Court Opinion

ID: 9479082
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:08:08.573555+00
Date Added: 2024-06-11T17:46:49.361584
License: Public Domain

SLOVITER, Circuit Judge,
concurring.
I concur in the majority’s opinion. However, because this case squarely presents the issue of the validity of shareholder votes by telegraphic transmission and because this issue is likely to arise again either in another election on the same proposal by PEI or elsewhere, I believe that we should reach and decide the issue.
In connection with the shareholder vote in this case, the proxy solicitors arranged that shareholders could call a special 800 telephone number, identify themselves to the operator, and vote their shares by phone. The phone calls were taken by Churchill Computer Corp. or Western Union who prepared a telegram containing the language of the proxy cards and transmitted that vote by telegram. The judges of election counted all of the votes actually owned by the shareholder even though the number of shares listed by the shareholder in the telegram proxy was fewer than those actually owned.
Carey challenges both the validity of the proxygram and the action of the election judges in crediting votes in excess of the shares indicated as voted by the telegram. The resolution of the DRIP share issue means that we do not have to involve ourselves on this appeal with the number of votes credited by telegram proxy. Because, however, I believe that the entire procedure of crediting telegraphic votes is invalid under current Pennsylvania law, I think it appropriate to state why.
Pennsylvania law requires, inter alia, that “[ejvery proxy shall be executed in writing by the shareholder, or by his duly authorized attorney in fact, and filed with the secretary of the corporation.” 15 Pa. Stat.Ann. tit. 15, § 1504(A). Unlike the facsimile proxies also credited by the election judges in this case, the telegram proxies contain no shareholder’s signature. There is also a complete absence of a paper trail which would evidence that the shareholder in fact appointed Western Union or Churchill Computer Corp. to act as agent.
The possibility of fraud is patent, since nothing in this record suggests that the recipient of the 800 call had the ability to check whether the caller was in fact the shareholder. See generally, Varalla, Data-gram Proxies: Gaps at the Interface Between Law and Technology, 2 The Computer Lawyer, August 1985 at 19, 20. Apparently the only information required of the putative shareholder was the identity of the shareholder. Anyone with that knowledge could vote the shares of a shareholder who, for one reason or another, such as illness, absence or disinterest, failed to vote the shares. It is even possible that this procedure could be used to override an earlier valid vote by the shareholder.
PEI argues that crediting telegram proxies is an accommodation to new technology and the computer age. This is an argument more properly addressed to the Pennsylvania legislature which may, if it so chooses, specifically provide for this type of voting of shares but which may also include various safeguards to insure that votes are properly cast and credited. Until the Pennsylvania legislature acts, I would hold that shares voted by proxies in the manner shown in this record are invalid and should not be credited.