Beecher v. Marquette & P. Rolling-Mill Co.
| Decision Date | 05 January 1881 |
| Citation | 45 Mich. 103,7 N.W. 695 |
| Parties | BEECHER v. MARQUETTE & PACIFIC ROLLING MILL CO. and others. |
| Court | Michigan Supreme Court |
Where the notice for a stockholders' meeting of a corporation stated that the purpose of each meeting was to authorize the issue of bonds to the extent of $100,000, to be secured by mortgage, etc., and the issue authorized was $150,000, held that one not a stockholder, but a purchaser, at execution sale, of the corporation's equity of redemption in the property mortgaged, could not raise the question of the irregularity, nor could he question an improper disposition of such bond by the officers of the corporation. Possession by mortgagee, of premises mortgaged, held to have been under a contract and not as mortgagee. Certain contract construed.
Appeal from Marquette.
F.A. Baker, J.P. Whittemore, and John Atkinson for complainant.
Parks & Mapes, F.O. Clark, and Hampton & Dalzell, for defendants.
The mortgage which this suit is brought to foreclose was given by the Marquette & Pacific Rolling Mill Company to secure the payment of 30 bonds of $5,000, dated July 1, 1871, payable to Sidney D. Miller, trustee, 10 years after date with 8 per centum interest payable semi-annually. The mortgage contained a provision that in case the interest should at any time be overdue for 60 days, the principal should, at the election of the trustee, become immediately due and payable. Complainant files the bill as holder of a part of the bonds, the trustee having declined to do so.
The Marquette & Pacific Rolling Mill Company, the mortgagor makes no defence, and the sole contestant of complainant's rights is William H. Parks, who is grantee of the parties who purchased the equity of redemption at execution sale. He claims--First, that the mortgage never had any validity; and, second, that if it had validity, in the hands of the trustee, complainant has never acquired any rights under it, for the reason that his demand was not such an one as the mortgage was intended to secure, and he is not in position to claim as a bona fide purchaser or holder of negotiable paper. Peter White, who is made defendant, claims rights under the mortgage which do not antagonize those asserted by the complainant.
1. The mortgage is said to be invalid because never authorized by the corporation giving it. The rolling mills company was organized under the statutes for the incorporation of mining and manufacturing companies, which are collected in chapter 95 of the Comp.Laws of 1871. By one of the sections of this collection it is provided that "no alienation, division, sale or mortgage, of any or any part of the mine works, real estate or franchise of any corporation mentioned in the first section of this act shall have any force or effect, or pass any title thereto, or interest therein, unless expressly authorized by the vote of three-fifths in interest of the entire stock of said company actually present or legally represented at some meeting of stockholders called and notified" as required by law, with an exception not important here. The provision in respect to notice is that no meeting of stockholders "shall be or be held to be legal or valid, or the proceedings thereof of any force or effect, unless the directors or other parties or officers calling the same shall cause a notice of the time, place and object of holding the same to be published two weeks for any annual meeting and four weeks for any special meeting previous thereto in some newspaper published in the county *** and shall also cause a copy of such notice to be sent by mail to each stockholder of record, at his usual place of residence, 20 days before the time of such meeting." Comp.Laws, �� 2888, 2887. The authority, such as it was in this case, was given at a special meeting, and it is claimed--First, there is no sufficient proof that the meeting was duly notified; and, second, that the notice actually given was insufficient to justify what was done at the meeting.
The evidence of the giving of notice of the meeting seems to us ample. It comes from William Burt, who testifies with much confidence to having caused notice to be published in a newspaper of the county, and produces a copy of the one published. He also testifies that as agent for the company he paid for the publication, and served notice by mail on the several stockholders. He gives reasons for his belief that all this was done in compliance with the statute, and the reasons are satisfactory. We discover no defect here.
The fact that the action taken did not correspond with the notice is more important. The notice is given in the margin, [*] and the object of the meeting is stated to be "for the purpose of electing a new board of directors, and to authorize the issue of bonds to the extent of $100,000, to be secured by mortgage on the company's property, and for such other business as may lawfully come before said meeting.
The meeting was duly convened and no question is made that the stock was sufficiently represented. After electing directors the record states that "the meeting then proceeded to consider the issue of $150,000 of first mortgage bonds upon the property of the company, and upon a vote unanimously authorized and instructed the treasurer to make such issue."
The object of the meeting as testified is thus seen to have been, to authorize bonds and a mortgage to the extent of $100,000, and the authority actually given was to issue bonds and give mortgage for $150,000. The explanation of this action, which is given on the part of complainant, is that the corporation was already indebted to the amount of $50,000, secured by mortgage of part of their property, and the new bonds and mortgage were intended in part to provide for that, so that the debt would be increased $100,000 only, and the notice be complied with in spirit though not in letter. But in behalf of defendant Parks it is insisted that the motive, not disclosed by the record, is immaterial; the fact being that one thing was proposed and another thing done; and this, according to the express provisions of the statute, cannot be "legal or valid," or "of any force or effect."
These are strong and seem very imperative words; and if full effect is given to them it may be difficult to support this mortgage. But we are not hastily to conclude that words thus apparently imperative are to be given a literal interpretation and enforced accordingly. Courts often speak of acts and contracts as void when they mean no more than that some party concerned has a right to avoid them. Legislators sometimes use language with equal want of exact accuracy; and when they say that some act or contract shall not be of any force or effect, mean perhaps no more than this: that at the option of those, for whose benefit the provision was made, it shall be voidable, and have no force or effect as against his interests. This was found to be the meaning in the mind of the legislature in enacting the Massachusetts usury law. It was declared in most positive terms that mortgages on usurious considerations should be "utterly void;" but a consideration of its purpose, which was to protect debtors against the enforcement of unconscionable demands, made it clear that it never was intended that strangers to the title should be at liberty to question such a mortgage. Green v. Keep, 13 Mass. 515.
Mr Justice Bayley in one case intimated that the word void in a statute might be construed voidable where the provision is introduced for the benefit of parties only, but not where it is introduced for public purposes and to protect those who are incapable of protecting themselves, (Rex v. Hipswell, 8 B. & C. 466, 470.) and though this distinction has been questioned, (Rex v. St. Gregory, 2 Ad. & El. 99, 107,) much...
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