Umatilla Water Users' Ass'n v. Irvin

• Decision Date: 31 May 1910
• Parties: UMATILLA WATER USERS' ASS'N v. IRVIN et al.
• Court: Oregon Supreme Court

108 P. 1016

56 Or. 414

UMATILLA WATER USERS' ASS'N v. IRVIN et al.

Supreme Court of Oregon

May 31, 1910

Appeal from Circuit Court, Umatilla County; H.J. Bean, Judge.

Suit by the Umatilla Water Users' Association against H.T. Irvin and others. Decree for defendants, and plaintiff appeals. Affirmed.

This is a suit brought by plaintiff to enjoin Irvin and others from acting as directors and officers of the plaintiff corporation.

The complaint, among other matters, alleges that H.G. Newport is president, F.A. Yates, secretary, F.B. Swayze, treasurer A.C. Crawford, vice president; that Newport, Skinner, Yates together with Crawford and Sommerer constitute the board of directors of such company; that they were duly chosen at the regular stockholders' meeting held at Hermiston on January 9, 1909; that on the 11th day of January, 1909, the directors above named elected Newport, president, Crawford vice president, Yates, secretary, and Swayze, treasurer; that they entered upon the discharge of the duties of their respective offices, and have ever since and are now in possession and control of the property, funds, and records of the corporation, excepting such as the defendant may wrongfully have collected and obtained possession of; that at the annual election held by the stockholders on January 9 1909, H.T. Irvin, president of the corporation, presided as chairman of the meeting until the canvass of votes cast for directors was partially completed. It is further alleged, in substance, that after the votes were cast Irvin, with the assistance of the directors, fraudulently proceeded to canvass the vote, and, with the purpose of depriving a majority of the stockholders of their choice for directors of declaring himself and C.S. McNaught elected directors, and of obtaining control of the property of the corporation, refused to count or allow to be counted a large number of votes which were cast by duly qualified stockholders; that against the will of a large majority of the stockholders, and against the wish and demand of the remaining members of the canvassing board, he undertook to close such board before all the ballots were counted, and refused to further act as chairman of the meeting, declined to continue the canvass, and left the meeting; that the stockholders and directors thereupon chose a chairman pro tem., continued the meeting, and proceeded to canvass the ballots and declare the result; that thereby Newport, Crawford, Yates, Sommerer, and Skinner were elected directors; that thereafter Irvin, for the purpose of depriving the duly elected directors and officers of the control of the corporation, and hindering them from transacting business with the United States reclamation service, certified that he, McNaught, Sommerer, Crawford, and Newport had been elected directors; that about January 15, 1909, they, with the exception of Newport, held a pretended directors' meeting, and alleged to elect Irvin president, McNaught vice president, Geo. Upthegrove secretary, and F.B. Swayze treasurer; that ever since such time the defendants Irvin, McNaught, and Upthegrove have feigned to be president, vice president, and secretary, respectively, of the plaintiff company; that the defendants Crawford and Sommerer have attended the pretended directors' meetings, and have aided and assisted them in their fraudulent acts and purposes; that Upthegrove, with Irvin's help, has falsely represented to the land department and the reclamation service that he is plaintiff's secretary; that he is proceeding, and intends, to receive and collect from the stockholders of this corporation large sums of money, due from them to the corporation, for shares of stock and the assessments thereon, and will, if not prevented and restrained by order of this court, collect the same, wrongfully and without authority, to the irreparable injury of plaintiff, take from numerous persons stock subscriptions and applications for water rights, and do other things which can only lawfully be done by the duly elected and qualified secretary of the corporation; that, by reason of these false and fraudulent acts, stockholders and persons wishing to deal with the corporation are hindered, delayed, and their rights jeopardized and rendered doubtful; that plaintiff will be prevented from collecting money due from stockholders and applicants for water rights and hindered from transacting business with the United States officials, and damaged in various other matters.

