State ex rel. Dewey Portland Cement Co. v. O'Brien, No. 10845

CourtSupreme Court of West Virginia
Writing for the CourtGIVEN
Citation142 W.Va. 451,96 S.E.2d 171
PartiesSTATE ex rel. DEWEY PORTLAND CEMENT COMPANY v. D. Pitt O'BRIEN, Secretary of State.
Docket NumberNo. 10845
Decision Date22 December 1956

Page 171

96 S.E.2d 171
142 W.Va. 451
STATE ex rel. DEWEY PORTLAND CEMENT COMPANY
v.
D. Pitt O'BRIEN, Secretary of State.
No. 10845.
Supreme Court of Appeals of West Virginia.
Submitted Sept. 27, 1956.
Decided Dec. 22, 1956.

Syllabus by the Court

1. Section 4, Article XI, of the Constitution of this State, provides in clear and unambiguous language that every shareholder shall have the right to vote his or her shares of stock in the election of directors or managers of an incorporated company in any manner provided for therein.

2. Sections 22 and 66 of Article 1, Chapter 31 of the Code, in so far as they purport to authorize the issuance of shares of stock, the owners of which are deprived of the right to vote at elections of directors or managers of an incorporated company, contravene the plain provisions of Section 4, Article XI, of the Constitution of this State, and are invalid.

3. A constitutional provision which is clear and unambiguous cannot be changed or made uncertain by a statute subsequently enacted.

Page 172

[142 W.Va. 452] Fitzpatrick, Marshall, Huddleston & Bolen, E. A. Marshall William C. Beatty, Huntington, Gage, Hillix, Moore & Park, Kansas City, Mo., for relator.

John G. Fox, Atty. Gen., Angus E. Peyton, Charles R. McElwee, Asst. Attys. Gen., for respondent.

Stathers & Cantrall, Arch M. Cantrall, Clarksburg, Charles C. Wise, Jr., Charleston, and C. H. Hardesty, Jr., Fairmont, amici curiae for Simpson G. M. C. Truck Co., Fairmont Auto Supply Co., and Sanitary Baking Co.

McCamic & Tinker, Wheeling, amicus curiae for Cooperative Transit Co. and Owl Office Outfitters.

BROWNING, President.

Relator, Dewey Portland Cement Company, seeks in this original proceeding in mandamus to compel the respondent, D. Pitt O'Brien, Secretary of State of West Virginia, to receive a certificate of amendment executed by relator's president, to issue his certificate reciting the resolution set forth in the certificate of amendment and to declare the amendments to the charter, increasing the authorized capital stock as set forth in the certificate of amendment, to be authorized by law.

Relator alleges its incorporation under the laws of the State of West Virginia, on November 19, 1906, and five subsequent amendments to its certificate of incorporation, the last of which, on July 1, 1937, authorized a total capital stock of $12,000,000 divided into 800,000 shares of common stock, of a single class of the par value of $15 per share. Relator then alleges a meeting of its stockholders on August 27, 1956, at which time, more than 66% of the outstanding common stock, the only class relator is authorized to issue, being represented by the holders thereof either in person or by proxy, a resolution was unanimously adopted authorizing the amendment of relator's charter to permit an increase in [142 W.Va. 453] the authorized capital stock from $12,000,000 to $15,000,000, and, instead of being divided into 800,000 shares of a single

Page 173

class of the par value of $15, dividing the common stock into two classes: (1) 1,350,000 shares of Class 'A' common stock of the par value of $7.50; and (2) 650,000 shares of Class 'B' common stock of the par value of $7.50, all voting rights, except in instances not here pertinent, to be vested exclusively in the holders of Class 'B' common stock.

This resolution, duly certified by the president of relator, was tendered to the respondent, with the proper fees, who refused to accept and file such, or to take any action in regard thereto.

On petition of relator, this Court issued a rule to show cause why a peremptory writ of mandamus should not be awarded against the respondent commanding that he perform the requested acts, returnable September 25, 1956, at which time the respondent appeared and demurred to the petition on the ground that Sections 22 and 66 of Article 1, Chapter 31 of the West Virginia Code, in so far as they authorize the issuance of nonvoting stock by a corporation, are unconstitutional in that they contravene the plain mandate of Article XI, Section 4 of the West Virginia Constitution.

