Court Opinion

ID: 6412296
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:53:36.314579+00
Date Added: 2024-06-11T15:51:24.752985
License: Public Domain

Hoar, J.
It is evident that the plaintiffs cannot maintain this action, unless the assessment or call made by the vote of September 13th 1854 was lawfully made, and created a valid obligation according to the contract of the defendants.
Previously to June 12th 1854, the by-laws of the company provided that “ the powers of the company should be vested in twelve or more directors,” and that five directors should constitute a quorum. At the regular annual meeting of the company, held on the 16th of January 1854, twelve persons were chosen directors for the ensuing year, and held their offices on the 12th of June following. On the 12th of June a special meeting of the company was held, in pursuance of a notice duly published, “ for the purpose of making alterations in the by-laws, and for the transaction of such business as may come before them.” At the meeting thus held, the by-laws were altered by. making four directors a quorum instead of five, and seven additional directors were chosen. Four of the seven directors then chosen were the only directors who were present at the directors’ meeting held on the 13th of September 1854, by which the assessment was made which is the foundation of this action.
It has been argued for the defendants that these were not directors of the company; that their action in the premises was not authorized by law; and that the claim made upon the defendants, by virtue of it, cannot be supported. The SL of 1854, c. 453, § 15, provides that “ every mutual insurance company shall annually elect, by ballot, not less than seven directors,’ who “ shall manage and conduct the business thereof.” A Similar provision was made in the Rev. Sts. c. 37, § 25; and by § 27, authority was given to fill vacancies by a special election.
The officers thus chosen are chosen for the year succeeding the annual meeting; and the point is certainly deserving grave consideration whether the power of the corporation to choose them is not exhausted, when, at an annual meeting, a number of directors, not less than the number required by law have been elected. If the number to be chosen is not fixed by the by-laws, then the determination and choice of a particular number at the annual meeting might be regarded as having the *442effect to fix it for the ensuing year; and there is no express authority given by statute to choose directors at any other time, unless to fill a vacancy.
But a decisive objection to the choice of these new directors is, that in the call for the meeting at which they were chosen there was no intimation of any purpose to make such an election. The only specific subject of action named was the altera tian of the by-laws. There was no by-law limiting the number of directors, and no new by-law was adopted respecting the number to be chosen, or altering the time of holding the annual meeting. A measure of such importance to the members of ¿he company, which might transfer the whole corporate power to new hands, could not fairly be embraced in the phrase “ for the transaction of such business as may come before them.”
It is urged on behalf of the plaintiffs that these were directors de facto, actually holding and exercising the office at the time the assessment was made, and that it is not open to the defendants to object collaterally to the legality of their election. But we think the doctrine of the validity of acts done colore officii, although well established by the authorities cited, is not applicable to this case. In Baird v. Bank of Washington, 11 S. & R. 411, which is the case most relied on, a director of the bank was chosen at a meeting at which less than a quorum were present; and it was held, that his acts as an agent and officer of the bank were valid, as between the bank and third persons. But these defendants are not to be regarded as third persons in their relation to the insurance company. They are not debtors absolutely to the corporation. By the terms of their contract, their liability can only be created by an assessment or call made by the directors, officers in whose selection they are entitled to a voice. The directors referred to in their contract were the twelve who were chosen at the annual meeting, and who held the office on the 13th of September 1854. No vote to increase the number had been passed at any meeting held for such a purpose. They were not bound to recognize as directors persons who were never lawfully chosen, and who were usurping the functions of an office already filled.

Judgment for the defendants.