Stratford v. Mallory

• Decision Date: 20 June 1904
• Citation: 70 N.J.L. 294,58 A. 347
• Parties: STRATFORD et al. v. MALLORY et al.
• Court: New Jersey Supreme Court

58 A. 347

70 N.J.L. 294

STRATFORD et al.

v. MALLORY et al.

Court of Errors and Appeals of New Jersey.

June 20, 1904.

(Syllabus by the Court.)

Error to Supreme Court.

Action by Frank B. Stratford and others against George S. Mallory and others. Judgment for defendants, and plaintiffs bring error. Affirmed.

Gilbert Collins and Joseph H. Lefferts, for plaintiffs in error.

Bedle, Edwards & Thompson, for defendants in error.

PITNEY, J. This case arose upon application made by the present plaintiffs in error to Supreme Court under section 42 of the general corporation act (P. L. 1896, p. 291) for a summary investigation of an election of directors of the Jersey City Paper Company. At the election four directors were to be chosen. Plaintiffs in error and defendants in error were opposing candidates. The latter were declared elected, having received a majority of the votes cast. At the time of the election the defendants in error were already in office as directors. They produced at the place of election a proper list of stockholders, showing the number of shares held by each, but omitted to produce the stock books. Treating the defendants in error as ineligible to election because of failure to produce the books, by force of the terms of section 33 of the corporation act (P. L. 1896, p. 288), the plaintiffs in error prayed the Supreme Court to set aside the election of defendants in error, and to declare the plaintiffs in error elected as directors. The matter came on to hearing in that court upon depositions taken by the respective parties. The court determined that defendants in error were ineligible for re-election as directors because of their neglect to produce the stock books, as required by section 33; but, being of the opinion that it would be unfair to the voting stockholders to declare that the petitioners had been elected, the court ordered a new election to be held.

So far as this judgment operates to set aside the election of the defendants in error, it is not under review. Plaintiffs in error pray reversal because the Supreme Court ordered a new election and refused to declare the plaintiffs in error elected. Section 42 of the corporation act may perhaps be treated either as a summary substitute for a quo warranto proceeding, with the provision for trial by jury in the Supreme Court, or as a preliminary investigation in order to determine the prima facie title to office without barring a subsequent proceeding by quo warranto. For the purposes of the present case it makes no difference in which aspect it is regarded. The section declares: "The Supreme Court, upon application of any person who may be aggrieved by or complain of any election, or any proceeding, act or matter in or touching the same, reasonable notice having been given to the adverse party, or to those who are to be affected thereby, of such intended application, shall proceed forthwith, and in a summary way hear the affidavits, proofs and allegations of the parties, or otherwise inquire into the matter or causes of complaint, and thereupon establish the election so complained of, or order a new election, or make such order, and give such relief in the premises as right and justice may require. The court may, if the case require it, either order an issue to be made up, in manner and form as it may direct, to try the rights of the respective parties to the office or franchise in question, or may give leave to exhibit, or direct the attorney general to exhibit, an information in the nature of a quo warranto in relation thereto."

It is manifest that the latitude allowed to the court, either to establish the election, or order a new election, or make such order and give such relief in the premises as right and justice may require, leaves the court free to deal with the case not necessarily in accordance with strict legal rules, but according to the substantial rights and equities of the matter. The finding of the Supreme Court in this case that it would be unfair to the voting stockholders to declare that the petitioners had been elected is a finding of fact, which must be given its due weight. Whether the review by writ of error in this court must proceed according to the legal method, so that we are bound by the findings of the court below if there be any legal evidence to sustain them, or whether, on the other hand, it is to be treated as an appeal from an equitable tribunal, whose findings of fact are open to review in this court, would make no difference in our conclusions in this case. There is, beyond controversy, legal evidence to sustain such a finding, and our consideration of the whole of the evidence has led us to a view thereof that accords with the view taken by the Supreme Court.

The facts in substance are as follows: The Jersey City Paper Company is a manufacturing concern, having its factory in that city. Its principal office was in the factory building. It had $43,000 of stock issued and outstanding, represented by 430 shares of $100 each. The stock was held by few parties, and transfers were seldom made. During four years preceding the election in question there had been but one transfer. This took place ten months preceding the date of the meeting, and resulted in placing in the names of the several plaintiffs in error certain shares of stock formerly held by their deceased father, of whose will one of the plaintiffs in error was executor. At the time of the meeting there were but nine stockholders, all of whom were present in person or by proxy, viz.: E. S. Cowles, present, 3...