The pertinent statutory provisions provide as follows:

Code, 31-1-22: 'Every corporation, other than a banking institution, shall have power to issue one or more classes of stock or one or more series of stock within any class thereof, any or all of which classes may be of stock with par value or stock without par value, with such voting powers, full or limited, or without voting powers and in such series and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the charter * * *.'

Code, 31-1-66: 'In all elections of directors of corporations each stockholder shall have the right to cast one [142 W.Va. 454] vote for each share of stock owned by him and entitled to a vote, * * *; and on any other question to be determined by a vote of shares at any meeting of stockholders each stockholder shall be entitled to one vote for each share of stock owned by him and entitled to a vote, * * *.'

Article XI, Section 4, of the Constitution of West Virginia provides: 'The Legislature shall provide by law that in all elections for directors or managers of incorporated companies, every stockholder shall have the right to vote, in person or by proxy, 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 said shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares of stock, shall equal, or to distribute them on the same principle among as many candidates as he shall think fit; and such directors or managers shall not be elected in any other manner.'

By his demurrer to the petition of the relator, the respondent admits all of the facts well pleaded therein. Code, 31-1-22, authorizes every corporation, except a banking institution, to issue nonvoting stock such as the Class 'A' common stock which, by the amendment to its charter, the relator seeks to issue. Mandamus is a proper proceeding to compel an administrative officer to perform a duty clearly imposed by a valid statute. Thus the issue is squarely presented as to whether the portions of Code, 31-1-22, and 31-1-66, pertaining to the issuance of stock by a corporation, which denies to the owner of shares of such stock the right to vote at stockholders' meetings for the election of directors or managers of such corporation, is in conflict with Article XI, Section 4, of the Constitution. The respondent contends that the pertinent provisions of Article XI, Section 4, of the Constitution of this State, are plain and unambiguous and not subject to interpretation or construction. The relator says that Section 4 is ambiguous,

Page 174

and that any doubt as to the validity of the pertinent statutes [142 W.Va. 455] should be resolved in favor of their constitutionality because of the legislative and administrative construction of Article XI, Section 4, over a period of many years.

At common law, each stockholder in a private corporation had but one vote at a stockholders' meeting, no matter how many shares of stock he owned. Fletcher, Cyclopedia on Law of Private Corporations, 1931, Section 2045. The Legislature of the several states at an early date began to give consideration to this question, and provisions relative to it were later incorporated in some state Constitutions. As early as 1836, the Virginia General Assembly was considering the matter, and in the revised Code of 1849, Chapter 57, Section 10, it was provided that: 'In a meeting of stockholders, each stockholder may, in person or by proxy, give the following vote on whatever stock he may hold in the same right, to wit: one vote for each share of such stock not exceeding twenty, one vote for every two shares exceeding twenty and not exceeding two hundred, one vote for every five shares exceeding two hundred and not exceeding five hundred, and one vote for every ten shares exceeding five hundred.'

By the Code of 1860, Chapter 57, Section 10, the prior Act was reenacted to give 'one vote for each share of such stock not exceeding ten, and one vote for every four shares exceeding ten.' At the first session of the Legislature of this State, by Chapter 83, Section 22, Acts of the Legislature, 1863, the rule was again changed to provide for 'one vote for every share of stock not exceeding one hundred; and one vote for every four shares exceeding one hundred.' The Code of 1868, Chapter 53, Section 44, provided that there should be 'one vote for every share of stock held in such company.'

Reverting to the Acts of 1864, Chapter 43, we find the first action by the Legislature of this State permitting the stockholders of a corporation to issue more than one type of stock. Therein it was provided that: 'The stockholders of any corporation now existing in this state, or which may be hereafter formed therein pursuant[142 W.Va. 456] to law, may, by by-law or regulation passed in general meeting, provide for the issue of preferred stock, upon such terms and conditions, and with such stipulations and regulations respecting the preference to be given to such stock in regard to future dividends or otherwise as by the said by-law or resolution they may see fit to prescribe or agree to * * *.' This same provision without substantial change is found in Chapter 53, Section 16, of the Code of 1868. This was the Act in force in this State when Article XI, Section 4, was adopted by the people of the State, and became a part of the Constitution in 1872.