The answer admits that Crawford, Sommerer, and Newport are directors, and that Swayze is treasurer, and, in effect, denies every other allegation of the complaint, except it admits that defendants are acting as officers and directors, and that they intend so to act, and to collect money and generally transact the business of the corporation. Defendants then allege that on January 9, 1909, defendants Irvin, McNaught, Crawford, Sommerer, and Newport were duly elected directors, and that Irvin, as president, declared them elected, and thereafter duly certified the result, that thereafter, on notice legally given, the defendants Irvin, Crawford, McNaught, and Sommerer met as a board of directors, and elected Swayze treasurer, and Upthegrove secretary; that they have been acting as such officers ever since; that they are the duly qualified and acting officers of the corporation; that the officers of the reclamation service, the Secretary of the Interior, and the United States Land Office at La Grande have recognized the defendants as the directors and officers of the corporation and transacted all business with them as such, and refuse to transact business with any other persons; that plaintiff has a plain, speedy, and adequate remedy at law; and that a court of equity has no jurisdiction.

R.J. Slater, for appellant.

J.P. Winter, for respondents.

McBRIDE, J. (after stating the facts as above).

Plaintiff in this case disclaims any attempt to try the title to the offices claimed by Newport, Yates, and Skinner, which for convenience we shall designate as the "Newport Board" and those claimed by Irvin and McNaught, who, with Crawford and Sommerer, their title being undisputed, we shall designate as the "Irvin Board."

It is contended that the Newport Board, with Yates as secretary, constitutes the de facto officers of the corporation, and that this suit is merely to prevent persons claiming title to these offices from interfering with them in the discharge of their duties. We are cited to several cases where persons in the actual, physical possession of an office, like a clerk's or other office of like character, have invoked the aid of equity to avoid being dispossessed. Other cases are cited where persons holding a regular certificate of election and engaged in the actual performance of the duties of an office have invoked equity to prevent a claimant from ousting them by force pending proceedings by quo warranto or otherwise. But in this case the officers, whose tenure is disputed, are not plaintiffs. No member of the Newport Board is in court for himself, asking that he be protected in his position, as director or other officer. It is the corporation that asks the aid of equity to protect it from persons who, it claims, are not properly elected, and who are alleged to be interfering with its regular or de facto officers in the discharge of their duties. Both parties admit that the same person is treasurer, and plaintiff does not allege that money collected by the Irvin Board is being appropriated to any improper purpose or to any end different from that to which it might be applied if the Newport Board had collected it. Barring the confusion of having two alleged boards of directors, each claiming authority to act for the corporation, no injury is shown to have resulted to plaintiff from defendants' claim to be the actual officers of the corporation.

The cause of the peculiar situation in which the plaintiff corporation finds itself arises primarily out of a disputed election of directors held on January 9, 1909. The plaintiff corporation is an association of landholders within the irrigation district covered by that irrigation project of the United States reclamation service known as the "Umatilla Project," and had entered into a contract with the United States for the collection and payment of all charges against its stockholders made under the federal statutes for work done by the United States in connection with its system of water supply. Under some regulation of the government assessments are made against irrigated lands by units, each unit being composed of lands in a particular locality supplied by its irrigation system and presumably organized with reference to the time when water could be supplied to that locality. The Hermiston unit was the first that the government attempted to supply with water. The reclamation authorities in the year 1908 levied an assessment of $7 per acre upon the lands embraced in the Hermiston unit, which assessment, plaintiff alleges, would become enforceable by foreclosure on the property on December 1, 1909. After this assessment had been levied by the Secretary of the Interior, and on November 10, 1908, plaintiff's board of directors levied an assessment of $7 per share on the land embraced in the Hermiston unit and declared it due and payable December 1, 1908. At the stockholders' meeting January 9, 1909, the right of the stockholders who had not paid this assessment to vote on the election of officers was challenged, and Irvin, president of the corporation, ruled that such stockholders could not vote and refused to count their ballots. An appeal was taken from this decision, and, by a vote of the meeting, it was overruled. Notwithstanding this action of the...