State ex rel. Lally v. Cadigan
State ex rel. Lally v. Cadigan
Opinion of the Court
— The annual meeting of the stockholders of the New World Life Insurance Company was to be held on February 12,1918, and the defendant Cadigan, who was president of the company and one of its' trustees, held proxies for 88,698 of the 113,000 shares of the company’s capital stock. At a meeting of the board of trustees, held before the stockholders’ meeting, the question of allowing the voting of proxies by an officer of the company was discussed and acted upon. This was in pursuance of a requirement of the insurance code, which provides:
“Every domestic company shall hold an annual meeting in the month of January or February, of its
The action of the board of trustees took the form of a resolution that the officers of the company be authorized to vote proxies held by them at the annual meeting of the stockholders, but limited that authority to thirteen special matters and attempted to designate the persons to be voted for as trustees, and to prevent the voting for the removal of any of the then trustees, and limited the right of the proxy holder to vote other than as directed in the resolution, upon the question of amending the by-laws of the company. At the meeting of the stockholders, the defendant Cadigan voted the proxies held by him generally and not in accordance with the resolution, and as a result of this voting, trustees other than those named in the resolution were elected, which gave rise to this action, this being a proceeding in quo ivarrcmto to try title to certain offices of the company, the relators claiming to have been duly and legally elected by the old board of trustees, and the defendants being the officers selected by the board elected at the stockholders’ meeting in the manner referred to. The sole question presented is whether or not the defendant Cadigan legally voted the proxies held by him at the stockholders’ meeting; the relators’
Upon this question, there has been no adjudication so far as tbe diligence of counsel and this court can determine. Tbe relators claim tbat tbe situation is analogous to tbat presented where a city, in passing a franchise ordinance, inserts restrictions which it bad no right to impose, and cite decisions bolding tbat tbe public service corporation seeking tbe benefit of tbe franchise ordinance is nevertheless bound by such restrictions. Southern Bell Tel. & Tel. Co. v. Richmond, 103 Fed. 31. Also, by analogy, it is asserted, tbat the rule applying in tbe construction of statutes should be applied to tbe question at bar. Connolly v. Union Sewer Pipe Co., 184 U. S. 540. Tbat tbe resolution must be considered as a whole, and tbat if tbe trustees did not have tbe power to limit tbe manner of using tbe proxies, then tbe entire resolution must be held to be of no avail; because, without tbe limitations contained in tbe resolution, tbe board of trustees would not have passed it.
We have held in State ex rel. Lindsey v. Derbyshire, 79 Wash. 227, 140 Pac. 540, that, where tbe body of an act and tbe limiting clause are inseparably connected in purpose and substance, they cannot stand one without tbe other. It is apparent tbat tbe intention of tbe board was to dictate tbe manner of tbe use of tbe proxies.
On behalf of tbe defendants, it is claimed tbat tbe resolution should be interpreted under tbe maxim omne majus continet in se minimis; and tbat, where
In the case of Scott v. Flowers, 61 Neb. 620, 85 N. W. 857, the state constitution allowed the commitment to the reform school of children under sixteen, but the legislature of Nebraska provided for the commitment of children under eighteen- — the court held that, under the statute, commitment of those under sixteen was legal. In trade agreements, the courts have held valid so much of the agreements as the parties might lawfully make, and have disregarded those portions to which they could not lawfully agree; the agreements, being held to be divisible, were enforcible so far as valid. Lange v. Werk, 2 Ohio St. 519; Peltz v. Eichele, 62 Mo. 171; Thomas v. Miles, 3 Ohio St. 274; Smith’s Appeal, 113 Pa. St. 579, 6 Atl. 251; Mallan v. May, 11 M. & W. (Eng.) 653.
Analogy is also claimed between the situation here and that presented in cases involving the law relating to conditions, it being argued that that portion of the resolution which authorizes the voting of the proxies was in the nature of a grant, and that part which directed how the proxies should be voted was in the nature of a condition annexed to the grant, and the grant being valid but the condition invalid, the grant
Another analogy is claimed by the defendant to exist in the law of contracts, in reference to the enforcement of a contract legal in part and in part illegal.
A treatise might be written in an attempt to explain and differentiate these claimed analogous situations, but no purpose would be served thereby except to further burden the library space of the members of the bar here and yet to come. We are content to hold that the presumptions which are applicable where legislative acts are under consideration are not necessarily determinative of private rights between private individuals.
It was not the intention of the legislature, in passing the section that we have under scrutiny, that thereby it should place in the hands of the board of trustees of an insurance company the power to perpetuate itself by means of restricting the voting of proxies, or by that means to eliminate from the stockholders the ability to control the destinies of their company. The stockholder himself in giving his proxy might couple with it such directions to his representative as he might see fit and those restrictions the board of trustees could nullify, if the construction of the resolution contended for by the relators is correct, by coupling with the authority to vote the proxy the imposition of explicit directions as to the manner of so voting. It is possible ■that owners of stock might desire, as they have a right, to accompany their proxy with secret instructions to their representative as to his manner of voting their stock upon certain questions, and it could not be
The judgment will be affirmed.
Main, C. J., Parker, Mount, and Holcomb, JJ., concur.
Reference
- Full Case Name
- The State of Washington, on the Relation of Thomas A. E. Lally v. John J. Cadigan
- Status
- Published
- Syllabus
- Insurance — Companies—-Stockholder’s Meetings — Proxy Voting —Limitations—Authority oe Trustees — Statutes. Under Rem. Code, § 6059-63, providing that the trustees of an insurance company may vote to- permit an officer of the corporation to vote proxies at the annual stockholders’ meeting, a resolution of the trustees permitting such voting, but limiting the authority to- special matters and attempting to designate the persons to be voted for as trustees, is a valid authority for proxy voting by an officer, but the attempted restrictions thereon are void as beyond the authority of the trustees, and contrary to public policy and the intent of the legislature.