Darrin v. Hoff

McSherry, C. J., delivered the opinion of the Court. This is an appeal from the Court of Common Pleas of Baltimore City. David D. Darrin and others filed a petition in that Court against George Hoff and others, praying that a writ of mandamus might be issued requiring Hoff and the other respondents to surrender the directorate of the Automatic Switch Company of Baltimore to the relators who claim that they were duly chosen directors at a stockholders meeting held on January 13th, 1904. It was further prayed in the petition that some of the respondents might be commanded to vacate the offices of President, Treasurer and Secretary of the Automatic Switch Company which positions it was alleged were unlawfully held by them, and it was asked that they be compelled to surrender the same to the relators who assert that they, and not the respondents, are entitled thereto.

It was further prayed that the respondents be required to allow the relators to take possession of the books, office, papers, records and other effects of the corporation, and to control and manage its affairs, subject to the provisions of its charter and by-laws, until such time as the successors of the relators may be properly elected. The answer of the respondents contains fifteen paragraphs. It admits that the statements contained in the first, second, third, fifth and thirteenth paragraphs of the petition are true. The relators joined issue ' upon the fourth, sixth, seventh, eighth, ninth and tenth paragraphs of the answer.

To the eleventh and part of the twelfth, tp the fourteenth and fifteenth paragraphs of the answer demurrers were interposed and to other portions of the twelfth paragraph ⁴⁹³ replications were filed. On the 15th day of March, 1904, the case was heard upon the demurrers to the answer and upon the questions of fact raised by the replications to portions of the answer, and evidence having been taken the Court passed an order wherein it was adjudged, first, that according to the evidence offered, the election of the. 13th of January, 1904, for the selection of directors of the Automatic Switch Company was held by ballot to all intents and purposes; secondly, that the appointment of tellers at the election of January the ,£'3th, was legally and properly made; thirdly, that as a by-law of the Automatic Switch Company required a majority of all the shares of stock of the corporation to be represented at the annual meeting of the stockholders for the election of directors, and as that by-law was, in tiie opinion of the Court, valid under the provisions of sec. 57 of Art. 23 of the Code, and as there was not a májority of shares represented at that meeting, the meeting was not a legal one and the election then held was null and void and of no effect, and that the subsequent meeting of the directors, chosen at that annual meeting of the stockholders, was unauthorized. The demurrers to the answer were overruled and the petition for a writ of mandamus was denied because, if the relators were not legally chosen directors they were not entitled to the relief they sought. The relators thereupon took the pending appeal.

Certain testimony is contained in the record, but there is no authentication of it by the Judge who heard the case and there is no agreement of counsel that it is the evidence which was in reality adduced before the trial Court. In the case of Street Coms. v. Williams, 96 Md. 232 , which was an application for a mandamus, precisely the same situation was presented. In that case the appellee filed fifteen pleas and joinders of issue to the answer of the respondents. Several of the pleas were demurred to and evidence was taken on the issues of fact.

When the record came into this Court it was held that the only question open for review was the one raised by the demurrer to the plea, and we said : “And that is the only question before us because though the record contains considerable ⁴⁹⁴ evidence on the issues of fact there is no bill of exceptions, no agreement of counsel or no certificate of the trial Judge from which this Court can know or be apprised that what is in the record was in fact the evidence considered by the Court below. Without some such authentication of the testimony we are not at liberty to consider it. Davis v. O'Berry, 93 Md. 751 . In Creager v. Hooper, 83 Md. 501 , the question decided arose on a demurrer.

In Manger v. Board of Examiners, 90 Md. 672 , there was a bill of exceptions.” In the last-named case all the evidence was fully set out in the bill of exceptions and was consequently properly before this Court. Laying out of view the testimony contained in the record because not authenticated in one of the modes pointed out in Williams' case, the only questions which arise are those presented by the demurrer to the twelfth paragraph of the answer and they are, first, whether' the election of directors on the 13th of January, 1904, was legal; secondly, whether the by-law which will be alluded to presently, is valid, and thirdly, whether the election of directors at the meeting named was by ballot. The Automatic Switch Company of Baltimore is a corporation of the State of Maryland formed under the general corporation laws contained in the Code of Public General Laws. It hás a capital stock of three thousand shares of the par value of twenty dollars each.

