Crom v. Frahm

Decision Date30 November 1920
Citation193 P. 1013,33 Idaho 314
PartiesJ. A. CROM et al., Respondents, v. JOHN FRAHM, Appellant
CourtIdaho Supreme Court

APPEAL AND ERROR-MOOT QUESTIONS-CORPORATIONS-ARTICLES OF INCORPORATION AND BY-LAWS-AMENDMENTS-CONSTITUTIONAL LAW.

1. A motion to dismiss an appeal, on the ground that the substance of the controversy between the parties has disappeared, will be overruled if the appeal presents a question the decision of which may result in liability on an injunction bond given in the case.

2. Private corporations are "persons" within the meaning of the provision of the fourteenth amendment to the constitution of the United States, whereby each state is prohibited from denying to any person within its borders the equal protection of the laws.

3. A statute whereby it is sought to grant rights, powers and privileges to corporations organized and existing for the control or management of irrigation canal systems constructed and operated pursuant to the Carey Act of Congress, while they are denied to other corporations although organized and existing for the control and management of like enterprises, but which have procured their canal systems from sources other than Carey Act construction companies, is in contravention of the fourteenth amendment to the constitution of the United States.

APPEAL from the District Court of the Fourth Judicial District, for Twin Falls County. Hon. Wm. A. Babcock, Judge.

Action to enjoin a corporation from performing certain acts pursuant to purported amendments to its articles of incorporation and by-laws. Judgment for plaintiff, and order overruling motion to dissolve injunction. Affirmed.

Judgment and order affirmed. Costs awarded to respondents.

E. M Wolfe and J. F. Martin, for Appellant.

This act affects all corporations of the kind mentioned where the number of stockholders exceeds three hundred. The classification is not unreasonable. (Continental Inv. Co. v. Hattabaugh, 21 Idaho 285, 121 P. 81; State v. Federal Knights and Ladies, 35 Wash. 338, 77 P. 500; State v. French, 17 Mont. 54, 41 P. 1078, 30 L. R. A. 415.)

"This is a species of classification which the legislature is at liberty to adopt, provided it be not wholly arbitrary or unreasonable." (Consolidated Coal Co. v. Illinois, 185 U.S. 203, 22 S.Ct. 616, 46 L.Ed. 872; Clark v. Titusville, 184 U.S. 329, 22 S.Ct. 382, 46 L.Ed. 569, see, also, Rose's U. S. Notes.)

Turner K. Hackman, for Respondents J. A. Crom et al.

Sec. 3050, C. S., is unconstitutional and void, because it is special as well as class legislation, and also impairs the obligations of a contract, as it applies only to a Carey Act corporation, "having stockholders numbering more than three hundred." (Turner v. Coffin, 9 Idaho 338, 74 P. 962; Const. Idaho, art. 11, secs. 2, 3; Sutherland on Stat. Const., secs. 190, 191, 199-204; Boise I. & L. Co. v. Stewart, 10 Idaho 38, 77 P. 25, 321; State v. Horn, 27 Idaho 782, 152 P. 275; In re Mallon, 16 Idaho 737, 102 P. 374, 22 L. R. A., N. S., 1123; Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 22 S.Ct. 431, 46 L.Ed. 679, see, also, Rose's U. S. Notes.)

James R. Bothwell, for Respondent Twin Falls Canal Co.

"This court will, upon motion to dismiss, consider evidence outside the record tending to show that since the entry of the judgment or order appealed from the substance of the controversy between the parties has disappeared, and when it appears that only a moot question remains to be determined, the appeal will be dismissed." (Abels v. Turner Trust Co., 31 Idaho 777, 176 P. 884; Wilson v. Boise City, 7 Idaho 69, 60 P. 84; Waters v. Dunn, 18 Idaho 450, 110 P. 258; Roberts v. Kartzke, 18 Idaho 552, 111 P. 1.)

MORGAN, C. J. Rice and Budge, JJ., concur.

OPINION

MORGAN, C. J.

This action was commenced by stockholders of Twin Falls Canal Company to procure an injunction restraining that corporation from governing itself according to certain proposed amendments to its articles of incorporation and by-laws, and restraining Claud Brown, Ivan G. Lincoln and John Frahm, directors chosen in conformity to the amendments, from acting in that capacity.

A temporary injunction was issued and a motion was made to dissolve it, which was overruled. Thereafter a judgment was entered as prayed for in the complaint, and John Frahm has appealed from the order overruling the motion to dissolve the injunction and from the judgment.

A motion has been made to dismiss the appeals on the ground that the substance of the controversy between the parties has disappeared and only a moot question remains to be determined. In support of this motion it is shown that, since the order and judgment appealed from were made and entered, the defendants named in the complaint have ceased to act pursuant to the purported amendments.

In order to procure the issuance of the injunction, respondents were required to give an undertaking in the sum of $ 1,000, to the effect that they would pay to the parties enjoined such costs, damages and reasonable counsel fees as they might incur or sustain by reason of the injunction, if the court should finally decide respondents were not entitled thereto.

In view of this obligation it cannot be said the case now before us is without substance, and the motion to dismiss is overruled.

The purported amendments were declared to be adopted at a special meeting of the stockholders of the corporation whereat were represented by the owners personally, or by proxy, but 58,326,89 shares of the capital stock of which there were issued and outstanding 202,178.48 shares. Among the amendments to the articles of incorporation was one whereby the board of directors was reduced from five members to three.

It is provided in C. S., sec. 4752, subd. 10, that every corporation has a right to amend its articles and thereby to change the number of its directors, but that such amendment shall be made and certified in the manner prescribed in sec. 4756 for increasing or diminishing the capital stock. The last-mentioned section contains this provision: "At least two-thirds of the entire capital stock must vote in favor of such increase or diminution before the same is effected."

C S., sec. 4710, provides: "The by-laws may be repealed or amended, or new by-laws may be adopted at the annual meeting, or at any meeting of the stockholders or members called for...

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  • Nelson v. Marshall
    • United States
    • United States State Supreme Court of Idaho
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    ...68 L.Ed. 742 (1925); 16 Am.Jur.2d, Constitutional Law § 520 (1964); 16A C.J.S. Constitutional Law § 504 (1956); cf. Crom v. Frahm, 33 Idaho 314, 193 P. 1013 (1920). The general preference for the corporate entities listed in I.C. §§ 42-1754(b) and 42-1756(a) appears to relate reasonably to ......
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    ...Squier, 56 Nev. 386, 54 P.2d 227; The Best Foods v. Welch, 34 F.2d 682, 687; A. Magnano Co. v. Dunbar, 2 F.Supp. 417, 424.) Crom v. Frahm, 33 Idaho 314, 193 P. 1013, does militate against, but sustains this principle, though the statute there considered was banned. As indicated above the co......
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