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for usurpation of a corporate franchise, was instituted was at one time acting as an officer of the alleged corporation, will not operate as an estoppel against the maintenance of the action by the attorney general.
Department 1. Appeal from superior court, county of Trinity. W. J. Tinnin, for appellants.
J. W. Phillbrook, Jackson Hatch, and E. C. Marshall, Atty. Gen., for respondent.
BELCHER, C. C. This is an action in the nature of quo warranto, brought in the name of the people by the attorney general, cn the information of one Fordyce Bates, to obtain a judgment that the defendants were usurping, intruding into, and unlawfully holding a certain franchise to collect tolls under a pretended wagon-road corporation. The defendants demurred to the complaint, on the ground that Fordyce Bates was one of the original organizers and owners of the wagon-road company, and was estopped from making the complaint and from denying the legitimate existence of the corporation he helped to make. The demurrer was overruled, and the defendants then answered. When the case came on for trial the plaintiff moved the court for judgment on the pleadings, and the motion was granted. The appeal is from the judgment so entered.
The complaint set forth at length the steps taken to form the sup posed corporation, and the various requirements necessary to be observed in forming such corporations under the statutes which authorized their formation, and then alleged that there was a failure to comply with the requirements of such statutes:
"That all the proceedings hereinbefore set out and referred to touching the formation, organization, and establishment of said pretended corporation were wholly fictitious and in bad faith; that nine persons did not sign said declaration of intention to organize such pretended corporation, but that a majority of the names signed thereto were signed by the persons referred to in allegation number two herein, without the knowledge or consent of such persons whose names were so signed. Said declaration of intention was never published in any newspaper at all, nor was it ever posted at all. No survey of a route was ever made by Nelson Hosmer, or anybody else, for or on behalf of said pretended corporation. No capital stock whatever was ever subscribed by anybody at all to said pretended corporation; nor was any money at all ever paid into said pretended corporation by anybody at all; nor was any number or valuation of shares of capital stock ever fixed by said pretended corporation; nor was any preliminary organization of said pretended corporation ever made or had; nor was any certificate ever filed as required by said acts; nor was any copy of the original declaration of intention, or a certificate of the election of officers and of the corporate name, filed in the county recorder's office of said county."
The complaint further alleged
"That if said pretended corporation ever did have any legal or proper standing, it became and was fully and wholly dissolved in the year 1873, upon the expiration of ten years; that defendants have, for a year last past, been using and exercising all the privileges and rights and the franchise of a corporation duly formed, organized, and established under the provisions of said acts of the legislature, and duly extended in its duration under section 401 of the Civi
Code of this state, under and by virtue of said pretended corporation, and have seized and taken possession of a public highway, duly and regularly established, * * and are collecting tolls from travelers passing over said road, and claim to be the successors in interest of those who took the steps and proceedings herein before set out and referred to; that under said pretended corporation, the franchise of a corporation legally formed, organized, and established under said acts, and extended under said section of the Civil Code, is now, and for a year last past has been, usurped, intruded into, and unlawfully held, and exercised by the defendants."
The defendants in their answer deny that the corporation named "is an illegal corporation; deny that they have at any time usurped, intruded into, or illegally held any franchise or corporation; deny that they have at any time seized or taken possession of any public highway; deny that they have collected tolls on any public highway; deny each and every allegation of the plaintiff's complaint as to the irregularity or illegality of the organization of the corporation called *; deny each and every allegation of the plaintiff's complaint as to the illegal existence of" the corporation named, "as a corporation, since the year 1873, or that it illegally existed at any time since the year 1863." They then allege that the company "is now a corporation duly, regularly, and legally organized under the laws of the state of California, and has for and during the twenty years last past, and over, continually been such corporation in good faith, and acting as such corporation, by owning, controlling, keeping in repair and collecting tolls on its wagon road, that said corporation
was duly organized in the year 1863, under the laws of the state of California, and continued under said organization until the month of June, 1877, when the owners of said corporation, its franchise and property, under and by the laws of the state of California, as they, the said laws, were in June, 1877, continued and extended the existence of the said corporation for the period of fifty years." They then allege that "they, and each of them, are part owners and officers of the said corporation, and that all acts done by them in the premises are done in obeyance of and by direction of the officers of said corporation."
