Christian v. Shideler, 40093

Citation382 P.2d 129
Decision Date28 May 1963
Docket NumberNo. 40093,40093
PartiesWilliam N. CHRISTIAN, Secretary of State of the State of Oklahoma, Plaintiff in Error, v. Alfred M. SHIDELER and Charles E. Baker, Defendants in Error.
CourtSupreme Court of Oklahoma

Syllabus by the Court

1. In construing an ambiguous statute, the Court may recur to the history of the times when it was enacted.

2. In ascertaining legislative intent, the language of an entire act should be considered, and that construction given which is reasonable and sensible.

3. Despite requirement of Business Corporation Act that a corporation have at least three directors, under the Oklahoma Professional Corporation Act, a professional corporation with only two physician members on its Board of Directors may be organized.

From the District Court of Garfield County, F. B. H. Spellman, Judge.

Defendants in error appealed to the District Court from the refusal of the Secretary of State of the State of Oklahoma to file their Articles of Incorporation under the Professional Corporation Act. The trial court ordered and directed such official to accept said Articles for filing and to issue a certificate of incorporation to said corporation. From such judgment the Secretary of State appeals.

Mac Q. Williamson, Atty. Gen., Fred Hansen, First Asst. Atty. Gen., for plaintiff in error.

Wright & Sawyer, by Will T. Wright, Enid, for defendants in error.

WILLIAMS, Justice.

This is an appeal by the Secretary of State of the State of Oklahoma from a judgment of the trial court ordering and directing such official to accept for filing, certain Articles of Incorporation tendered to him by defendants in error and to issue a certificate of incorporation. The parties will be designated respectively, as plaintiffs and defendant according to their standing in the trial court.

The plaintiffs are medical doctors licensed in the State of Oklahoma. In February, 1962, they mailed to the defendant certain Articles of Incorporation for the purpose of forming a corporation under the Professional Corporation Act, 18 O.S.1961, §§ 801-819. Upon receipt of such, the defendant wrote plaintiffs that he declined to file said articles for the reason that such provided for only two directors and that the law requires that the Board of Directors consist of at least three members. The plaintiffs thereupon appealed to the district court.

The pertinent sections of the Professional Corporation Act here involved are as follows:

' § 802. Statutory policy.--This act shall be so construed as to effectuate its general purpose of making available to professional persons the benefits of the corporate form for the business aspects of their practices while preserving the established professional aspects of the personal relationship between the professional person and those he serves.

' § 804. Articles of Incorporation.--One or more individuals each of whom is licensed to render professional service may incorporate a professional corporation by filing Articles of Incorporation with the Secretary of State. Such Articles of Incorporation shall meet the requirements of the Business Corporation Act, and in addition thereto contain the following:

'(a) the profession to be practiced through the professional corporation;

'(b) the names and residence addresses of all of the original shareholders, directors, and officers of the professional corporation;

'(c) A certificate by the regulating board of the profession involved that each of the incorporators, directors, and shareholders are duly licensed to practice such profession.

' § 805. Applicability of Business Corporation Act.--The Business Corporation Act shall be applicable to professional corporations, and they shall enjoy the powers and privileges and be subject to the duties, restrictions, and liabilities of other corporations, except where inconsistent with the letter and purpose of this act. This act shall take precedence in the event of any conflict with provisions of the Business Corporation Act or other laws.

' § 810. Officers, directors, and shareholders.--No person may be an officer, director or shareholder of a professional corporation who is not an individual duly licensed to render the same specific professional services as those for which the corporation was organized. No person may be simultaneously an officer, director, or shareholder of more than one professional corporation.

' § 819. Inapplicability of conflicting laws.--All laws and parts of laws in conflict with any of the provisions of this act shall be inapplicable to professional corporations organized under this act; provided, however, that nothing in this act shall be construed to supersede the provisions of 59 O.S.1951, §§ 581 through 592, both inclusive, §§ 601 through 606, both inclusive, or §§ 941 through 947, both inclusive, as amended. In the event of the conflict of any of the provisions of this act with any of the above cited sections, then cited sections shall take precedence over this act and this act shall be construed accordingly.'

The sections of the Business Corporation Act, Title 18 O.S.1961, which have a bearing on this controversy are as follows:

' § 1.10 Incorporators.----

'Three (3) or more persons legally competent to enter into contracts may form any corporation which may be incorporated under this Act by complying with the requirements hereof.

' § 1.34 Directors: powers, duties, qualifications.----

'c. A director to be qualified to take office shall be legally competent to enter into contracts. He shall be required to be a subscriber or shareholder of the corporation, or a resident of this State or of the United States, only when the articles of incorporation or by-laws so provide. If the articles of incorporation or by-laws so provide, a director may be required to own shares of the corporation absolutely in his own right to an amount specified in such articles or by-laws and not to be in arrears in respect of any calls thereon. Other qualifications of directors may, subject to the provisions of this Act, be prescribed by the articles of incorporation and by-laws.

