Meyer v. St. Louis Southwestern Ry. Co.
| Decision Date | 07 February 1928 |
| Citation | 2 S.W.2d 185,221 Mo.App. 265 |
| Parties | WALTER E. MEYER, APPELLANT, v. ST. LOUIS SOUTHWESTERN RAILWAY COMPANY, DANIEL UPTHEGROVE, F. W. GREEN, CARL F. G. MEYER, L. F. LOREE, WINSLOW S. PIERCE, CHARLES HAYDEN, PAUL ROSENTHAL, E. ROLAND HARRIMAN AND FRANK M. GOULD, RESPONDENTS. [*] |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of the City of St. Louis.--Hon. Robert W. Hall, Judge.
AFFIRMED.
Judgment affirmed.
Nagel & Kirby, Allen C. Orrick and E. P. Griffin for appellant.
(1) At a corporate election for nine directors, the nine persons receiving the highest vote are entitled to be declared elected, and to have seats on the board of directors. Sec 9726, R. S. 1919. The fact that at such election the seven persons receiving the highest vote for director are nonresidents of the State of Missouri does not, under section 9788, Revised Statutes 1919, defeat the election of the person receiving the seventh highest vote, because: (a) Section 9788, Revised Statutes 1919, which requires domestic corporations to have three resident directors, must be construed in conjunction with section 9789, which, as part of the same legislation, prescribes the penalty for the violation of section 9788, and, so construed, it appears that the wrong contemplated by the statutes is the retention of a board of directors containing less than three residents of Missouri for a period of six months. Secs. 9788 and 9789, R S. 1919. From which it appears that said sections created no classification among, nor disqualification of, candidates for directorship. (b) Only the State in a direct proceeding can complain of the violation of statutes regulating the conduct of corporations after incorporation. Seymour v Mines, 153 U.S. 523; Ryland v. Hollinger, 117 F. 216; Land v. Kaufman, 50 Mo. 243; Granby Mining Co. v. Richards, 95 Mo. 106; Hill v. Rich Hill Coal Mining Co., 119 Mo. 9; School District v. Hodgen, 180 Mo. 70; Bank v. Rockefeller, 195 Mo. 15; Summit v. City Realty & Brokerage Co., 208 Mo. 501; Bank v. Gillespie, 209 Mo. 217; Sedalia Ry. Co. v. Abell, 17 Mo.App. 645; Laird v. Pan-American Lumber Co., 237 S.W. 1047; Drake Hotel Co. v. Crane, 240 S.W. 859; Lippman v. Kehoe Stenographic Co., 98 A. 943, 102 A. 988; Williams v. Delaware Ry. Co., 99 A. 477. (2) (a) It is unlawful for any person to hold the position of director in more than one carrier unless such holding shall have been authorized by the Interstate Commerce Commission. Section 20a, par. (12), I. C. A. (b) The mere filing of an application to the Interstate Commerce Commission for authority to hold office in more than one railroad corporation, without affirmative action thereon, is not sufficient to remove the illegality of such office holding under Section 20a, par. (12), I. C. A. (c) Section 20a, par. (12), I. C. A., creates a disqualification of a candidate (for a directorate of a railway corporation) coming within its purview, and may be invoked by any party in interest for the purpose of defeating the election of such candidate. (3) Votes cast in favor of a disqualified candidate may be thrown aside if the electors had knowledge of the disqualification at the time they cast their vote; but if the electors had no such knowledge the votes cannot be thrown aside so as to elect a candidate having no plurality, but there must be a new election. State ex rel. Attorney-General v. Vail, 53 Mo. 97; State ex rel. Circuit Attorney v. McCann, 81 Mo. 479; Sheridan v. City of St. Louis, 183 Mo. 25; State ex rel. v. Walsh, 7 Mo.App. 142; See, also, Note in 13 L.R.A. (new series) 1013; Note in 124 Am. State Reports, at page 216; Jordy v. Hebrard, 18 La. 455; In re Long Island Ry., 19 Wend. (N. Y.) 37; In re St. Lawrence Steamboat Co., 44 N.J. L. 529; Schmidt v. Mitchell, 101 Ky. 570, 72 Am. St. R. 427; See, also, 14A Corpus Juris 60, Corporations, par. 1814; Morawetz on Private Corporations, sec. 485; Cook on Stock and Stockholders, sec. 623.
Carter, Jones & Turney, A. H. Kiskaddon, George A. McNulty and James E. Garstang for respondent, Railway Company, Upthegrove and Green.