It is clear that the denials found in the answer raise no issues. The first four are denials of averments in the complaint which are mere conclusions of law from the facts stated. Pom. Rem. §§ 637, 638. The last two are general denials. The answer was verified as required by the Code, (Code Civil Proc. § 446,) and in a verified answer general denials are inadmissible and may properly be stricken out. People v. Hagar, 52 Cal. 182.
The affirmative averments state conclusions of law and not facts. It is alleged simply that the corporation was duly, regularly, and legally formed, and that it has continued to act as such in good faith for more than 20 years, and that in 1877 the owners of its franchise and property, under the laws of the state, continued and extended its existence for 50 years. This is not enough. In a proceeding
like this the burden is on the defendants to show that the corporation was legally formed and that its existence has been legally extended, and to that end they must set forth in their answer the facts showing such formation and extension. High, Extr. Rem. § 712.
The defendants pleaded in bar of the action a judgment rendered by the superior court of Trinity county, in a case wherein the corporation in question was plaintiff and the board of supervisors of that county was defendant. But that was an application for a writ of mandate to compel the board of supervisors to fix the rates of tolls to be taken on the road claimed by plaintiff, and the right of the plaintiff to exercise the franchise, which it claimed could not, in that proceeding, be inquired into. Weaverville & M. W. R. Co. v. Board of Supervisors, 64 Cal. 69.
It is clear, therefore, that the judgment in that proceeding could not be a bar to this.
The defendants also alleged in their answer that "Fordyce Bates, the informant and complainant herein, is estopped from giving this information or making this complaint," for the reason that he was one of the original organizers of the company; one of its first directors and one of its first shareholders, as is shown by the complaint, and for the further reason that in 1879, 1880, and 1881 he was a member of the board of supervisors of the county of Trinity, and voted for, aided, and assisted to fix the rates of toll for said corporation on the said toll-road, and by his acts induced the defendants to believe that the company was a just and legal corporation; and that in March, 1881, he represented that he "knew the said corporation was a good corporation," and thereby induced one of the defendants to buy its franchise and property for himself and his then associate. The attorney general may commence an action like this upon his own information, or upon the complaint of a private party, and he must commence it whenever he has reason to believe that a franchise has been usurped, intruded into, or unlawfully held or exercised by any person. Code Civil Proc. § 803. The action is commenced in the interest of the public, to redress wrongs which injuriously affect the public. If the defendants have usurped and are unlawfully exercising a franchise, why should an action commenced to redress the wrong be barred because of any prior acts or misrepresentation of the informant? No case of a similar character has been called to our attention where the doctrine of estoppel has been invoked, and we fail to see how it can be invoked here. The other points need not be mentioned.
On the whole, we think the judgment and order should be affirmed.
BY THE COURT.
SEARLS, C.; FOOTE, C.
For the reasons given in the foregoing opinion.
the judgment and order are affirmed.
(67 Cal. 532)
WRIGHT v. CENTRAL CALIFORNIA WATER Co. (No. 8,445.)
Filed September 28, 1885.
1. CORPORATION-SETTING ASIDE ELECTION FOR DIRECTORS.
A proceeding to set aside an election for directors of a corporation may be instituted by a stockholder, although he has not had the stock standing in his name on the corporation books for a sufficient length of time to entitle him to vote at such election.
2. ACTION TO SET ASIDE ELECTION OF DIRECTORS OF CORPORATION-JURISDICTION OF.
An action to set aside an election of officers of a corporation, because not made in conformity with law, is within the jurisdiction of the superior court sitting as a court of equity, though such jurisdiction has not been expressly conferred on it by statute.