By the averments of the petition and by the admissions of the answer, it appears that David H. Darrin, as president and owner of the D. H. Darrin Company, a corporation of the State of New York, controls 948 shares of the capital stock of the Switch Company; that in addition thereto, he owns one share of the Switch Company stock individually: That a certain Frederick G. Townsend owns one share and that T. Roland Slingluff held a proxy for one other share. It further appears that George H. Whittingham is the owner of 1490 shares; that Hollis J. Parkes owns one share, Thomas .U- Dudley owns 16 shares, The Pikesville Dairy Company owns four shares and that 538, shares were claimed by Darrin as his property, but that this ⁴⁹⁵ claim was disputed. Under sec. i of Art. 2 of the by-laws of the Switch Company, it is provided that “the annual meeting of the stockholders shall be held in the city of Baltimore at the office of the company, on the second Wednesday in January of each year, between the hours of 1 and 1.30 P. M., due notice of which shall be mailed to the addresses of each stockholder.” On the second of January, the Secretary of the company mailed to the stockholders notices of the meeting to be held on the second Wednesday of January, 1904, as required by sec. 5 of Art. 2 of the by-laws: Prior to the meeting on the 13th of January, Hollis J. Parkes, Thomas Dudley and the Pikesville Dairy Company were restrained by injunction from attending that meeting and voting thereat the shares of stock standing upon the books of the company in their respective names. It seems t'hat Whittingham, who owned 1490 shares of the stock, as already stated, discovering that the injunctions just mentioned had been issued to restrain the owners of the twenty-one shares of stock owned by Parkes, Dudley and the Pikesville Dairy Company from voting, determined that it would be better to postpone the annual meeting until the right of the holders of the above mentioned twenty-one shares to vote, had been passed upon and decided by the Court.

Notwithstanding the fact that Whittingham had come to Baltimore on the 13th, to attend the meeting on that day, and notwithstanding the further fact that he owned and controlled 1490 shares of the stock, he decided not to be present at the meeting and he accordingly returned to New York with a view of defeating the holding of the meeting on that day, and for the purpose of preserving the situation which then existed in the management of the corporation. When the hour natned in the by-law for the meeting to convene had arrived, there were represented in person and by proxy only 952 of the 3000 shares of capital stock. The holders of the 952 shares thereupon proceeded to organize the stockholders’ meeting. A chairman and secretary were chosen and a vote was taken upon the election of directors and the result as announced, declared the relators ⁴⁹⁶ in this case to have been duly elected directors for the ensuing''year by the votes representing the 952 shares which were present.

Immediately after the adjournment of the stockholders’ meeting the five directors so elected by the votes of the 952 shares of stock, organized by electing a president and other officers of the corporation. Thereupon demand was made upon the former officers for the possession of the books and papers of the corporation. This demand was .refused and then the application now before us for a mandamus was filed in the Court of Common Pleas. It being established by the allegations of the petition, the admissions of the answerand the concessions of the demurrer that the election of directors by the stockholders on January 13th, was participated in by only 952 of the whole 3,000 shares, it is insisted that the entire proceeding was void and that no election was legally held.

A great deal of the discussion at the bar was addressed to a consideration of the proposition that at the common law the rule in joint stock companies is that the majority of those stockholders who attend a properly called meeting, provided there be at least two present, can control the meeting and elect directors. Whilst this proposition was conceded, in a general way, to have been the doctrine of the common law, it was, in behalf of the appellees, insisted, that in modern business corporations the rule was no longer applicable, because the voting unit is not now the individual but the share of stock, and that, therefore, a majority in shares is necessary to constitute a quorum for the election of directors. Interesting as this subject