State ex rel. Heidenreich v. Smalley

7 Ohio C.C. 400

• Court: Ohio Circuit Courts
• Decided: January 15, 1893
• Status: Published

Opinion

Smith, J.

On the evidence submitted we find:

First. — That those of the stockholders who represented what might be called the Heidenreich party, at the meeting called to be held at 2 p. m. on Feb. 27, 1893, for the election of directors for the Harrison Water Co., had reason to, and did believe, from what took place, after all of the stockholders then in the village of Harrison had assembled at the hour named, at the place where the election was to be held, that the organization of the meeting of the stockholders and the election ot the directors were to be postponed‘until the arrival of the afternoon train from Cincinnati, due at Harrison about 3:50 p. m., on which it was understood that E. Lee Heidenrich, tbe president of the company, and who was the owner of about two-fifths of the stock of the company would arrive.

Second. — That in accordance with this understanding (the meeting having not organized for nearly one hour), Mr. 8. Lee Heidenrich, the vice-president of the company, and Mr. Miller, two of the stockholders, (and who with Mr. Matler, the secretary of the company, acting with that party, owned or held proxies for more shares of stock than were had or controlled by the Kuhn party), left the room in which the stockholders were assembled, for a temporary purpose only, expecting to be present at the meeting when the train came in. But in their absence, about 3 o’clock, the meeting was organized, a chairman appointed, and within ten or fifteen minutes, a board of directors of the Kuhn party was elected, and the meeting adjourned. When the meeting was organized, Mr. Matler the secretary, was asked by the chairman to call the two stockholders who had left the room, but he could not find them near at hand, and returned and reported the fact, but expressed the opinion that they would be in presently. The election, however, proceeded, Mr. Matler, the only person of his party present, declining to vote. When the train arrived, on time, the president, Mr. E. Lee Heidenreich, carne, and he and, the vice president, and Miller and Matler, went to the place of meeting, but found the othe party gone, with the books of the company. They then procceeded to elect a different board of directors, and the question is, whether either of these boards, and, if so, which, was legally elected.

On the facts thus found, we think neitherof the two boards was properly or legally elected. The evidence on the part of the defendants tended to show, that while there was an understanding on the part of all the stockholders present, that the organization of the meeting and the election of the directors should be delayed, that it was not agreed that it should be until the arrival of the train, but that it was claimed by Mr. Haskell, for the Kuhn party, that it must be closed up in time to allow them to return to the city by the 5:35 p. m. train, This was probably the case, but it tended, we think, to confirm the opinion of the other party, that it would be postponed until the train arrived, as the meeting and election could then have been had in time to allow Kuhn ..and his friends to return to the city. Unless this understanding was had, the conduct of Miller and S. Lee Heidenrich cán not satisfactorily be accounted for, as they would not have been likely to absent themselves from a meeting for the electihn of directors as to which they were greatly interested, when it was in their power to control the election, as matters then stood. If the Kuhn party knew that the other party were relying on this agreement, good faith required that it should be carried out. If there was a misunderstanding in regard to it, still we think in justice and fairness we should not allow the election thus held to stand. In the way in which it was done, the holders of a comparatively small minority of the stock succeeded in electing a board against the'wishes of those present at a part of the meeting, holding or controlling a larger number of shares, and who were temporarily absent, under what they understood to be an agreement on the part of all concerned for the postponement of the election to a certain hour.

Matthews & Cleveland, for relators. C. W. Baker and Haskill & Sutton, contra.

If the case came within the provisions of section 6775-6, Revised Statutes, we would order a new election; but it is questionable whether it does so. But the persons.voted for at the first election will be ousted from any claim to the office, and unless the parties agree to a new election, under the order of the court, it will be left without further order; but in our judgment the directors in office prior to and on February 27, 1893, arc until their successors are elected and qualified, the legal directors of such company.