State ex rel. Kearns v. Rindsfoos

• Citation: 161 Ohio St. 60,118 N.E.2d 138,43 A.L.R.2d 1316
• Decision Date: 24 February 1954
• Docket Number: No. 33621,33621
• Parties: , 43 A.L.R.2d 1316, 53 O.O. 2 STATE ex rel. KEARNS v. RINDSFOOS et al.
• Court: United States State Supreme Court of Ohio

Page 60

161 Ohio St. 60

118 N.E.2d 138, 43 A.L.R.2d 1316, 53 O.O. 2

STATE ex rel. KEARNS v. RINDSFOOS et al.

No. 33621.

Supreme Court of Ohio.

Feb. 24, 1954.

Syllabus by the Court.

1. That part of Section 8623-50a, General Code, Section 1701.58, Revised Code, in the General Corporation Act, which authorizes cumulative voting by shareholders in the election of directors of a corporation, does not apply to the election of directors of a state banking corporation.

2. In the election of directors of a state banking corporation, cumulative voting by shareholders is not authorized under the laws of Ohio, unless there is provision therefor in the articles of incorporation of such corporation.

The appellant relator, hereinafter referred to as the relator, instituted this action in quo warranto in the Court of Appeals for Franklin county to determine whether the appellee respondents, hereinafter referred to as the respondents, were legally elected as directors of the Brunson Bank & Trust Company, a banking institution, organized and incorporated under the laws of the state of Ohio and doing business in the city of Columbus.

In his petition the relator contends that the respondents are usurping the offices of directors and should be ousted. The respondents admit the essential allegations of the petition in their answer. Following the filing of the answer the relator filed a motion for judgment on the pleadings. This motion was overruled and, the relator not desiring to plead further, final judgment was rendered for the respondents.

Prior to the annual shareholders meeting, which was held at the bank on January 14, 1953, and at which time five directors were to be elected, Alex S. Dombey, the third largest shareholder of the bank, gave notice as required by Section 8623-50a, General Code, Section 1701.58, Revised Code, which is a part of the General Corporation Act, that he requested cumulative voting in the election of directors. His request to cumulate votes was denied, but he cumulated, nevertheless, the votes of his own stock and those which he held by proxy and cast them for himself as director. If cumulative voting is permissible in the election of directors of a state banking corporation, these votes were sufficient to elect him. The votes cast by him were declared illegal and void by the chairman of the meeting, with the result that the five respondents, who each had received the same number of votes, were declared elected as directors to the exclusion of Dombey.

This cause is now before this court on appeal as of right.

Frank H. Kearns, Prosecuting Attorney, Wm. E. Knepper and C. Richard Grieser, Columbus, for appellant.

Paul Gingher, Luther L. Boger and Rodney Baldwin, Columbus, for appellees.

LAMNECK, Judge.

The sole question to be determined in this appeal is whether cumulative voting by shareholders of a state banking corporation is authorized under the laws of Ohio.

Section 710-52 and 710-64, General Code, Sections 1103.42 and 1103.20, Revised Code, which are parts of the Banking Act, read as follows:

Section 710-52. 'Such corporation shall be created, organized, governed and conducted, and directors shall be chosen in all respects in the same manner as provided by law for corporations organized under the general incorporation laws of this state, in so far as the same shall not be inconsistent with the provisions of this act.'

Section 710-64. 'Except as otherwise provided in the articles of incorporation, in elections of directors and in deciding questions at meetings of stockholders, each stockholder of an incorporated bank shall be entitled to one vote for each share of stock held by him. Any stockholder may vote by proxy duly authorized in writing. Unless the articles of incorporation or the regulations or the contract of or for subscription otherwise provide, a subscriber for authorized shares shall be deemed a stockholder for the purposes of this section, but no shares shall be voted upon which an installment of the purchase price is overdue and unpaid.'

Section 8623-50, 8623-50a and 8623-132, General Code, Sections 1701.57, 1701.58 and 1701.20, Revised Code, which are parts of the General Corporation Act, read as follows:

Section 8623-50. 'Except as otherwise provided in the articles (or in the provisions of this act respecting script), every shareholder of record as of the day next preceding the date of the meetings or, if a record date for the determination of persons entitled to vote thereat is fixed as in this act provided, of record as of said date, shall be entitled at such meeting to one vote for each share then standing in his name on the books of the corporation.

'A shareholder shall be entitled to vote even though his shares have not been fully paid, but shares upon which an installment of the purchase price is overdue and unpaid shall not be voted.'

Section 8623-50a. 'At a meeting of shareholders at which directors are to be elected, only persons nominated as candidates shall be eligible for election as directors.

'At all elections of directors the candidates receiving the greatest number of votes shall be elected.

'If notice in writing is given by any shareholder to the president or a vice president or the secretary, not less than twenty-four hours before the time fixed for holding a meeting for the election of directors, that he desires that the voting at such election shall be cumulative, and if an announcement of the giving of such notice is made upon the convening of the meeting by the chairman or secretary or by or on behalf of the shareholder giving such notice, each shareholder shall have the right to cumulate such voting power as he possesses and to give one candidate as many votes as the number of directors to be elected multiplied by the number of his votes equals or to distribute his votes on the same principal among two or more candidates, as he sees fit.

'Such right to vote cumulatively shall not be restricted or qualified by any provisions in the articles or regulations.'

Section 8623-132. 'In cases where special provision is made in the General Code for the incorporation, organization, conduct or government of any class of corporations, such special provision shall govern to the exclusion of the provisions of this act on the same subject, unless it clearly appears that the special provision is cumulative, in which case the provisions of this act also shall apply.

'No banking, safe deposit, trust or insurance corporation shall be authorized to issue shares without par value.'

There is no provision in the articles of incorporation of the Brunson Bank & Trust Company authorizing cumulative voting.

Whether cumulative voting by shareholders of a state banking corporation is permissible, where no provision therefor is made in the articles of incorporation depends upon the interpretation of the foregoing statutes.

Under Sections 710-52 and 710-64, General Code, Sections 1103.42 and 1103.20, Revised Code, which are parts of the Banking Act, 'directors shall be chosen in all respects in the same manner as provided by law for corporations organized under the general incorporation...