Muller v. Theo. Hamm Brewing Co.
| Decision Date | 26 June 1936 |
| Docket Number | 30,922 |
| Parties | MARIE MULLER AND OTHERS v. THEO. HAMM BREWING COMPANY AND OTHERS |
| Court | Minnesota Supreme Court |
Plaintiffs appealed from a judgment of the district court for Ramsey county, John W. Boerner, Judge, in favor of defendants, entered pursuant to an order striking as sham and frivolous plaintiffs' reply. Affirmed.
Corporation -- business corporation act.
1. The defendant corporation, by proper resolution duly adopted filed, and recorded under the provisions of L. 1935, c. 44, elected not to accept or become bound by L. 1933, c. 300.
Corporation -- business corporation act.
2. Such resolution was properly adopted by vote of the holders of a majority of all the corporation stock, as provided in L. 1933, c. 300, § 61, subsec. II.
Corporation -- business corporation act.
3. A vote of two-thirds of the stock of each class was not required.
Corporation -- business corporation act -- validity of amendment.
4. L. 1935, c. 44, is not invalid or unconstitutional as impairing or taking away any vested property rights of the plaintiffs.
Corporation -- business corporation act -- validity of amendment.
5. Chapter 44 is not unconstitutional as class legislation.
Constitution -- statutory construction -- presumption in favor of constitutionality.
6. Every law is presumed constitutional in the first instance. An act will not be declared unconstitutional unless its invalidity clearly appears. The power of the court to declare a law unconstitutional is to be exercised only when absolutely necessary in the particular case, and then with great caution.
Corporation -- business corporation act -- amendment --no repeal of act.
7. Chapter 44 was not repealed by L. 1935, c. 117. It is not shown to be arbitrary or discriminatory.
Corporation -- business corporation act.
8. The resolution adopted by defendant corporation not to accept or be bound by L. 1933, c. 300, was adopted under express statutory authority and was not in excess of its corporate powers.
Corporation -- business corporation act.
9. The question of the constitutionality of L. 1933, c. 300, is not here decided. It is not necessary for the decision of this case to decide that question.
Paul C. Thomas, for appellants.
Bundlie, Kelley & Finley, for respondents.
The appeal is from a judgment in favor of the defendants, entered upon an order striking out the plaintiffs' reply and ordering judgment in favor of the defendants. Originally there were two causes of action pleaded. Plaintiffs dismissed the first cause of action.
The defendant Theo. Hamm Brewing Company is a corporation, organized in 1896 under the statutes of this state then in force, and has continued to exist and do business as such since that time. It was organized and has operated for business purposes. By its articles of incorporation its stock is divided into 19,000 shares of $100 each. Of this stock, 7,500 shares are common and 11,500 preferred. Each share of stock, whether common or preferred, entitles the holder thereof to one vote at all stockholders' meetings. There in no provision in the articles or by-laws for cumulative voting. Of said stock the plaintiffs hold in the aggregate 6,427 shares of the preferred stock. Defendants hold in the aggregate 7,500 shares of the common stock and 5,073 shares of the preferred stock, or a total of 12,573 shares.
By L. 1933, c. 300, approved April 18, 1933, hereinafter referred to as c. 300, the legislature adopted what is commonly called the business corporation act or code, which made numerous material changes in the laws governing business corporations thereafter organized. Among these new statutory provisions are the following:
The defendant corporation made no change in its articles or by-laws as to its meetings or as to the voting rights of its stockholders after c. 300 was adopted. It does not appear that plaintiffs ever claimed or attempted to exercise any rights under the new act prior to the commencement of this action.
It is further provided by § 61, subsec. I, of the act as follows:
"This act shall not apply to corporations in existence at the time it takes effect; but every such corporation formed under the laws of Minnesota, if formed for a purpose or purposes for which a corporation might be formed under this act, may accept and come under this act, and every such corporation shall be conclusively presumed to have accepted and come under this act unless, within one year after this act takes effect, the corporation shall signify its election not to accept or be bound by the provisions of this act."
Defendant corporation did not signify its election not to accept or be bound by the act within the one-year limitation period stated. It continued its business and stockholders' meetings the same as before the act was passed.
Section 60 of the act provides:
"The state hereby fully reserves the right to alter, amend or repeal the several provisions of this act and all corporations formed or coming under this act are subject to such reserved right."
1. By L. 1935, c. 44, approved March 13, 1935, hereinafter referred to as c. 44, the legislature did exercise its right to change and amend c. 300 by providing:
"Every corporation * * * which did not file an acceptance of the terms of said act [L. 1933, c. 300] nor a refusal to accept or be bound by the provisions thereof prior to one year after the passage thereof and which shall not since April 18, 1934, have amended its articles of incorporation so as to extend the period of its duration, may file a refusal to accept or be bound by the provisions of said act at any time prior to May 1, 1935, with the same effect as if said refusal had been filed prior to one year after the passage of said act; * * *"
There is the further provision that a corporation which fails to file such refusal on or prior to May 1, 1935, shall be conclusively presumed to be and to have been bound by the act of 1933, after one year from its passage. Pursuant to this act defendant corporation duly adopted a resolution, by majority vote of all the stock of the corporation, electing "not to accept or be bound by the provisions of Chapter 300, Laws of 1933," and refusing to come under the provisions thereof. This resolution was adopted April 8, 1935, and a certified copy of said resolution was duly presented to the secretary of state and filed and recorded in his office on April 26, 1935. The prescribed fee was paid and a certified copy duly recorded in the register of deeds' office.
2. Plaintiffs contend that the corporation could not in 1935 elect not to come under the provisions of c. 300 without a vote of the holders of two-thirds of the shares of each class of stock. But by § 61, subsec. II, of that chapter, it is expressly provided that in electing to accept or not to accept and come within the act the resolution shall be by majority vote of all the stockholders. No vote by classes of stockholders is provided for or required. Chapter 44 does not prescribe the manner of voting on the resolution not to accept or be bound by c. 300. That chapter must be held to refer back to c. 300 for the manner of adopting the resolution not to accept or be bound by the existing law. The vote by majority of all the stockholders, irrespective of class, on a question of accepting or refusing to accept the provisions of the new corporation law, is also recognized in L. 1935, c. 117, § 10, which amends c. 300, § 61, subsec. III, which refers back to c. 300 for the manner of procedure, and extends, without limitation, the time within which a corporation may elect to come within the act. We find no provision of the several acts requiring any vote by classes or any vote other than by a majority of all stockholders, which we take to mean the vote of the holders of the majority of all shares of stock, irrespective of class, upon the question of accepting or refusing to accept the new corporation law.
3. Plaintiffs contend that defendant corporation, having failed to elect not to accept the provisions of c. 300 within one year after its enactment, became bound thereby and thereafter could not, by resolution or otherwise, elect not to accept or be bound thereby without a vote of two-thirds of the stock of each class, even under c. 44. The two-thirds vote requirement and the requirement of a two-thirds vote of each class, found in c. 300, § 36, subsec. III(b, c, and d), expressly apply only to the...
To continue reading
Request your trial