' § 1.35 Directors: election, number, term, salary.----

'a. Except as provided in Sections 37 and 38 of this Act for filling vacancies, the board of directors of every domestic corporation shall be elected by the shareholders in the manner provided by this Act. Such Board shall consist of at least three (3) members, the number, qualifications, manner of election, and term of office of the directors may, subject to the provisions of this Act, be prescribed by the articles of incorporation or by-laws.

' § 1.208 Articles of incorporation: execution and contents.----

'a. The articles of incorporation of any corporation to be formed under this Act shall be executed in triplicate and signed by each of the incorporators and acknowledged by at least three (3) of them, and shall set forth in the English language: * * *'.

The principal question to be resolved is whether a proposed professional corporation having only two directors may be organized under the laws of this State.

Bouv. Law Dict., Rawles Third Revision, p. 682, contains the following definition of the word 'corporation':

'A body, consisting of one or more natural persons established by law, usually for some specific purpose. * * *'

In 18 C.J.S. Corporations § 36, p. 415, is the following language:

'In the absence of constitutional restriction the legislature may undoubtedly create either by special act or under general laws corporations consisting of a single member only, or authorize a single individual to become incorporated and leave it optional with him whether he will have associates. * * *'

In the case of Sneed v. Tippett, 114 Okl. 173, 245 P. 40, the Court in the first and second paragraphs of the syllabus said:

'Under chapter 34, Comp.St.1921, corporations are creatures of the law, deriving their powers and their existence from the law, and having such powers only as are conferred by legislative grant.

'Under sections 38, 47, art. 9 of the Constitution, the Legislature is given power to authorized the creation of corporations, to define their powers, and determine their period of existence.'

We determine that the Legislature has the authority to permit the organization of a corporation with only two members on the board of directors.

This Court in the case of Chicago, R. I. & P. Railroad Co. v Gist, 79 Okl. 8, 190 P. 878, 879, in paragraphs ten, eleven and twelve of the syllabus held:

'Courts, in construing a statute, may with propriety recur to the history of the times when it was passed; and this is frequently necessary in order to ascertain the reason as well as the meaning of particular provisions in it.

'The history of the times during which a law was enacted tends strongly to disclose the reasons for the act, and therefore the evils sought to be remedied.

'Whenever light can be derived from such sources, the courts will take judicial notice of the facts of contemporaneous history, the prior state of the law, the particular abuse or defect which the act was meant to remedy, and will then apply the language of the act to such state of affairs.'

See also Silmon v. Rahhal, 178 Okl. 244, 62 P.2d 501, and Atlantic Refining Co. v. Oklahoma Tax Commission, Okl., 360 P.2d 826, wherein the above case was cited with approval.

In the smaller communities of our State professional persons are usually sole practitioners. Seldom do more than two associate together. To require three directors per professional corporation would necessitate that other...

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5 cases
  • Tate v. Browning-Ferris, Inc.
    • United States
    • Supreme Court of Oklahoma
    • 19 May 1992 933 n. 6.60 An act should be construed reasonably and sensibly. Lancaster v. State, Okl., 426 P.2d 714, 716 (1967); Christian v. Shideler, Okl. 382 P.2d 129 (1963).61 State v. Okl. State Bd. For Property, Okl., 731 P.2d 394, 398-399 (1987); Ricks Exploration Company v. Oklahoma Water Res......
  • Tomahawk Resources, Inc. v. Craven, 2005 OK 82 (OK 1/31/2006)
    • United States
    • Supreme Court of Oklahoma
    • 31 January 2006
    ...legislative policy underlying a statute. Id. This Court will look at the particular problem the statue was intended to address. Christian v. Shideler, 1963 OK 129, ¶ 10, 382 P.2d 129, 132. This Court will not adopt a construction which defeats the legislative intent as shown by other relate......
  • Tomahawk Resources, Inc. v. Craven, 100,437.
    • United States
    • Supreme Court of Oklahoma
    • 15 November 2005
    ...legislative policy underlying a statute. Id. This Court will look at the particular problem the statue was intended to address. Christian v. Shideler, 1963 OK 129, ¶ 10, 382 P.2d 129, 132. This Court will not adopt a construction which defeats the legislative intent as shown by other relate......
  • Lancaster v. State ex rel. Harrod
    • United States
    • Supreme Court of Oklahoma
    • 4 April 1967
    ...McSpadden v. Mahoney, Okl., 402 P.2d 656; a construction should be given the act which is reasonable and sensible, Christian v. Shideler, Okl., 382 P.2d 129, and should not be construed so that it would lead to an inconsistency between different parts as they bear upon each other. State ex ......
  • Request a trial to view additional results

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