State ex rel. Dewey Portland Cement Co. v. O'Brien

96 S.E.2d 171, 142 W. Va. 451, 1956 W. Va. LEXIS 70
CourtWest Virginia Supreme Court
DecidedDecember 22, 1956
DocketNo. 10845
StatusPublished
Cited by16 cases

This text of 96 S.E.2d 171 (State ex rel. Dewey Portland Cement Co. v. O'Brien) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Dewey Portland Cement Co. v. O'Brien, 96 S.E.2d 171, 142 W. Va. 451, 1956 W. Va. LEXIS 70 (W. Va. 1956).

Opinions

Browning, President :

Relator, Dewey Portland Cement Company, seeks in this original proceeding in mandamus to compel the respondent, D. Pitt O’Brien, Secretary of State of West Virginia, to receive a certificate of amendment executed by relator’s president, to issue his certificate reciting the resolution set forth in the certificate of amendment and to declare the amendments to the charter, increasing the authorized capital stock as set forth in the certificate of amendment, to be authorized by law.

Relator alleges its incorporation under the laws of the State of West Virginia, on November 19, 1906, and five subsequent amendments to its certificate of incorporation, the last of which, on July 1, 1937, authorized a total capital stock of $12,000,000.00 divided into 800,000 shares of common stock, of a single class of the par value of $15.00 per share. Relator then alleges a meeting of its stockholders on August 27, 1956, at which time, more than 66% of the outstanding common stock, the only class relator is authorized to issue, being represented by the holders thereof either in person or by proxy, a •resolution was unanimously adopted authorizing the amendment of relator’s charter to permit an increase in [453]*453the authorized capital stock from $12,000,000.00 to $15,-000,000.00, and, instead of being divided into 800,000 shares of a single class of the par value of $15.00, dividing the common stock into two classes: (1) 1,850,000 shares of Class “A” common stock of the par value of $7.50; and (2) 650,000 shares of Class “B” common stock of the par value of $7.50, all voting rights, except in instances not here pertinent, to be vested exclusively in the holders of Class “B” common stock.

This resolution, duly certified by the president of relator, was tendered to the respondent, with the proper fees, who refused to accept and file such, or to take any action in regard thereto.

On petition of relator, this Court issued a rule to show cause why a peremptory writ of mandamus should not be awarded against the respondent commanding that he perform the requested acts, returnable September 25, 1956, at which time the respondent appeared and demurred to the petition on the ground that Sections 22 and 66 of Article 1, Chapter 31 of the West Virginia Code, in so far as they authorize the issuance of nonvoting stock by a corporation, are unconstitutional in that they contravene the plain mandate of Article XI, Section 4 of the West Virginia Constitution.

The pertinent statutory provisions provide as follows:

Code, 31-1-22: “Every corporation, other than a banking institution, shall have power to issue one or more classes of stock or one or more series of stock within any class thereof, any or all of which classes may be of stock with par value or stock without par value, with such voting powers, full or limited, or without voting powers and in such series and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the charter # * 99
Code, 31-1-66: “In all elections of directors of corporations each stockholder shall have the right to cast one. [454]*454vote for each share of stock owned by him and entitled to a vote, * * *; and on any other question to be determined by a vote of shares at any meeting of stockholders each stockholder shall be entitled to one vote for each share of stock owned by him and entitled to a vote, * * * »

Article XI, Section 4, of the Constitution of West Virginia provides: “The Legislature shall provide by law that in all elections for directors or managers of incorporated companies, every stockholder shall have the right to vote, in person or by proxy, for the number of shares of stock owned by him, for as many persons as there are directors or managers to be elected, or to cumu-late said shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares of stock, shall equal, or to distribute them on the same principle among as many candidates as he shall think fit: and such directors or managers shall not be elected in any other manner.”

By his demurrer to the petition of the relator, the respondent admits all of the facts well pleaded therein. Code, 31-1-22, authorizes' every corporation, except a banking institution, to issue nonvoting stock such as the Class “A” common stock which, by the amendment to its charter, the relator seeks to issue. Mandamus is a proper proceeding to compel an administrative officer to perform a duty clearly imposed by a valid statute. Thus the issue is squarely presented as to whether the portions of Code, 31-1-22, and 31-1-66, pertaining to the issuance of stock by a corporation, which denies to the owner of shares of such stock the right to vote at stockholders’ meetings for the election of directors or managers of such corporation, is in conflict with Article XI, Section 4, of the Constitution. The respondent contends that the pertinent provisions of Article XI, Section 4, of the Constitution of this State, are plain and unambiguous and not subject to interpretation or construction. The relator says that Section 4 is ambiguous, and that any doubt as to the validity of the pertinent statutes [455]*455should be resolved in favor of their constitutionality because of the legislative and administrative construction of Article XI, Section 4, over a period of many years.

At common law, each stockholder in a private corporation had but one vote at a stockholders’ meeting, no matter how many shares of stock he owned. Fletcher, Cyclopedia on Law of Private Corporations, 1931, Section 2045. The Legislature of the several states at an early date began to give consideration to this question, and provisions relative to it were later incorporated in some state Constitutions. As early as 1836, the Virginia General Assembly was considering the matter, and in the revised Code of 1849, Chapter 57, Section 10, it was provided that: “In a meeting of stockholders, each stockholder may, in person or by proxy, give the following vote on whatever stock he may hold in the same right, to-wit: one vote for each share of such stock not exceeding twenty, one vote for every two shares exceeding twenty and not exceeding two hundred, one vote for every five shares exceeding two hundred and not exceeding five hundred, and one vote for every ten shares exceeding five hundred.”

By the Code of 1860, Chapter 57, Section 10, the prior Act was reenacted to give “one vote for each share of such stock not exceeding ten,' and one vote for every four shares exceeding ten.” At the first session of the Legislature of this State, by Chapter 83, Section 22, Acts of the Legislature, 1863, the rule was again changed to provide for “one vote for every share of stock not exceeding one hundred; and one vote for every four shares exceeding one hundred.” The Code of 1868, Chapter 53, Section 44, provided that there should be “one vote for every share of stock held in such company.”

Reverting to the Acts of 1864, Chapter 43, we find the first action by the Legislature of this State permitting the stockholders of a corporation to issue more than one type of stock. Therein it was provided that: “The stockholders of any corporation now existing in this state, or which may be hereafter formed therein pur[456]

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Bluebook (online)
96 S.E.2d 171, 142 W. Va. 451, 1956 W. Va. LEXIS 70, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-dewey-portland-cement-co-v-obrien-wva-1956.