Commonwealth ex rel. Clark v. Roydhouse

• Decision Date: 19 October 1911
• Docket Number: 147
• Citation: 233 Pa. 234,82 A. 74
• Parties: Commonwealth ex rel. v. Roydhouse, Appellant
• Court: Pennsylvania Supreme Court

82 A. 74

233 Pa. 234

Commonwealth ex rel. v. Roydhouse, Appellant

No. 147

Supreme Court of Pennsylvania

October 19, 1911

[Copyrighted Material Omitted]

Argued October 3, 1911

Appeal, No. 147, Jan. T., 1911, by defendant, from judgment of C.P. Northampton Co., Dec. T., 1910, No. 27, for plaintiff on case tried by the court without a jury in suit of Commonwealth ex rel. Samuel Clark v. George W. Roydhouse. Affirmed.

Quo warranto to determine the legality of a corporate election. Before SCOTT, P.J.

From the record it appeared that the case turned upon the effect to be given a voting trust agreement entered into between certain of the stockholders of the Bath Portland Cement Company and the Equitable Trust Company as trustee. The agreement recited that it was deemed desirable "in order to promote and protect the individual interests of stockholders who have signed this agreement," that the stock should be delivered to the trustee, to be held for the term of five years for the purpose of carrying out the agreement. The agreement further provided as follows:

"The said Trustee shall issue to depositors Trust Certificates in substantially the form hereto annexed as Exhibit 'A,' which shall be transferable only on the transfer books of Trustee. The said Trustee shall hold said shares under the terms and conditions hereof and shall vote same from time to time, at any annual or special meetings of the stockholders in accordance with the written instructions of a majority of a committee of three, to be appointed by an instrument in writing, lodged with said Trustee and signed by a majority in interest of the holders of said Trust Certificates, as registered on the said books of said Trustee.

"Any vacancies in said committee from any cause, shall be filled from time to time in a similar manner. The written instructions of said committee or a majority thereof, as aforesaid, shall be a complete, full and sufficient warrant and protection to said Trustee for so voting, and shall relieve it from any liability or responsibility whatsoever, anything herein contained to the contrary notwithstanding.

"Dividends when paid to Trustee, shall in due course be distributed to the holders of said Trust Certificates.

"Upon the expiration of said five (5) years from the date thereof, the shares of stock deposited hereunder shall be transferred to the holders of Trust Certificates as the same are surrendered, duly indorsed.

"The said Trust Certificates, and the interest represented thereby, shall be assignable and new Trust Certificates may be issued, upon surrender of the outstanding Certificates. The holders of such assigned Certificates, shall, by virtue of accepting the same, become parties to this Agreement."

1. The capital stock of the Bath Portland Cement Company consists of 7,000 shares, of which certificates for 6,754 had been issued and were outstanding on October 26, 1910, the date of the annual election for corporate officers, as appointed by the by-laws.

2. On July 27, 1910, individual stockholders holding certificates in the aggregate for 3,591 shares of this capital stock, executed and delivered to the Equitable Trust Company of Philadelphia, a "voting trust" agreement to continue five years, wherein it appears (without more specific mention here) that the stockholders named were to deposit with the trust company their certificates in trust "to be used only for the uses and purposes stated in this agreement. Such deposit shall vest in said trustee the complete title to said shares and must be accompanied by the certificates properly assigned to said trustee." The trust company is to vote this stock, for which it was to issue its own certificates, "from time to time at any annual or special meetings of the stockholders in accordance with the written instructions of a majority of a committee of three, to be appointed by a paper in writing, lodged with said trustee and signed by a majority in interest of the holders of said trust certificates, as registered on the books of said trustee."

3. The 3,591 shares were deposited with the trust company by the individual holders prior to October 6, 1910, for all of which the trust company aforesaid issued receipts, but its own certificates to the assignors, while written out, were never signed or issued. The certificates for 1,581 shares (the votes now in dispute) thus transferred, were surrendered by the trustees to the Bath Portland Cement Company, which issued new certificates therefor October 3, 1910, to the "Equitable Trust Company, Trustee, under stockholders' agreement dated July 27, 1910;" thereupon registered the same in the name of the trustee on the books of the company and paid to it for distribution, according to the terms of the trust agreement, the dividends declared on or about October 6 following.

"Note. The remaining 2,010 shares were in possession of the Equitable Trust Company, under properly executed assignment, with letters of attorney to transfer the same on the books from the stockholders, but the certificates had not been yet surrendered to the Bath Portland, and the shares remained registered on the books of the latter in the names of the individual holders. These shares were voted without objection for the relator at the corporate meeting by the Trust Officer of the Equitable Trust Company holding their personal proxies, and the validity of these votes generally is not now put in issue by the answer of respondent. The holdings of Samuel Clarke, the relator, however, numbered 995 shares and were included in this class of 2,010. As a director must be a stockholder, the effect of his transfer to the trustee as divesting him of title is a pertinent inquiry."

4. Art. I. sec. 3, of the by-laws of the Bath Portland Cement Company provides, inter alia, that each stockholder shall be "entitled to one vote, either in person or proxy, for each share of stock standing registered in his or her name on the 20th day preceding the election."

5. Upon the day of the corporate election in Philadelphia, the trust officer of the Equitable Trust Company, tendered the vote of the 1,581 shares, with a copy of the trust agreement attached to the ticket, in accordance with the written instructions of a committee appointed, as assumed to be required by the said agreement, signed by stockholders holding 1,046 shares representing a majority of the 1,581, but not of the entire trust interest in 3,591, all of whom were among those holding the particular 1,581 shares above mentioned, then registered on the books of the Bath Portland Cement Company in the name of the trustee. When these ballots were offered, a duly qualified and voting stockholder filed with the election judges the written objection, a copy of which, stating specifically the grounds of protest, is appended to respondent's answer and the respondent himself filed the written objection, a copy of which, with the accompanying affidavit, will be found therein. No more extended recital of either is necessary here. The trust officer declined to take the oath specified in the Act of March 28, 1820, P.L. 169, as demanded. Concurrently with this tender by the trust officer, and these objections, he offered to the board the same votes on behalf of the beneficial owners thereof (Act of May 26, 1893, sec. 2, P.L. 141), by virtue of their individual proxies, executed at...