Court Opinion

ID: 3867300
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:01:14.369868+00
Date Added: 2024-06-11T07:41:34.494630
License: Public Domain

I can not agree with the opinion of the majority of the court. The respondents were not elected to office as directors of the Narragansett Brewing Company, a corporation, are not entitled to hold and exercise said offices, and should be ousted therefrom. In accordance with the by-laws of said corporation, the annual meeting for the election of the nine directors of said company was held on the fifteenth day of April, 1910. The provision of the by-laws for the election of directors is as follows: "The election of directors shall be by nomination and ballot, those receiving the largest number of votes being elected." The meaning of this provision is perfectly plain. It is required that each director elected must first have been nominated, that is, named to the stockholders, before the balloting, as a candidate for the office; he must have been voted for upon a ballot, that is, his name must be written or printed upon a paper ballot cast into the ballot-box or receptacle by the stockholder desiring to vote for him; and then, to be elected, he must be one of the nine candidates whose names are written or printed upon the largest number of ballots cast. This is the plain and obvious construction of this by-law, as its language would be understood by the business men of this community, and undoubtedly expresses the intention of the business men, members of this corporation, who adopted this by-law for their own government in conducting the election of directors. Whatever may be the primary meaning of the word ballot, it can not be seriously urged that the stockholders of the Narragansett Brewing Company ever contemplated voting for their directors by *Page 543 
little balls, or that a stockholder conceived, when he wrote the name of the person for whom he wished to vote upon a piece of paper and put that paper into the ballot-box, that he had both nominated and balloted for a director. I do not think that "where the name is written or printed on the ballot it might well be called a nomination and ballot because it is itself evidence of both."
At said annual meeting of the corporation nine persons only were nominated for directors, viz.: C.A. Moeller, A.A. Sack, C.R. Moeller, R.L. Kautz, G. Wilhelm, and these four petitioners; after the balloting the tellers, who counted the votes, reported that the nine persons having the largest number of votes were C.A. Moeller, A.A. Sack, C.R. Moeller, R.L. Kautz, and G. Wilhelm, who had been nominated as aforesaid, and these four respondents who had not been nominated. The petitioners at once protested against the election, and the declaration thereof, of the four respondents; but they were declared elected, and each one has assumed the office of director. It is suggested in the opinion of the majority of the court that the complainants contend that the votes cast for the respondents were void because said respondents had not been orally nominated as candidates. I do not understand that such distinction is made. In the absence of other provision in the by-laws, the nominations would naturally be made to the stockholders, orally, at the meeting, before the balloting, But the contention of the petitioners is that the respondents were not nominated orally or in any other manner, which the record of the meeting shows to be the fact.
It is claimed by the petitioners that the proceedings at the annual meeting show a plan upon the part of certain stockholders to trick their colleagues and effect a change in the directorate without giving any intimation of the proposed change, and to prevent a free discussion of what was for the best interests of the corporation. The provision requiring the nomination of a director before his election is a provision much more important to the well-being of the corporation than the provision for a ballot. As in this case, if the respondents had been *Page 544 
nominated, perhaps many things might have been brought to the attention of the stockholders which would have demonstrated the undesirability of the election of the respondents as directors of the corporation, and would have prevented their selection. There are a number of circumstances attending this matter which give support to the contention of the petitioners. The nine persons nominated at the annual meeting were all nominated by one stockholder. After these nominations, one of the stockholders inquired, "Are these the only nominations?" and he was answered, "Yes." And the stockholder then asked, "Well, these are the same as last year?" and was answered,"Yes." After the report of the tellers it was the stockholder who had made the nominations who moved that the report of the tellers be preserved. And thereafter throughout the remainder of the meeting this same stockholder managed the interests of the respondents upon the floor. And in these proceedings before the court it is the same stockholder who appears as solicitor for the respondents. The suspicion is warranted that the nomination of these petitioners by the representative of the respondents was to forestall the nomination of the petitioners by their own friends and was part of a plan to conceal the real intention and to elect the respondents without giving an opportunity for discussion upon their nomination.
