Diamond v. Parkersburg-Aetna Corp.

• Decision Date: 23 October 1961
• Docket Number: PARKERSBURG-AETNA,No. 12086,12086
• Citation: 146 W.Va. 543,122 S.E.2d 436
• Court: West Virginia Supreme Court
• Parties: Sol DIAMOND et al. v.CORPORATION et al.

Page 436

122 S.E.2d 436

146 W.Va. 543

Sol DIAMOND et al. v. PARKERSBURG-AETNA CORPORATION et al.

No. 12086.

Supreme Court of Appeals of West Virginia.

Submitted Feb. 28, 1961.

Decided July 3, 1961.

Dissenting Opinion Oct. 23, 1961.

Syllabus by the Court.

1. 'In ascertaining the intention of the people in adopting a constitution all parts of the constitution must be considered, every article, section, clause, phrase and word allowed some effect, and all parts, clauses, phrases and words harmonized, if possible. No part or word in it can be ignored, disregarded, treated as meaningless or denied purpose and effect, unless there be irreconcilable contradiction and repugnancy.' Point 3, syllabus, State v. Harden, 62 W.Va. 313, 58 S.E. 715, 60 S.E. 394.

2. An elementary rule of construction is that, if possible, effect should be given to every part and to every word of a constitutional provision and that, unless there is some clear reason to the contrary, no part of the fundamental law should be regarded as surplusage.

3. The object of construction, as applied to a written constitution, is to give effect to the intent of the people in adopting it.

4. The provisions of the 1958 Amendment to the Constitution of this State mean that every corporation, other than a banking institution, shall have the power to issue one or more classes and series within classes of stock, with or without par value, with full, limited or no voting powers, and with preferences and special rights and qualifications; that a stockholder holding stock which gives him full voting powers shall have the right to vote for the number of shares of stock owned by him for as many persons as there are directors or managers to be elected, or to cumulate his shares; that a stockholder holding stock which gives him the limited right to vote for more than one director or manager but for less than the total number of directors or managers to be elected shall have the right to vote for that number of directors or managers to be elected, or to cumulate his shares; that a stockholder holding stock which gives him no voting powers can not vote for any directors or managers to be elected and can not cumulate his shares; and that stockholder holding stock which gives him the right to vote for only one director or manager can vote for only one of the directors or managers to be elected and can not cumulate his shares for the reason that his vote for one director or manager can not be cumulated.

5. Under the 1958 Amendment to the Constitution of this State and Sections 22 and 66, Article 1, Chapter 20, Acts of the Legislature, 1959, Regular Session, which are based on that amendment, the provisions of a section of the charter of a corporation, other than a banking institution, that the holders of its preferred stock shall have the right, as a class, to elect at least one member of its board of directors and that the holders of its common stock shall have the right, as another class, to elect the remaining members of such board, are constitutional and valid and apply and are operative from the after the ratification of the amendment and the effective date of the statute.

6. The effect of the ratification of the 1958 Amendment and of the enactment of Sections 22 and 66, Article 1, Chapter 20, Acts of the Legislature, 1959, Regular Session, was to validate the provisions of the existing charters of corporations created and organized under the laws of this State which authorized the issuance of classes of stock with full, limited or no voting powers, and to give such charter provisions operative effect from and after the ratification of the amendment and the effective date of the statute. By the terms of the amendment the legislation which it directs the Legislature to enact applies to 'every corporation' and includes corporations then in existence and corporations subsequently created and organized.

Steptoe & Johnson, James M. Guiher, Clarksburg, Thomas W. Bayley, Parkersburg, for appellants.

Geo. W. Hill, Jr., Wm. Bruce Hoff, Daniel A. Ruley, Jr., Parkersburg, for appellees.

Arch M. Cantrall, Rupert Sinsel, Clarksburg, Clarence E. Martin, Jr., Martinsburg, George Richardson, Jr., Bluefield, Charles C. Wise, Jr., William M. Woodroe, Charleston, amici curiae.

HAYMOND, President.

