm. ed.), p. 664, sec. 592. There can be no doubt as to the rule in Wisconsin in view of the enactment of sec. 180.91, Stats., by the Wisconsin legislature. Fletcher also makes the following statement in his treatise at page 242, sec. 396, with respect to the effect of a statute permitting informal corporate action: Of course, a statute may authorize particular acts to be done by the directors acting otherwise than as a board and at a formal meeting. But where it is claimed that the statutes of the state permit the corporation to dispense with this eminently wise and just rule, the construction will be strictly against any such contention. The fact (1) that Mr. Evert owned 51 percent of the stock of the corporation, or (2) that he may have been accustomed to resolving the problems of the corporation as a sole owner, or (3) that the board of directors met infrequently, or (4) that the corporation subsequently ratified his act, does not derogate from the clear mandate of the statute. The annexation petition must be valid as of the time it is submitted to the city council. Blooming Grove v. Madison (1960), 9 Wis. (2d) 443, 101 N. W. (2d) 809. Accordingly, ratification is of no avail.