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In re Election of Directors of New York and Westchester Town Site Co.

Supreme Court of New York, Appellate Division

June 29, 1911

In the Matter of the Election of Directors of the NEW YORK AND WESTCHESTER TOWN SITE COMPANY. ROBERT E. ROBINSON and Others, Petitioners, Respondents, Appellants; JACOB LEITNER and Others, Respondents, Appellants. (Appeal No. 1.)

Page 624

APPEAL by Jacob Leitner and others from an order of the Supreme Court, made at the Westchester Special Term and entered in the office of the clerk of the county of Westchester on the 9th day of February, 1911, resettling an order entered on the 2d day of February, 1911, setting aside an election of directors of the New York and Westchester Town Site Company.

And also an appeal by the petitioners, Robert E. Robinson and others, from part of the said order, entered on the 2d day of February, 1911, as resettled, denying certain of the relief prayed for in the petition.

COUNSEL

R. Floyd Clarke [Robert R. Reed with him on the brief], for the petitioners.

George S. Graham [J. Addison Young with him on the brief], for the appellants Jacob Leitner and others.

OPINION

BURR, J.:

This is a special proceeding brought under section 32 of the General Corporation Law (Consol. Laws, chap. 23; Laws of 1909, chap. 28) to review an election for directors of the New York and Westchester Town Site Company. The defendants appeal from an order made February ninth, which resettled an order of February 2, 1911, which set aside an election held October 17, 1910, and ordered a new election. The petitioners appeal, both from the order of February ninth resettling the order of February second, and from the order of February second, as resettled, in so far as, first, it refuses to declare petitioners to be the lawfully elected board of directors of the company; second, refuses to enjoin the individual defendants from acting as directors or officers thereof and to compel them to turn over to petitioners the books, seal and other corporate property under their control; third, fixes the date for determining the qualification of voters at the new election as February 28, 1911; fourth, inserts in the order a provision that at such new election all stock may be voted which was entitled to vote on February twenty-eighth; fifth, refuses generally to restrain the defendant directors and the officers from acting, and, sixth, provides that nothing shall be taken to adjudicate the question

Page 625

of the validity of stock held by the Nassau Securities and Holding Company.

It may be doubted whether defendants' appeal brings up anything for review. It is not from the order of February second, which fixed and determined the rights of the parties, but from an order of February ninth, which corrected the form thereof. Petitioners' notice of appeal is in proper form. It is from the order of February second as resettled by the later order. But inasmuch as the point was not raised upon the argument of the case, and the power to amend a defective notice of appeal now exists, we have concluded to consider defendants' appeal upon the merits.

The New York and Westchester Town Site Company was incorporated October 21, 1905, for the purpose of dealing in real estate. On April 15, 1908, its board of directors made a call for payment on account of subscriptions to the capital stock. Such payment was to be made in four installments, on June 15, September 15, December 15, 1908, and March 15, 1909, respectively. Notice of this call was sent by mail to the stockholders on April 23, 1908. Palmer, Ferren and Pryer, three of the subscribers, failed to respond to the call. On July 8, 1908, three of the members of the board of directors concurred in a resolution directing the counsel of the company to take steps to forfeit the stock of delinquent subscribers and stockholders, and directing the secretary of the company to 'sign and serve upon, or mail to, each such stockholder such notice as should be prepared for him by Counsel for the Company.' On July fourteenth a notice was sent to each stockholder referring to the action of the board on April fifteenth, and to the mailing of the notice of call for payment of subscriptions on April twenty-third. This notice also contained a recital that the parties to whom the notice had been sent had made default in the payment due June fifteenth, and notified them that unless such installment was paid at the office of the company 'within sixty days from the service of this notice,' the stock and all previous payments thereon would be forfeited. This notice was subscribed 'By Order of the Board of Directors, L. D. Maltbie, Secretary.' It does not appear that Palmer,

Page 626

Ferren or Pryer paid any attention to this notice. On September 14, 1908, at a meeting of the board of directors, a resolution was adopted which recited the fact of the calls, that sundry stockholders had failed to pay the first installment due June 15, 1908; that under direction of the board statutory notice had been sent to each delinquent that, unless said installment was paid on or before sixty days from date, their stock would be forfeited, and that due proof of proper service of such notice had been made upon Harry Ferren owning 6,900 shares; M. J. Kraus, 1,100 shares; Jacob Leitner, 6,375 shares; Owen T. Palmer, 25,000 shares, and Charles Pryer, 2,000 shares. The resolution thereupon provided that the shares of stock standing in the names of the foregoing persons should be and the same were thereby forfeited to the company. Notice of the passage of this resolution was served upon Ferren, Palmer and Pryer. It does not appear that either of these persons paid any attention to it. In 1910 efforts seem to have been made by the stockholders who had responded to the calls to put the company on its feet, and at the election for directors in October of that year there was a fierce struggle for the control of the board. At this election 17,580 votes were cast for the individual defendants other than Ralph P. Buell as directors, and also for one George S. Graham. Graham subsequently resigned, and defendant Buell was elected in his stead. Five hundred and eighty-four undisputed votes were cast ...


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