In this suit in equity, involving a controversy over corporate control between management and certain stockholders, instituted in the Circuit Court of Wood County on April 1, 1960, the plaintiffs, Sol Diamond, Diamond Boning Corporation, Louis Idelstein, Harold Konner, Rennick, Inc., H & M Holding Corporation, Konner Auto Sales, Inc., Benjamin Yanowsky, George Weinstein, Jack Gorham, and Irving Sklow, who constitute a minority group of common stockholders of Parkersburg-Aetna Corporation and who own no preferred stock but claim to own 104,743 shares of common stock of a total of 749,444 shares of common stock of Parkersburg-Aetna Corporation issued and outstanding, sought injunctive relief to prevent the principal defendants, Parkersburg-Aetna Corporation, a West Virginia corporation, Bernard P. McDonough, individually and as president and member of its board of directors, and Harold N. Wilson, its secretary-treasurer, and other defendants as members of the board of directors and stockholders of that corporation, from proceeding further with the annual meeting of the stockholders scheduled for April 15, 1960, than to adjourn or recess such meeting until such time as the right of the plaintiffs should be accorded them to examine the books and records of the corporation; from electing directors of the corporation at such annual meeting; and from decreasing or diminishing the membership of the board of directors; and particularly from reducing the number of directors from eight to three; and to require the defendants to permit all the stockholders to vote for the election of all the directors to be voted for and elected at the annual meeting of the corporation.

Upon the verified bill of complaint and its exhibits and a notice to the principal defendants of the application of the plaintiffs for an injunction against the defendants, filed April 5, 1960, the circuit court granted the plaintiffs injunctive relief substantially as prayed for in their bill of complaint. In a written opinion filed April 6, 1960, the circuit court held that section 7 of the charter of Parkersburg-Aetna Corporation, which provided that the holders of its preferred stock as a class should have the right to elect one member of the board of directors and that the holders of the common stock as another class should have the right to elect the remaining members of the board, was violative of Article XI, Section 4 of the Constitution of this State, as amended in 1958, and that the provisions of its charter and by-laws which authorized the board of directors to increase or diminish the number of directors were also unconstitutional and void for the reason that they operated to permit the election of directors in a manner other than that provided by the foregoing article and section of the Constitution.

At May Rules 1960 the principal defendants, herein sometimes referred to as the defendants, filed their written demurrer to the bill of complaint and their written motion to dissolve the injunction insofar as it prevented the board of directors from changing the number of its members which it had done by reducing the number from eight to three or February 16, 1960, and insofar as it required the defendants to permit all the stockholders to vote at the annual meeting of the corporation for the election of all directors to be elected at such meeting.

On June 3, 1960, the principal defendants filed their joint and separate answer and its exhibits, in which they denied the unconstitutionality and asserted the constitutionality of section 7 of the charter of Parkersburg-Aetna Corporation and denied the invalidity and asserted the validity of the provisions of the charter and by-laws which authorize the board of directors to increase or diminish the membership of the board and asserted the validity of the action of the board of directors in reducing its number from eight to three on February 16, 1960. By the cross-bill portion of their answer the principal defendants prayed for affirmative relief with respect to the validity of section 7 of the charter and the provisions of the by-laws permitting increase or reduction in the membership of the board, and for a mandatory injunction to require the plaintiffs to make certain corrections in a progress report prepared and sent to the stockholders of the corporation by the plaintiffs on May 23, 1960, which informed the stockholders of and enumerated the advantages which enured to them from the rulings of the circuit court upon the questions involved and the injunctive relief granted by its decree of April 7, 1960, in the campaign by the plaintiffs to restore corporate control to all the stockholders of the Parkersburg-Aetna Corporation.

On June 30, 1960, the plaintiffs filed their written demurrer and their special replication to the answer of the defendants; and on July 13, 1960, moved the court to dismiss the bill of complaint, without prejudice, and to dissolve the injunction granted by the decree of April 7, 1960, with the reservation that the plaintiffs did not abandon their position with respect to the legal propositions and contentions involved and without waiving any benefit accruing to them by reason of the written opinion of the court of April 6, 1960, and that the court enter an order to require the 1960 annual meeting of the stockholders to be held as soon as possible.

On July 25, 1960, the defendants filed their motion for the injunctive relief prayed for in the answer filed by them on June 3, 1960. On August 17, 1960, the court granted the motion of the principal defendants to amend their answer to show that the total number of shares of preferred ...