3. ELECTION FOR DIRECTORS OF CORPORATION-MANNER OF VOTING.
A qualified stockholder of a corporation may, at an election for directors, exercise his power of voting, by voting at one time the whole number of his shares for the whole number of directors to be elected, or to cumulate his shares by voting for one candidate for director as many votes as shall equal the number of his shares, multiplied by the number of directors to be elected, or by distributing them among as many candidates for director as he shall see fit; and where qualified stockholders are denied the right to so vote, the election is illegal and may be set aside.
Department 1. Appeal from superior court, Fresno county.
Stuart S. Wright and W. Barry, for respondent.
MCKEE, J. This was a proceeding to set aside an election for seven directors of the Central California Colony Water Company, a corporation organized and existing under the laws of this state, having a capital stock of $30,000, divided into 192 shares of stock,, of the par value of $156.25 each. It is claimed that the petitioner was not qualified to inaugurate the proceeding to set aside the election, because he was not a bona fide stockholder, having stock in his own name on the stock-books of the corporation at least 10 days prior to the election, and that the court did not find on that issue. But there was no such issue joined in the case. The petitioner merely alleged that he was a bona fide stockholder at the commencement of the proceeding. Of this allegation there was a denial; and, upon the issue raised by the denial, the court finds that the election for directors was held on the twenty-first of September, 1881, and that on the twentieth of September, the day before the election, "the petitioner became a bona fide stockholder in said corporation, and has ever since continued to be a stockholder therein, having stock in his own name upon the stock-book of the corporation." That being the fact, it may be conceded that the petitioner was not a qualified elector of the corporation, under section 312 of the Civil Code, which provides that a bona fide stockholder, having stock in his own name on the stockbooks of the corporation, at least 10 days prior to the election, is the only person entitled to vote at a corporate election. But while the petitioner may have been disqualified from voting at the election, he was not disqualified from instituting proceedings to set aside the elec
tion, if it was voidable; for, by the same section of the Code, "any absent or other stockholder" is authorized to institute such a proceeding. Therefore, as a stockholder of the corporation, the petitioner had legal capacity to institute the proceeding commenced on the twenty-ninth of September, 1881.
It is urged, however, that even if the petitioner had the capacity to sue, the proceeding was improperly commenced in the superior court, because section 312 of the Civil Code, upon which the proceeding is founded, only authorized the filing of a petition in the district court to set aside a voidable election; and as, at the time of the commencement of the proceeding, there was no district court, and no law which authorized the filing of such a petition in the superior court, the proceeding was improperly commenced in the superior court. The constitution of 1879 abolished the district court, but at the same time it created the superior court, and conferred upon it the same equity jurisdiction which had been formerly conferred upon and was exercised by the district court. Sitting as a court of equity, therefore, the superior court had jurisdiction to inquire into the validity of an election and to set it aside, if it had not been made in conformity to law, whether the statute conferred it or not. Brown v. Pacific M. S. Co., 5 Blatchf. 525; Walker v. Devereaux, 4 Paige, 225; Webb v. Ridgely, 38 Md. 364. The abolition of the district court did not destroy or affect the right to invalidate a voidable election. The remedy still existed in favor of any one aggrieved, and was enforceable by him in any court of competent jurisdiction of the subject-matter.
It is next claimed that the election was valid, and that the court erred in holding it to be invalid. According to the finding of the court, the election was called "pursuant to a notice which was, in all respects, published according to law;" and at the proper time and place for holding the election, a majority of stockholders of the subscribed capital stock of the corporation met and organized and proceeded to elect seven directors. The records of the election show:
"After some discussion, the following motion was made and seconded: That the stockholders of the Central California Colony Water Company proceed to the election of officers of the said Central California Colony Water Company in the manner provided in the constitution of said company. Carried, 62 to 10."
And the court finds that the manner of conducting the election was this:
"That, prior to taking any vote in said election, the majority of said stockholders adopted a resolution to the following effect: That seven (7) ballots should be taken for directors; that each stockholder should vote on each of said ballots for one person, and no more; and that the person receiving the majority of the votes cast on each ballot should be declared elected director for the ensuing year."
In this way seven separate ballots were taken in succession, and on each ballot the candidate receiving the highest number of the votes cast was declared a director, until seven directors were chosen.