In re the Election of Directors of Westchester Trust Co.

Majority

p. 856

In the Matter of the Election of Directors of the Westchester Trust Company, Respondent.

Second Department,

July 24, 1906.

Headnote

Corporation—resolution reducing number of directors—when filing thereof sufficient to validate election of directors.

A resolution of 'stockholders reducing the number of directors, if filed as required by section 31 of the Stock Corporation Law, relates back so as to validate the resolution from the date thereof. Thus, when at the same meeting the number of directors was reduced and vacancies filled by election, a person receiving the lowest number of votes and excluded from office because the quota of directors is filled by others having a larger vote, cannot assert a right to office on the theory that the resolution reducing the number of directors was not then on file, if in fact it was filed before his proceeding to assert his claim to office.

Appeal by the petitioner from an order of the Supreme Court, made at thé Westchester Special Term and entered in the office of the clerk of the county of Westchester on the 7th day of May, 1906, denying the application of the petitioner to review an election of directors of the Westchester Trust Company and to establish his election as a director.

Gerard B. Townsend, for the appellant.

Ralph Earl Prime, Jr., for the respondent.

The established number of directors of the corporation was 25, but the number in office had fallen to 21 by resignations. At the annual meeting of the stockholders in 1906 they voted, pursuant to notice, and previous consent thereto of the superintendent of banks, to reduce the number to 20, and to elect only 7 at the annual election on that day, viz., 5 for three years and 2 for two years. At the election 6 were voted for for the three years’ term, of whom the petitioner was one. His vote being the smallest, the inspectors reported the other five elected, and that result was declared.

The petitioner’s claim is that although the stockholders had on that same day before the election duly reduced the number of directors, their resolution had not yet gone into effect at the elec

p. 857

tion for lack of a transcript _of the proceedings of their meeting having been tiled, as required by section 21 of the Stock Corporation Law (Laws of 1892, chap. 688, as amd. by Laws of 1905, chap. 750), in the office where the original certificate of incorporation of the company was filed. On that basis he would be elected for except for the reduction more than 5 directors were due to be elected in the three years’ class.

The transcript was filed in ten days and before this proceeding was begun. The act of reduction had therefore taken effect. It is true that the act of reduction is not complete and does not take effect until such filing (Matter of Dolgeville Elec. L. & P. Co., 160 N. Y. 500 ); but the filing relates back to the meeting of the stockholders and makes the act or resolution of reduction effective. The case cited above is not contrary to this. There the transcript was never filed, and therefore the directors who had been dropped by the reduction were still in office, from which it followed, as the court held, that the petition for a voluntary dissolution was not signed by a majority of the directors, and failed to confer jurisdiction on the Supreme Court. In this case the resolution of reduction was operative when this proceeding was begun.

The order should be affirmed.

Hirschberg, P. J., Hooker, Eioh and Hiller, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.

Cases cited

In re the Application for a Voluntary Dissolution of the Dolgeville Electric Light & Power Co. 160 N. Y. 500 N.Y. 1899-11-21 p. 857