Court Opinion

ID: 6245895
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:58:57.242425+00
Date Added: 2024-06-11T08:59:17.207702
License: Public Domain

Mr. Justice Mitchell,
dissenting:
By the act of incorporation certain persons were declared and created to be a corporation under the name of the Char-tiers Cemetery Company and as such empowered not only to carry into effect the objects of the company but also “ generally do all such other matters and things as are incident to a corporation” and specifically to establish a rural cemetery on Marshall’s land. The power to issue stock was necessarily implied. No mode was provided for the acquisition of the land, and the natural and usual method “incident to a corporation”" for that purpose was to obtain subscriptions for stock and buy the land from the fund thus raised or by the direct • issue of stock to the landowner. It is said that the corporators might-mortgage the land and thus obtain the money. Perhaps so, and perhaps not; there is nothing to show whether they could or not. But conceding that they might, they were not confined to this mode. The money had to be raised, and there is no-evidence that the organizers were willing to contribute it in equal amounts. If not they could only protect their proportionate interests by a partnership, which the statute did not contemplate, or by the creation of stock. Even if not the only or even the best way it was a reasonable and effective way of performing the express duty laid on the corporation, and was-therefore within the discretion necessarily implied by the command of the act.
The power subsequently to increase the number of shares is-not so clear but it is not now material to consider.
But secondly even if the original issue of stock was ultra *204vires the title of the complainants should be sustained until they are deprived of office in some regular and orderly way. They are the de facto and de jure board of trustees to which the government of the affairs of the corporation is committed by the charter.
Section 2 of the act of incorporation provides that “the government of the said company and the management and disposition of its affairs is hereby vested in a board of trustees who shall be elected at such times and in such manner as the said company shall by its rules and regulations direct.” Under this section the corporators met and elected the predecessors of complainants by a vote in proportion to the funds each contributed to start the corporation. It was a perfectly lawful mode of election. Even if they had formed a partnership a regulation that each should have a voice in the management in proportion to his capital invested would have been entirely valid. The act of incorporation commanded the creation of a board of trustees but left the mode of election wholly to such rules and regulations as the company should establish. The company established the mode of election by stock vote, and even if the stock was invalid and ultra vires, as stock, it was a legitimate means of carrying out the regulation established by the company for the election of its trustees, and has been recognized and acted under as such for thirty-five years. Under it the plaintiffs were duly elected in the same manner as all their predecessors had been, and their title now should be held clear and valid until their successors are elected in accordance with the practice, or the regulation itself is changed in some orderly and legal manner by the full board of the corporators or their successors or representatives in the present corporation. The appellants are a body of disgruntled stockholders, mere intruders into the government, self-elected by a disorderly and illegal proceeding not authorized by any regulation of the corporation but in direct violation of the only corporate regulation on the subject and the uniform usage for thirty-five years.
Sterrett, C. J., and Fell, J., join in this dissent.