Salem-Fairfield Telephone Ass'n v. McMahan

• Decision Date: 28 December 1915
• Parties: SALEM-FAIRFIELD TELEPHONE ASS'N v. MCMAHAN.
• Court: Oregon Supreme Court

153 P. 788

78 Or. 477

SALEM-FAIRFIELD TELEPHONE ASS'N v. MCMAHAN.

Supreme Court of Oregon

December 28, 1915

Department 1.

Appeal from Circuit Court, Marion County; Wm. Galloway, Judge.

Suit by the Salem-Fairfield Telephone Association, a corporation against L. H. McMahan. From a decree enjoining the adding of other customers to the line, or from interfering therewith the plaintiff appeals. Remanded for further proceedings.

John H. McNary and Roy Shields, both of Salem (McNary Smith & Shields, of Salem, on the brief), for appellant. M E. Pogue and L. H. McMahan, both of Salem (W. T. Slater, of Portland, on the brief), for respondent.

MOORE C.J.

It appears from a transcript of the testimony that in the year 1898 a local telephone line was constructed northerly along a county road from Salem about ten miles by W. H. Egan and others. With their consent a branch line, known as telephone line No. 6, was built from their line northwesterly beside a public highway by A. M. La Follette, L. F. Townsend, and Oliver Beers, who installed and used phones in their respective farmhouses. Several other telephone lines were also built in the same manner and connected with the line constructed by Egan and others. As the telephone poles began to decay and other repairs became necessary, a written agreement was signed March 16, 1908, by many persons using telephones on these lines, whereby they undertook to consolidate such lines into a system, to be controlled by an unincorporated society, called the Salem-Fairfield Telephone Association. This agreement, however, was not signed by either La Follette, Townsend, or Beers. In order to put into effect the terms of the writing, some of the users of telephones on the several lines met, pursuant to notice, and elected seven members to constitute the board of trustees; La Follette being chosen to represent line No. 6. By-laws were adopted providing that capital stock in the association should consist of all necessary appliances required to build, maintain, and operate a telephone system, and such stock should be divided into shares of $25 each; that no member should be entitled to own or control more than three shares, entitling him to one vote for each share at a stockholders' meeting. The trustees were authorized to levy equal annual assessments to meet the expenses of maintaining and operating lines, not exceeding $3.50 for each share, except in cases of emergency, when a majority of the stockholders were empowered to increase the assessment. Section 5 of article 6 of the by-laws was as follows:

"It is agreed by the undersigned stockholders that all the lines forming a part of this association shall be placed in first-class shape by June 1, 1908, at which time the same shall become the property of the association."

Section 9 of article 5 provided that:

The board of trustees "shall have authority to expel and disconnect any member who shall violate any of the rules of this association or these by-laws or who shall refuse or neglect promptly to pay any assessment or fine levied or assessed against him."

Oliver Beers and his wife on January 13, 1909, entered into a contract with the defendant, whereby they covenanted to sell and convey to him their farm. The defendant also paid Beers the sum of $25 for all his interest in telephone line No. 6. In conformity with the terms of the contract, the defendant immediately took possession of the premises, except such part thereof as had been leased, and began making extensive improvements. La Follette and Townsend were members of the unincorporated association, but neither Beers nor the defendant ever became a member thereof, though a share of its capital stock was issued to Beers May 15, 1909, and after McMahan had become the purchaser of the land. At an annual meeting of the stockholders of the association a motion was regularly passed to the effect that a special meeting be called to discuss the propriety of incorporating the society, and the secretary was directed to give notice of such meeting. Pursuant thereto there was sent out a notice which reads:

"Salem, Or., June 9, 1910. Dear Sir: You are hereby notified that a meeting of the stockholders of the Salem-Fairfield Telephone Association will be held at the Clear Lake schoolhouse Wednesday evening, June 15, 1910, at 8 o'clock, for the purpose of determining whether or not we shall incorporate under the laws of Or. You are earnestly requested to be present at this meeting. Yours truly, Alex Harold, Sec."

The minutes of the meeting, held pursuant to that notice, in referring to the question of...