Court Opinion

ID: 8505261
Source: CourtListenerOpinion
Date Created: 2022-11-23 01:26:27.243736+00
Date Added: 2024-06-11T16:50:51.447659
License: Public Domain

Gilchrist, O. J.
The Manchester and Lawrence Railroad was incorporated on the 30th of June, 1847. The grantees were nineteen in number. The first section of the charter provides that these grantees, “ their associates, successors and assigns, shall be a body corporate,” &c.
The fourth section provides that “ the immediate government and direction of the affairs of the corporation shall be vested in a board not exceeding seven directors, chosen by the members of the said corporation at their annual meeting.”
The tenth section enacts that Messrs. Bell, Parker and Poster, or any two of them, shall call the first meeting of the grantees.
These persons gave notice, and on the 31st day of July, 1847, the grantees met in pursuance of the notice, and voted to accept the charter; and then, without having *69taken or made any associates or assigns, elected the defendants as directors.
The defendants having been so elected, proceeded to do those things which directors might lawfully do. They chose one of their number to be president of the board and of the company. They caused books to be opened for subscription to the stock, and apportioned the shares as they deemed just and proper among the individuals who had subscribed, and received assessments ordered by themselves to be paid in by such subscribers. They also proceeded to locate the road, and to expend the funds of the company in executing surveys, explorations, and like works, under the direction of the proper officers. It is conceded, by the form in which the cause comes up for hearing, that these were such acts as directors of the corporation had the i’ight to perform, and that they were performed in a manner which furnishes no substantial ground for grave complaint on the part of those interested in the success of the work for which the corporation has been created.
The bill is preferred by a stockholder in the company, for enjoining the defendants against the farther prosecution of the work, and the farther exercise of the functions of dii’ectors, upon the ground that they have not been legally elected to their office ; and this the plaintiff seeks to maintain upon two grounds.
He says, in the first place, that the grantees could not legally have elected directors, without first having made or taken to themselves associates. But this position cannot be maintained. The grantees and their associates form the corporation. If there are no associates, then the grantees compose the corporation. The corporation may consist of them, or they may associate others with themselves in the exercise and enjoyment of the rights and privileges conferred by the act; or they may wholly assign its benefits to other parties. But the act does not require them to do *70either. Its benefits belong to the grantees, or to the grantees and their associates, or to their assigns; and if they do not choose to receive associates, there is no ground for complaint, any more than there 'would be if they did not see fit to assign those benefits. The authorities cited by the defendants’ counsel are in point, and confirm the obvious construction which they have given to the act of incorporation.
The second position taken by the plaintiff is, that the defendants were not chosen directors at the annual meeting of the corporation, in accordance with the provisions of the charter and by-laws, inasmuch as at the time when the election was made no by-laws had been enacted.
The 4th section of the act of incorporation provides that the government of the corporation shall be vested in a board of “ directors, chosen by the members of said corporation at their annual meeting,” &c.
The 10th section provides that these annual meetings for the choice of directors “ shall be holden at such time and place, in this State, as may be provided by the bylaws.”
On the last Saturday of July the grantees held the meeting called by the persons authorized by the act to call the first meeting, and transacted business in the following order: 1. They voted to accept the charter. 2. They elected directors. 3. They adopted by-laws, the first article of which provided that “ the annual meeting of the corporation shall be holden on the last Saturday of July in each year,” &c.
Now at the precise moment when the election of the directors took place, no by-laws had designated that day as the day of the annual meeting of the corporation. No time or place had been provided by the by-laws for holding the annual meeting. Nor would it have overcome the objection made by the plaintiff, if the adoption of the bylaws had preceded the election of directors on the same *71day; because he says that an annual meeting, such as is prescribed by the by-laws for the choice of directors, cannot be called but by the agency of officers appointed by the directors.
No valid election of directors could, therefore, have been made under the present by-laws of the corporation, if the position assumed by the plaintiff is correct.
The election of directors and other suitable officers or agents, for the direction and government of the affairs of the corporation, and the conduct of its business through the agency of such officers, pertain to the condition and nature of aggregate corporate bodies. The creation of this corporation by an act of the legislature, which should have contained no provisions whatever for the choice of directors, or for the management of its affairs through the agency of such, would have implied all that is expressly conferred by the provisions which the act contains, except so far as those provisions relate to the time, place, or other modes to be observed by the corporation in the exercise of that inherent function. In requiring, therefore, that the immediate government and direction of the affairs of the company shall be vested in directors, to be chosen at the annual meeting, the law does not imply that elections held at other times shall be wholly void. The law is merely directory, and does not, in terms or by any implication, attach such a consequence to an omission or non-observance of the prescribed modes of exercising the power of electing directors.
This is illustrated by a case referred to in Eolle’s Ab. 514. If the king create a corporation of a mayor and eight aldermen, with a clause in the charter, that, on the death or removal of any one of the aldermen, the mayor and the other aldermen may, within eight days, elect another in his place, in such a case, though no election be made within eight days, yet they may elect one at any time afterward; for the power of election is incident to the *72corporation, and the affirmative power to elect within eight days does not take away the power implied as incident to the corporation. Hicks v. Launaston.
So in The King v. Poole, B. R. H. 27, which was to try the validity of the election of the mayor of Liverpool. The statute prescribed for the meeting the time between ten in the morning and two in the afternoon, and the election was not within those hours. Lord Hardioicke said that the statute was in that case directory only, and not restrictive, and was intended only to prevent surprise; and that where no surprise appeared to have occurred, an election, begun, or continued by adjournment to any other time, is good. This case is partially reported in Lord Hardwicke’s Rep. 38, Cases Temp. Hardw. 23, and in 2 Barnard. 93.
In Prowse v. Foot, 2 Bro. P. C., where the mayor was eligible from among the aldermen, and these were required by the statute to be chosen annually, the statute was held to be directory only, and that persons remaining in office many years without reelection were capable, as aldermen, of being elected to the office of mayor. To the same point is People v. Runkin, 9 Johns. 147.
I think that the provision in the act which prescribes that the directors should be elected at annual meetings only, is merely directory, and that it was not intended that the observance of that condition should be essential to the exercise of the power of election. Rex v. Londule, 1 Bur. 447; Rex v. Leicester, 7 B. & C. 12; Dwarris on Statutes 714.
But irregular elections are voidable only, and not void. These directors at most are only irregularly chosen. They are in under color of an election, and their acts, so long as they retain their offices, are binding. The legality of their election cannot be brought collaterally in question, but proceedings should be instituted for the express purpose of trying it, and of evicting them, if not properly *73entitled to the offices which they have assumed to exercise. This bill is not such a proceeding. Its object is to restrain the defendants from exercising the offices which they actually hold; not because they are abusing their powers, but because they do not rightfully possess them. This cannot be done. Trustees of Vernon Society v. Hill, 6 Cowen 28. The bill must, therefore, be dismissed.