Silsby v. Strong

• Citation: 62 P. 633,38 Or. 36
• Parties: SILSBY et al. v. STRONG.
• Decision Date: 12 November 1900
• Court: Oregon Supreme Court

62 P. 633

38 Or. 36

SILSBY et al. v. STRONG.

Supreme Court of Oregon

November 12, 1900

Appeal from circuit court, Josephine county; H.K. Hanna, Judge.

Action by A.W. Silsby and George H. Binns, as trustees of the Elmer-Brown Copper Mining & Smelting Company, against W.J Strong. From a judgment in favor of plaintiffs, defendant appeals. Affirmed.

This is an action to recover possession of certain personal property. The complaint sets up the due organization and incorporation of the Elmer-Brown Copper Mining & Smelting Company, and further states that on or about April 16, 1896, said company made, executed, and delivered to plaintiffs a deed to the personal property therein described, said property to be held in trust for certain named creditors of the company, with power to sell the same, or sufficient thereof to satisfy the legal claims of such creditors, and that said trust should thereupon terminate; that immediately after the delivery of said deed the plaintiffs took possession of the property, and delivered it to one George E. Payne, as their agent; that on or about the 28th of May, 1897, the defendant wrongfully and unlawfully took possession thereof, and withholds the same from plaintiffs, in Josephine county, Or.; that due demand has been made for its return and refused; that said trust has not been fully executed; and that plaintiffs are entitled to possession. A general demurrer thereto having been overruled the defendant answered, and, after denying every material allegation of the complaint, set up three separate defenses (1) That R.M. Kelly and W.J. Strong are the owners of the property; (2) that J.O. Booth is the owner; and (3) that L.S Shipley is the owner. Plaintiffs replied, and, the trial resulting in a judgment in their favor, the defendant appeals.

Dexter Rice and A.M. Crawford, for appellant.

R.G. Smith, for respondents.

WOLVERTON J. (after stating the facts).

It is first insisted that the court erred in overruling the demurrer to the complaint because it is defective, in that the trust deed upon which it is based does not show the amount due or owing to the creditors, nor does it provide when and where the property shall be sold. The objection goes to the validity of the deed, but, as the action is based upon the possession given under it, the sufficiency of the complaint may be said to depend upon such validity. The first objection is without efficacy, because it challenges the sufficiency of the consideration in support of the deed, and this may be shown by parol. As it respects the second, the deed, by obvious construction, reposes in the trustees a discretion to sell for the best interests of the parties concerned. It is plain that neither of these objections vitiates the deed, and the complaint must be held sufficient.

When it came to the trial, the deed was offered, and objection was made to its admission in evidence, whereupon the plaintiffs called A.M. Brown as a witness, who testified that he was a member of the board of trustees of the Elmer-Brown Copper Mining & Smelting Company, and produced the minutes of the first meeting of the stockholders and of the board of directors, and also of the meeting authorizing the execution of the deed in question. The minutes show, in substance, that George F. Wheeler, Andrew M. Brown, and Robert A. Brown were the sole owners of the entire stock subscribed, and the only persons present at such stockholders' meeting. They elected themselves, N.L Ireland, and William T. Elmer directors, organized a directors' meeting, and elected George F. Wheeler president, and A.M. Brown secretary and treasurer. There were present at the meeting which authorized the execution of the deed George F. Wheeler and A.M. Brown; the latter holding the proxy of R.A. Brown, with authority to act in his stead. Objection was also made to the introduction of these minutes, but, the objections being overruled, the deed and minutes were submitted to the jury. It is insisted that the board meeting which authorized the execution of the deed was illegal, because R.A. Brown was not personally present thereat, leaving the board without a quorum to transact business. The situation is a novel one. Two of the directors elected were not stockholders, and hence were not eligible under the statute. Hill's Ann.Laws Or. § 3224, as amended in 1893 (Sess.Laws 1893, p. 62). Under this section, a director ceasing to be a stockholder ceases also to be a director; and, if a director cannot continue after having parted with his stock, it follows that one without stock cannot be legally elected a director, so that the attempted election of Ireland and Elmer was without validity. This left the board consisting of three directors only, and, as the by-laws or other rules of the corporation prescribing the number necessary to constitute a quorum were not introduced in evidence, we must have recourse to the general rule of law...