State ex rel. Ross v. Anderson

• Citation: 67 N.E. 207,31 Ind.App. 34
• Parties: STATE ex rel. ROSS v. ANDERSON.
• Decision Date: 22 April 1903
• Court: Court of Appeals of Indiana

31 Ind.App. 34

67 N.E. 207

STATE ex rel. ROSS

v.ANDERSON.

Appellate Court of Indiana, Division No. 1.

April 22, 1903.

Appeal from Circuit Court, Randolph County; A. O. Marsh, Judge.

Action by the state, on the relation of Melissa J. Ross, against Edwin A. Anderson. From an order overruling a demurrer to defendant's answer, relatrix appeals. Affirmed.Shockney Bros., for appellant. Engle, Caldwell & Parry, for appellee.

BLACK, P. J.

In a verified complaint or information on the relation of Melissa J. Ross against Edwin A. Anderson, the appellee, it was claimed that he had usurped her office of director of a corporation organized under the laws of this state, the Ross Carriage Manufacturing Company, and also her office of bookkeeper of that company; and the appellant sought a decree declaring the establishment of the right of the relatrix to each of said offices, and a judgment for damages for being kept out of them. The appellant's demurrer to the answer of appellee was overruled, and this ruling is alone assigned as error.

The answer showed: That the company was organized as a corporation pursuant to the statutes of this state regulating the organization of manufacturing and mining companies October 23, 1899, and thereafter had been, and still was, doing a manufacturing business at Union City, Ind. That at its organization the stockholders adopted articles of association, and among the articles those numbered 5 and 6 are as follows:

“Art. 5. The prudential affairs of this association shall always be managed by a board of directors to consist of Edmund L. Anderson, Oliver Downard, George W. Ross and Melissa J. Ross, unless they shall become incapacitated, resign or die; in either of which events the successor or successors shall be elected from among the stockholders of said association on the first Monday in October in each year, by the holders of the corporate stock of said association, each holder being entitled at such election to one vote for every share so owned or controlled by such stockholder; except that in the absence of said George W. Ross, or in the event of his incapacity or death, and in either of such events, Melissa J. Ross, one of the subscribers hereto, if she shall at the time be a stockholder in this company, shall fill the vacancy and perform the duties for and instead of said George W. Ross.

“Art. 6. George W. Ross shall be the president of the board of directors, Edmund L. Anderson shall be the secretary of said board, Oliver M. Downard shall be the treasurer of said board, and Melissa J. Ross shall be the vice-president thereof, and in addition thereto shall keep the books, of said association. Each of said persons shall hold said office and offices so long as they shall remain shareholders in said association, unless they shall become incapacitated, absent themselves from the business, resign or die; in either of which events their successor or successors shall be elected thereafter from among the stockholders of said association on the first Monday in October, in each year, by the board of directors of said association; except that in the absence, incapacity, resignation or death of the said George W. Ross, one of the subscribers hereto, Melissa J. Ross, in either of such events shall, if she be a stockholder in said association at the time, fill the vacancy and perform the duties of said office in place of and instead of said George W. Ross. The duties of said officers shall be the same as are usually imposed on like officers of similar corporations, but the vice-president shall, in addition to the other duties of her office, be the book-keeper of this association and keep the books thereof,” etc.-the remainder of this article relating to the meetings of the board of directors.

It was alleged that at the organization of the company the persons so named in the articles as directors, including the relatrix, were selected and named as the directors of the company, and became and constituted its board of directors by virtue of the provisions of said article 5, and not otherwise, and so continued until October 7, 1901, the first Monday of that month; and they were at no time prior to that date elected or selected as directors, except by and under the provisions of said article 5, and by causing their names to be inserted in that article at the organization of the company; that the persons named as president, secretary, treasurer, vice president, and bookkeeper at that organization assumed the duties of their said respective offices, and they continued to discharge such duties until October 7, 1901, under and by being so named in that article, and they were not selected or elected to such offices prior to that date, except by and under the provisions of that section and by causing their names to be inserted therein as incumbents of such offices; that there was not, and had not been, in the articles of association, by-laws, rules, and regulations of the company any provisions for an annual or other meeting of the stockholders of the company except the provisions of said articles 5 and 6; that there was no annual or other meeting of the stockholders on the first Monday of October, 1900, and no successors of the members of the board of directors were then chosen or elected by the stockholders. It was alleged that on the first Monday in October, 1901, pursuant to notice duly and legally given to each and all of the stockholders, a regular annual meeting of the stockholders was held at the principal office of the company, at which all the stockholders representing all the stock and owning and holding all the stock attended. The answer then showed in detail and at length the election by the stockholders at this meeting of four directors for the ensuing year, the number provided for by the articles of association and by-laws, each person so elected receiving votes representing a majority of the shares of stock; that the members of the original board were thus elected except the relatrix, instead of whom the appellee was elected, he being then and since that time a stockholder and eligible to the office; and the pleading further set forth at length the fact of the election by the board of directors of the executive officers, the relatrix not being one of them, but the appellee being so elected as secretary and bookkeeper, and that he was exercising the functions and duties of a director and of secretary and bookkeeper pursuant to these elections, and under the authority thereof.

The relatrix depends upon the provisions of articles 5 and 6 of the articles of association in asserting a right to continue in the office of director and in the so-called office of bookkeeper; while the appellee bases his defense upon his election to the office of director at the annual meeting of the stockholders, he being eligible, and upon his election as secretary and bookkeeper by the board of directors. Therefore the dispute relates to the question as to the effectiveness or binding force of those articles.

Assuming the validity and obligatory force of article 5 would imply that the persons named therein as directors would continue to constitute the board of directors, and the affairs of the association would continue to be managed by such board always, unless they should become incapacitated, resign, or die, the election of a successor to any of them by the stockholders being authorized only in case of incapacity, resignation, or death, such election of successors, if any, to be on the first Monday of October annually, except, however, that if George W. Ross, one of such directors, should be absent, or should become incapacitated, or should die, the relatrix, another one of such directors, if then still a stockholder, should fill the vacancy and perform the duties of George W. Ross, in addition to her own duties. Though by transfers of shares of stock the original directors should come to be the owners of a minority of the stock, and become obnoxious to the owners of the majority of the shares, they would still continue always to be directors, and as such to control the affairs of the company, except those of them who should become incapacitated, or resign or die, except, further, that the absence or incapacity or death of George W. Ross would not furnish occasion for the election of a successor, but would devolve the duties of two directors upon the relatrix. Substantially the same provisions were made by section 6, relating to the executive officers of the corporation, as those made by section 5, relating to the members of the board of directors; the successors, if any, of such executive officers to be elected annually by the board of directors, except in the case of the presidency, a vacancy in which would devolve its duties on the relatrix if she were still a stockholder. The possible results of such provisions need only be suggested to justify condemnation on the grounds of their unfairness and impolicy. The corporation derives its existence, powers, duties, and obligations from the statutes alone, the express laws of the state. Not only is it confined to the objects and purposes of its creation, but the instrumentalities and methods by which it performs its functions must not be in conflict with its fundamental statutory authority. Those who undertake its organization may not select for their observance only such provisions of law as seem to them to suit their purposes, rejecting or ignoring other statutory requirements,...