State ex rel. Starkey v. Alaska Airlines, Inc.

413 P.2d 363, 68 Wash. 2d 337, 1966 Wash. LEXIS 740
CourtWashington Supreme Court
DecidedApril 7, 1966
DocketNo. 37452
StatusPublished

This text of 413 P.2d 363 (State ex rel. Starkey v. Alaska Airlines, Inc.) is published on Counsel Stack Legal Research, covering Washington 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. Starkey v. Alaska Airlines, Inc., 413 P.2d 363, 68 Wash. 2d 337, 1966 Wash. LEXIS 740 (Wash. 1966).

Opinions

Donworth, J.

This is a mandamus action brought by a director-elect of the defendant corporation to require it to allow him to inspect its books and records, to copy them, and for “such other relief as the court may deem just.” The trial court ordered the defendant, Alaska Airlines, Inc., to allow the relator to inspect and copy the corporation books or records, and to admit him to the directorship to which [339]*339he was admittedly elected in August, 1963. Alaska Airlines, Inc., has appealed.

This case arose out of the struggle of the majority shareholder faction, controlled by the incumbent management of the airline, to deny the minority shareholder faction any representation on the board of directors of the airline.

The dispute arose in the following manner. In 1963, Ralph W. Starkey (respondent relator), Raymond W. Marshall, Homer W. Robinson, and Frank LaGrange, each of whom was a minority shareholder and previously interested in the corporation’s affairs, solicited proxies sufficient to elect 3 of the 11 directors at the annual shareholders’ meeting scheduled to be held in Seattle on August 6, 1963.

On the morning of August 6, 1963, the shareholders’ meeting was convened in Seattle at the principal office of the company, and certain preliminary management speeches and entertainment were presented. However, no business was transacted before the minority shareholder faction was served with an ex parte temporary restraining order from the local federal district court which forbade the minority faction to vote its proxies on the ground that the solicitation material had violated regulations of the Securities and Exchange Commission of the federal government. The allegations of the complaint were read to the assembled shareholders after which the shareholder meeting was adjourned until August 20, 1963.

The minority shareholder faction protested in federal court concerning the lack of grounds for the complaint and the reading of the complaint before the shareholders’ meeting, followed by the postponement of the meeting for 2 weeks. They argued that the delay, coupled with the reading of the complaint at the shareholders’ meeting, gave the majority shareholder faction an additional 2 weeks within which to try to weaken the position of the minority faction by further proxy solicitation prior to the election. After several hearings in the federal court, the complaint was dismissed by stipulation of the parties, and the reconvened shareholders’ meeting of August 20, 1963, was held.

[340]*340The minority group retained their proxy strength and elected Starkey, Robinson, and Marshall as directors on August 20, 1963. They were certified as elected on August 23, .1963.

However, on August 20, 1963, after the election of directors was held, the incumbent board of directors (which did not include Starkey, Marshall, or Robinson) met and amended the corporate bylaws to provide that a qualification for a director was that he must not be in violation of the Federal Aviation Act, § 409(a), now codified as 49 U.S.C. § 1379, and hereinafter designated as § 409 (a). This amendment of the bylaws further provided that the previously existing board of directors must meet to make prima facie findings as to the qualifications of all directors just elected with respect to § 409(a). This statutory provision is designed to prevent “interlocking relationships” among air carriers and the aircraft industry.

Following the directors’ meeting held August 20, 1963, no further meeting was held until October 17, 1963, at which time the prior board of directors met in New York City and determined that Starkey, Marshall, and Robinson were prima facie in violation of § 409(a) and must obtain the approval of the Civil Aeronautics Board in order to qualify as directors under the new bylaw relating to violation of § 409(a). None of the directors-elect were advised of this meeting. The prior board of directors immediately called another board meeting to be held October 28, 1963, in Fairbanks, Alaska. Although Starkey, Marshall, and Robinson had not received notice of the October 17, 1963 meeting in New York, they were later notified of the action taken at that meeting, and were notified of the meeting scheduled for October 28, 1963, in Fairbanks.

A few days after the certification of the results of th.e election held August 20,1963, the application for an alternative writ of mandamus and order to show cause was filed by Starkey in the Superior Court for King County. Due to various delays, mostly on the motion of the corporation, the matter was not heard at trial until October 22, 1963. The trial consumed 3 days, after which the trial court, on the [341]*341morning of October 25. 1963, orally granted the peremptory writ of mandamus. November 5, 1963, the trial court signed the written order of mandamus, which provided (1) that Starkey was entitled, and must be allowed, to inspect all corporate books and records, and (2) that he was entitled to, 'and must be given, all the rights and privileges of a duly elected director of Alaska Airlines, Inc. The corporation has appealed only from that portion of the order giving Starkey the rights and privileges of a director. The trial court granted supersedeas as to that portion of the order. Therefore, Starkey has not been treated as a director, but only as a shareholder, pending the result of this appeal.

It has been argued by appellant, Alaska Airlines, Inc., that this case is now moot, because (1) the minority shareholders can no longer elect directors because of a change of bylaws of Alaska Airlines, Inc., and (2) because Starkey is not currently entitled to sit as a director because he was not elected as a director at the August, 1965 shareholders’ meeting.

In State ex rel. Starkey v. Alaska Airlines, Inc., cause No. 37933, which was heard on appeal at the same time as this case now before the court, we decided that Starkey still has the right to vote his shares cumulatively. That decision is published ante, at p. 318, 413 P.2d 352 (1966).

Starkey was not elected in the August, 1965, shareholders’ election of directors. This fact was disclosed at the time of reargument (second oral argument) before the court en banc. However, that does not mean that no controversy exists in this case between these parties. It would have been a useless act for him to have tried to be elected at that meeting because the 1965 annual shareholders’ meeting was controlled by the majority shareholder faction, and only direct voting of shares would have been permitted, in view of the mistaken belief of the management that a valid bylaw had been adopted by the board of directors in June, 1964, which permitted only direct voting of shares. The vote for the directors who were elected at the 1965 annual meeting indicates that no shares previously controlled by the minority faction have come under the control of the majority faction.

[342]*342It is reasonable at this time to assume that at the August, 1966, annual meeting the minority shareholder faction will endeavor to elect two directors using the cumulative voting method.

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Related

Far East Conference v. United States
342 U.S. 570 (Supreme Court, 1952)
Pan American World Airways, Inc. v. United States
371 U.S. 296 (Supreme Court, 1963)
State Ex Rel. Starkey v. Alaska Airlines, Inc.
413 P.2d 352 (Washington Supreme Court, 1966)

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Bluebook (online)
413 P.2d 363, 68 Wash. 2d 337, 1966 Wash. LEXIS 740, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-starkey-v-alaska-airlines-inc-wash-1966.