(1) Appellant was not elected a director upon the face of the returns. Sec. 9752, R. S. 1919. (2) The statute regulating corporate powers and membership upon boards of directors is part of the corporate charter. 14 Corpus Juris, p. 117, sec. 108; O'Brien v. Cummings, 13 Mo.App. 197. (3) Stockholders are conclusively presumed to know the provisions of the articles, the by-laws and general statutes regulating corporate affairs and elections. 3 Fletcher's Encyclopedia on Corporations, p. 2440. (4) Sections 9788 and 9752 create a classification of railroad directors as between resident and nonresident directors. Horton v. Wilder, 48 Kas. 222, 29 P. 566; Sec. 1190, General Statutes of Kansas 1889; Secs. 9788, 9789, R. S. 1919; Laws of Missouri 1891, page 78; Laws of Missouri 1893, page 124; Laws of Kansas 1874 (Special Session), chapter 321. (5) A proceeding of this kind is a direct proceeding, not a collateral one. The sole question is who was elected upon the face of the returns. Burford v. Keokuk Packet Co. et al., 3 Mo.App. 159. (6) A proceeding under Secs. 9767 et seq., Revised Statutes 1919, is a personal one. Tomlin v. Bank, 52 Mo.App. 430. (7) The certified copy of the report of the Interstate Commerce Commission of May 3, 1927, in Finance Docket 5679, introduced in evidence subject to objection, is res inter alios acta, and cannot be considered in connection with this proceeding. (8) The Act to Regulate Commerce is not a restriction of the corporate power to elect directors. Act to Regulate Commerce, par. 12, sec. 20a; Order of Interstate Commerce Commission June 19, 1922; New York, etc., Railway v. Interstate Commerce Commission, 200 U.S. 361, 50 L.Ed. 515; U. S. v. Bailey, 9 Peters, 238, 9 L.Ed. 113; U. S. v. Moore, 95 U.S. 760, 24 L.Ed. 588; U. S. v. Johnston, 124 U.S. 236, 31 L.Ed. 389; Five Per Cent Cases, 110 U.S. 471, 29 L.Ed. 198; Union Insurance Co. v. Hogue, 21 Howard 35, 16 L.Ed. 61. (9) The majority of the stockholders have the right to follow the Missouri statute and to cumulate their votes, not only in the manner provided in the Constitution, but also in the light of the express provisions of the statute which was a part of the company's charter. State ex rel. v. McGann, 64 Mo.App. 225.
This suit was brought by appellant, Walter E. Meyer, against the respondents, for the purpose of having himself declared elected a member of the board of directors of the respondent St. Louis Southwestern Railway Company. The suit was instituted under the provisions of sections 9767, 9768, 9769 and 9770 of the Revised Statutes of Missouri, 1919. These sections provide in substance, that any person who considers himself aggrieved by an election or any proceeding concerning an election of directors or officers of any corporation, may apply to the circuit court for redress, and that when such application is made the court shall proceed to hear the case in a summary manner, and make such orders and grant such relief as the circumstances and justice of the case may require, and adjudge the costs according to equity.
On May 5, 1927, the annual meeting of the stockholders of the defendant St. Louis Southwestern Railway Company, for the election of directors, was held in the city of St. Louis. Pursuant to the provisions of the by-laws, the annual meeting of the stockholders was duly convened. There were nine directors to be elected for the ensuing year. Inspectors of election were chosen, and the election was held in the regular manner. The following is the result of the vote as cast:
L. F. Loree
received
440,481 1/2
votes
Winslow S. Pierce
received
440,481 1/2
votes
Charles Hayden
received
440,481 1/2
votes
Paul Rosenthal
received
440,481 1/2
votes
E. Roland Harriman
received
440,481 1/2
votes
Frank M. Gould
received
440,351 1/2
votes
Walter E. Meyer
received
438,853 1/2
votes
Daniel Upthegrove
received
7,687 1/2
votes
F. W. Green
received
7,597 1/2
votes
Carl F. G. Meyer
received
7,652 1/2
votes
Immediately after this vote was cast one of the stockholders of the defendant Railway Company called the attention of the meeting to the provisions of section 9752 of the Revised Statutes of Missouri, 1919, which provides that not less than three members of such board of directors shall be citizens and residents of the State. The first seven men above mentioned are nonresidents of Missouri. The other three, or the three receiving the smallest vote, are residents of Missouri. A motion was then made, seconded and carried, appellant voting against the same, that the six nonresidents receiving the highest number of votes be declared elected, together with the three resident candidates, thus making the board of directors consist of L. F. Loree, Winslow S. Pierce, Charles Hayden, Paul Rosenthal, E. Roland Harriman, Frank M. Gould, Daniel Upthegrove, F. W. Green, and Carl F. G. Meyer.
In this proceeding appellant seeks a number of remedies in the alternative. He first asks that he be seated as a director instead of F. W. Green, who received the smallest vote among the resident candidates. In case this is not done, he asks to be seated in the place of L. F. Loree, who it appears, is acting as a director of several other railroad corporations and appellant insists that to permit him to act as a director in this instance would be in violation of certain provisions of the Interstate Commerce Act, which provides a penalty of fine and imprisonment for any person who shall act as a director of more than one carrier, unless authorized to do so by the Interstate Commerce Commission. Loree filed his application with the Interstate...
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