Court Opinion

ID: 9725925
Source: CourtListenerOpinion
Date Created: 2023-08-26 12:20:55.34649+00
Date Added: 2024-06-11T18:25:20.227559
License: Public Domain

BEACH, J.
I concur in that part of the judgment and that part of the majority opinion which reverses the trial court’s judgment that (a) declares proxies may not be used in the election of directors and (b) awards attorney’s fees. However, in other respects I believe that the language of the majority opinion, as well as the trial court, too liberally interprets the decision and holding of Braude v. Havenner, 38 Cal.App.3d 526, 529 [113 Cal.Rptr. 386].
The first part of the judgment of the Court of Appeal in Braude v. Havenner, supra, 38 Cal.App.3d 526, 534, says: “The judgment is reversed with directions to enter a new judgment determining that the electoral procedures which led to the selection of respondent directors were unfair and unlawful. . . .” (Italics added.) The “electoral procedures” referred to are described in the opinion as (1) “the effect of defendant club’s solicitation of proxies,” (2) “failure to give any more than minimal legal notice of the meeting,” (3) “failure to disclose nominees to be voted upon at the meeting, and” (4) “the impracticality of any third person[’s] being able to communicate effectively with the members of the club ....” (Braude v. Havenner, supra, 38 Cal.App.3d at p. 533.)
The bylaws which the court determined caused these four infirmities have been changed, and the specific defects removed. The bylaws in effect at the time of the second trial were different than those which gave rise to or allowed the procedures which the appellate court ordered be declared unfair and invalid.
After obediently declaring the previous bylaws invalid, the only remaining issue before the trial court was the extent of the court’s *189authority under the order to retain equitable jurisdiction and to take evidence if necessary before determining to approve or order any specific electoral plans. It is in this respect that the holding of Braude v. Havenner should be narrowly interpreted and strictly limited. It is at this point that I believe the language of the majority in the present case adopts too broad an interpretation. We are aware that both the trial court and this panel of the Court of Appeal are bound by the law of the case and the determination of questions of law in Braude v. Havenner, supra, 38 Cal.App.3d 526, People v. Shuey, 13 Cal.3d 835 [120 Cal.Rptr. 83, 533 P.2d 211]. It follows that we cannot say and do not say that the trial court erred in retaining jurisdiction and considering the matter anew as a court of equity. However, in directing the trial court to compel respondents to put into effect such new electoral processes “as the court may consider just and proper,” the appellate court used language which might be subject to misinterpretation. That language cannot be interpreted to mean that the trial court thereby had authority to determine what was fair, just, and proper utilizing its own ideas of what is just and fair. To interpret the decision as meaning that the auto club is required to be governed not by what the Corporations Code allows, but by what a judge of a superior court thinks is “fair and just” is totally unfair and without precedent. No other corporation is required in addition to making bylaws that are within the keeping and confines of the Corporations Code, to also submit its bylaws to a censor or pre-inspector and receive therefrom his imprimatur, before it may adopt such bylaws and operate thereunder. Because the statement of the appellate court in Braude v. Havenner, supra, seems to assume and to confer upon the trial court an equitable jurisdiction upon a court of law to an extent and in a manner not heretofore clearly recognized and because as a result it might be misconstrued to improperly grant to a superior court a “roving commission” it is necessary to view the language in the light of the case law upon which it relied to order the superior court to “retain equitable jurisdiction.” We briefly review that case law.
Lawrence v. I. N. Parlier Estate Co., 15 Cal.2d 220 [100 P.2d 765], involved the right of pledgeholders to vote. The court determined the rights of the individual pledgeholder on the basis of contract law and general fiduciary duties, and the right of a corporate pledgeholder on the basis of case law and the statutory provision governing pledgeholder voting. (Id. at pp. 229-231.) Haynes v. Annandale Golf Club, 4 Cal.2d 28 [47 P.2d 470, 99 A.L.R. 1439], involved the validity of a bylaw which required the consent of the corporation when members wished to resign. The court held that this bylaw was “. .. obnoxious to the spirit as well as *190to the clear meaning of the statute(Italics added.) (Id. at p. 30.) People’s Bank v. Superior Court, 104 Cal. 649 [38 P. 452], involved a bylaw which required proxyholders to be stockholders. The court held that this bylaw restricted a right granted by statute, and was therefore invalid. (Id. at p. 652.) Columbia Engineering Co. v. Joiner, 231 Cal.App.2d 837 [42 Cal.Rptr. 241], involved the validity of votes cast by shareholders whose stock had been issued in violation of a permit from the Commissioner of Corporations. The court held that these shares could not be voted because they were void, citing Corporations Code section 26100, and the cases which apply that section. (Id., at pp. 853-854.) Burnett v. Banks, 130 Cal.App.2d 631 [279 P.2d 579], dealt with directors perpetuating themselves in office by refusing to call an annual meeting. The court held that it had a right under section 2238 to order an election because sections 2200 and 2201 contemplate “that there should be annual election of directors.” (Id. at p. 635.)
All of the California cases cited by the Court of Appeal are primarily guided by and place reliance on the statutory scheme governing corporations. This is typical of the cases decided under Corporations Code sections 2236-2238. In none of the cases relied upon by the appellate court is there a decision that a court may impose its own idea of what is “fair or unfair” in a bylaw. The court must measure the bylaws against statutory or constitutionally permissible administrative requirements or determine if valid bylaws have been misused because of improper and unfair conduct of officers, directors, or shareholders or in direct violation of law.
At bench the present bylaws are entirely legal and fair. The fact that plaintiff or some other dissident minority member of the club is personally unable to easily and on an equal financial basis oppose the board of directors is no reason to employ the Robin Hood theory of equalizing his minority position with a position of the majority, and for that purpose to say that the bylaws are therefore unfair. The present bylaws comply with the requirements of the Corporations Code. They in no way offend any statute, rule, or administrative order of the Corporations Commissioner. No evidence of misuse of any bylaw or rule of the corporation has been presented. There is not a hint of personal wrongdoing by any director and none is claimed. To the contrary, the record shows that the past and present directors are persons of high ethical standards and dedicated to and performing much public service. They have not individually or collectively attempted to “perpetuate themselves” in office, or to use the proxies or bylaws “solely” to do so.
*191I would add to the order and judgment of this court as set forth in the majority opinion, that the trial court in addition to finding that the use of proxies is proper, find that the present bylaws are just and proper and to terminate its jurisdiction, having performed the directed task of determining that the old bylaws were improper and that new bylaws have been adopted by the club, and that there has been no misuse of the bylaws or any other wrongdoing by any individual director.
A petition for a rehearing was denied March 30, 1978, and the petition of the plaintiffs and appellants for a hearing by the Supreme Court was denied May 1, 1978. Mosk, J., was of the opinion that the petition should be granted.