By the Acts of 1872-73, Chpater 181, approved December 20, 1873, one year after the adoption of the constitutional provision, the Legislature adopted the following provision: 'That in all elections for directors or managers of incorporated companies, every stockholder shall...

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12 practice notes
  • Quesenberry v. Estep, No. 10827
    • United States
    • Supreme Court of West Virginia
    • December 22, 1956
    ...binding force and effect. The final decree of the circuit court is reversed and set aside and this proceeding is remanded to that court [142 W.Va. 451] with directions that it enter a decree sustaining the validity of Rule Eleven and Rule Twelve in conformity with the principles enunciated ......
  • State ex rel. Vance v. Arthur, No. 10887
    • United States
    • Supreme Court of West Virginia
    • May 28, 1957
    ...to require the discharge by a public official of a nondiscretionary duty. State ex rel. Dewey Portland Cement Company v. O'Brien, W.Va., 96 S.E.2d 171; State ex rel. Board of Governors of West Virginia University v. Sims, 140 W.Va. 64, 82 S.E.2d 321; State ex rel. West Virginia Commission o......
  • State ex rel. State Bldg. Commission v. Bailey, No. 12582
    • United States
    • Supreme Court of West Virginia
    • October 11, 1966
    ...v. Brown, 143 W.Va. 617, 103 S.E.2d 892; State ex rel. Deway Portland Cement Company v. Page 457 O'Brien, 142 W.Va.[151 W.Va. 93] 451, 96 S.E.2d 171; Staley v. Wayne County Court, 109 W.Va. 251, 153 S.E. The invalidity of the provision of Section 1 of the statute which designates the forego......
  • Diamond v. Parkersburg-Aetna Corp., PARKERSBURG-AETNA
    • United States
    • Supreme Court of West Virginia
    • October 23, 1961
    ...Code, 1931, is set forth in the majority opinion and in the dissenting opinion in State ex rel. Dewey Portland Cement Company v. O'Brien, 142 W.Va. 451, 96 S.E.2d 171, in which this Court held that Sections 22 and 66, Article 1, Chapter 31, Code, 1931, to the extent that they undertook to a......
  • Request a trial to view additional results
12 cases
  • Quesenberry v. Estep, No. 10827
    • United States
    • Supreme Court of West Virginia
    • December 22, 1956
    ...binding force and effect. The final decree of the circuit court is reversed and set aside and this proceeding is remanded to that court [142 W.Va. 451] with directions that it enter a decree sustaining the validity of Rule Eleven and Rule Twelve in conformity with the principles enunciated ......
  • State ex rel. Vance v. Arthur, No. 10887
    • United States
    • Supreme Court of West Virginia
    • May 28, 1957
    ...to require the discharge by a public official of a nondiscretionary duty. State ex rel. Dewey Portland Cement Company v. O'Brien, W.Va., 96 S.E.2d 171; State ex rel. Board of Governors of West Virginia University v. Sims, 140 W.Va. 64, 82 S.E.2d 321; State ex rel. West Virginia Commission o......
  • State ex rel. State Bldg. Commission v. Bailey, No. 12582
    • United States
    • Supreme Court of West Virginia
    • October 11, 1966
    ...v. Brown, 143 W.Va. 617, 103 S.E.2d 892; State ex rel. Deway Portland Cement Company v. Page 457 O'Brien, 142 W.Va.[151 W.Va. 93] 451, 96 S.E.2d 171; Staley v. Wayne County Court, 109 W.Va. 251, 153 S.E. The invalidity of the provision of Section 1 of the statute which designates the forego......
  • Diamond v. Parkersburg-Aetna Corp., PARKERSBURG-AETNA
    • United States
    • Supreme Court of West Virginia
    • October 23, 1961
    ...Code, 1931, is set forth in the majority opinion and in the dissenting opinion in State ex rel. Dewey Portland Cement Company v. O'Brien, 142 W.Va. 451, 96 S.E.2d 171, in which this Court held that Sections 22 and 66, Article 1, Chapter 31, Code, 1931, to the extent that they undertook to a......
  • Request a trial to view additional results

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