Salgo v. Matthews

497 S.W.2d 620, 1973 Tex. App. LEXIS 2151
CourtCourt of Appeals of Texas
DecidedMay 17, 1973
Docket18094, 18117
StatusPublished
Cited by25 cases

This text of 497 S.W.2d 620 (Salgo v. Matthews) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Salgo v. Matthews, 497 S.W.2d 620, 1973 Tex. App. LEXIS 2151 (Tex. Ct. App. 1973).

Opinions

GUITTARD, Justice.

This equitable proceeding involves a proxy contest for control of General Electrodynamics Corporation, a Texas corporation. Stockholders Joe W. Matthews and Paul Thorp, representing the faction opposed to current management, sought the aid of the district court in requiring the president, as chairman of the stockholders’ meeting, and the election inspector appointed by him, to accept certain disputed proxies, count the votes of the stockholders cast under these proxies, and declare that the candidates supported by plaintiffs had been elected directors of the corporation. We hold that the court erred in granting in-junctive relief, both temporary and final, in absence of any showing that plaintiffs could not have obtained adequate relief by the statutory remedy of quo warranto after the completion of the election.

Facts

The facts are substantially without dispute. Although defendants, as appellants here, have challenged many of the trial court’s findings of fact, none of these challenges appears to be material to this appeal, and we take our statement of the facts from the findings, although we do not accept all of the court’s inferences and conclusions.

Before the special stockholders’ meeting, proxies had been solicited on behalf of management for a slate of candidates for the board of directors, consisting of the president, defendant Francis Salgo, and four others, and also by an opposing faction for a slate composed of plaintiff Joe Matthews and four others. The meeting was convened on the afternoon of November 8, 1972. Defendant Salgo, acting as chairman of the meeting, appointed defendant Julian Meer, an attorney, as election inspector. Plaintiffs have never denied his authority to act in that capacity, although they question the extent of his authority. The chairman opened the polls and plaintiffs tendered their proxies and ballots to the inspector for examination and tabulation. Before the tabulation was complete a motion was made and carried to adjourn the meeting, but the court found this adjournment to be only a temporary recess. After the recess was called, examination and tabulation of the proxies continued for several hours until discontinued by agreement and was resumed the following morning, November 9. In the course of this process, plaintiffs presented to defendant Meer four proxy documents purporting to have been executed in plaintiffs’ favor on behalf of Pioneer Casualty Company, the registered owner of 29,934 shares of stock. Beneficial title to these shares had been transferred to Don Shepherd, who was in bankruptcy, and two of the [623]*623proxy documents were signed, “Pioneer Casualty Company By Don Shepherd.” Plaintiffs also presented to the inspector an order of the 126th District Court of Travis County, Texas, directing Tom I. McFarling as receiver of Pioneer Casualty Company to give Shepherd a proxy to vote these shares by giving his proxy to plaintiffs Matthews and Thorp, and plaintiffs also presented a proxy document signed by the receiver in accordance with this order. Defendant Meer refused to accept any of these proxies, and their validity is the principal matter in controversy. Defendant Meer also refused to accept two telegraphic proxies aggregating 5,000 shares from stockholders Candis and Wrobliske when plaintiff Thorp presented them to him on the afternoon of November 9.

Examination and tabulation of the proxies and ballots continued until late on November 9, when defendant Meer signed a certificate, which the court found not to be a final and official certificate of the result of the election. On November 10 plaintiffs sought and obtained from the district court an ex parte order temporarily restraining defendants Salgo and Meer from soliciting or accepting any additional proxies or votes, from refusing to accept and count the disputed proxies and ballots, from refusing to close the polls, and from certifying the vote count until the validity of the questioned votes had been determined by the court. The same relief was granted in the form of a temporary injunction on November 13, after hearing both factions.

The cause came on for trial before the court without a jury on December 4, and on December 26 the court issued a final decree ordering defendant Salgo to reconvene the stockholders’ meeting before the court on January 15, 1973, for the sole purpose of declaring plaintiff Matthews and the other nonmanagement candidates elected as directors of the corporation and for the purpose of entertaining a motion to adjourn the meeting sine die. The decree recites findings, later repeated in the court’s formal findings of fact, to the effect that the disputed proxies of Pioneer, Candis and Wrobliske were duly executed and timely presented to the election inspector, that he should have accepted them, and that when so accepted and the votes under them counted, the result of the voting was to elect plaintiff Matthews and the other candidates of the nonmanagement slate as directors of the corporation. The court further found that the mathematical accuracy of the count and tabulation of proxies by defendant Meer as election inspector was conceded by all parties. According to that tabulation, if the votes of the Pioneer Casualty Company shares and also of the Candis and Wrobliske shares were voted in favor of the nonmanagement candidates, they were elected, but if either the Pioneer votes or the Candis and Wrobliske votes were rejected, then defendant Salgo and the pro-management candidates were elected.

The court’s findings also show that in conformity with the final decree, defendant Salgo did on the morning of January 15, 1973, reconvene the meeting in open court and did formally announce the results of the election as ordered by the court, and that the meeting was then adjourned sine die.

Defendants Salgo and Meer have appealed from both temporary injunction and final decree. We advanced submission of the appeal from the final decree and have heard both appeals together.

Adequacy of relief by quo warranto

Our question is whether the court was justified in intervening in the elective process or whether plaintiffs had an adequate remedy by quo warranto under Vernon’s Tex.Rev.Civ.Stat.Ann. arts. 6253 and 6257 (1970).1 Defendants contend that the [624]*624injunctive relief granted, both temporary and final, was improper because plaintiffs have not shown that the statutory remedy was inadequate. We agree. The court’s findings on the necessity of extraordinary relief are as follows:

“72. Unless controlled by this court, Defendants wrongfully would have caused an election and vote upon stockholder proposals favorable to management to have been concluded based upon an inaccurate vote count contrary to the expressed intention of a majority of stockholders who were present in person and by proxy and voting at said meeting, thereby depriving said Plaintiffs and said stockholders of their property right to vote their shares at said meeting in conformity with their final intent and decision and further depriving said, stockholders of their right to have management chosen by a majority vote of stockholders control the affairs of GEC from and after the said meeting, all of which constitutes irreparable injury to said parties and against none of which do Plaintiffs and stockholders have an adequate remedy at law.”
“75.

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Bluebook (online)
497 S.W.2d 620, 1973 Tex. App. LEXIS 2151, Counsel Stack Legal Research, https://law.counselstack.com/opinion/salgo-v-matthews-texapp-1973.