In the majority opinion considerable weight is given to certain language printed upon the blank form of ballot used at the election. The words "The blank lines are for any other name you may care to vote for" are said to be a contemporaneous construction of the by-law in that respect by the person who framed the ballot; and as it was used, and thus approved, by the stockholders, it may be said to have become theirs by adoption. In my opinion, the conclusion is not warranted. This form of ballot is not provided for in the by-laws. By whom it was distributed at the annual meeting is not disclosed. For anything that appears, it may have been prepared by the friends of the respondents as a part of the plan of concealing their intention, and the very language to which *Page 545 
so great weight has been given may have been inserted craftily by the respondents or their friends as a point upon which to hang the very argument which has been adopted by the court. But the great force which has been given to the language, quoted above, is not justified. That language can not fairly be said to be a construction that a person could be voted for, who had not been nominated in accordance with the by-law, nor can it be said that the use of a ballot with that language upon it constituted a waiver of the provisions of the by-law on the part of the stockholders using it. To constitute a waiver there must be an intentional relinquishment of a right. In this case there must appear conduct from which it fairly can be inferred that there was an intentional relinquishment of the right of every stockholder, under the by-law, to have the candidates for directors named to him before the balloting, that he may have the benefit of the advice of his fellows in casting his ballot, and no less that he may have the opportunity to inform his fellows of any fact in his possession bearing upon the desirability of the proposed directors. Any person, as, for instance, the clerk of the corporation, preparing this form of ballot, in perfect good faith, might well have inserted these words without any intention of disregarding the provisions of the by-law. The names printed upon the ballot are those of the directors of the previous year, and the person preparing the form of ballot might know that those men were to be nominated at the meeting. Not knowing what other names would be presented, or that any others would be nominated, he could not print other names upon the ballot before the meeting; and as the ballot could not be printed at the meeting, after the nomination, he left a number of blank spaces to provide an opportunity for the stockholders to write in the names of candidates, nominated at the meeting, for whom stockholders might wish to vote. The direction, "The blank lines are for any other name you may care to vote for," is a perfectly reasonable and proper one to place upon the ballot and is not repugnant to the superior direction of the by-law. Whether this language was printed upon the ballot in this natural and proper way *Page 546 
or was subtly placed there, the use of the ballot with this language upon it does not in itself amount to a waiver of the provision of the by-law.
The opinion of the majority of the court concludes that "The largest number of votes have elected the directors. The spirit and, we believe, the letter of the by-law have been complied with. The will of the majority has been definitely ascertained, and the petitioners have no just ground of complaint." It is both the spirit and the letter of the by-law that no one is eligible for election as director of this corporation who has not been nominated, and these respondents were not nominated. It can not rightly be said, as does the majority opinion, that "The election of directors in the present case was by nomination and ballot." It violates the clear intent of the by-law to say that the election of these respondents was by nomination and ballot because certain other men were nominated. As to five directors, the election was by nomination and ballot; to so hold as to these respondents is to entirely disregard the undisputed facts.
It is the approval of a dangerous doctrine, to say that in the conduct of a corporation a majority of the stockholders can be allowed to disregard and override a restriction of the corporation by-laws. It is a doctrine which will lead to consequences of great injustice. A by-law, which it is within the power of the corporation to make, is as binding upon the corporation and upon all the stockholders as is the law of the land. Its purpose and effect frequently is to restrain the will of the majority. The by-law under consideration provides a restraint and a form of procedure which controls the will of the majority of this corporation. The by-laws themselves provide a method for their amendment, and it is within the power of the majority, if they observe the orderly method there provided, to amend this by-law. But until it is amended the majority can not legally disregard its provision. In Wetherly v. Medical Surgical Society, 76 Ala. 567, the court said: "Such societies or corporations may make their own constitutions and by-laws; and so long as they remain unchanged *Page 547 
each member is alike bound and shielded by them. The society, too, must observe its own constitution and laws, until it changes them in legal form. Of course, such constitution and by-laws, to be obligatory, must not contravene public law, or any principle of public policy. No provision of the constitution or by-laws of this society is objectionable on that score. If any of them are inconvenient, or embarrassing in administration, this furnishes no excuse for disobeying them. It may suggest the expediency of their alteration."
I am of the opinion that the prayer of the petition should be granted.
PARKHURST, J., concurs in dissent.