Petitioners, who are husband and wife, as members of the FDR-Woodrow Wilson Democrats, Inc., a membership corporation, seek an order to void the election of directors at a meeting held on March 20, 1968.
In essence, the application is based on these contentions: (1) that, by statute, as supplemented by the corporate by-laws, directors may be elected only at a duly called membership meeting; (2) that the meeting called for March 20, 1968 was not duly called; and (3) that consequently the election of directors thereat is void.
The corporation, as its name suggests, is a political club, with centered activity in upper West Side Manhattan. It has approximately 1,150 members and its meetings are well attended. The March 20, 1968 meeting, the validity of which is in dispute, was attended by approximately 150 to 250 members.
Pursuant to sections 20 and 42 of the Membership Corporations Law, the club adopted by-laws. These by-laws provide for an "annual meeting" in February and for "other meetings" at least once per month. At least seven days' written notice to all members is required for the "annual meeting", and at least five days' written notice is required for "other meetings". The officers of the club and members at large of a board of directors are required to be elected at the "annual meeting".
In accordance with these by-laws, an annual meeting of the members was duly called for February 28, 1968, for the election of officers and of members at large of the board of directors. At this meeting, due to unanticipated other business, the election of directors was not reached. The minutes record that, "After sometime, when it became apparent that no report was forthcoming from the proxy committee, David Kornbluh introduced a resolution recessing the meeting and empowering the executive board [obviously meaning the Board of Directors] to set a date for continuing this meeting no later than three weeks from today's date. The motion passed."
On March 14, 1968, there was a regular meeting of the Club, which apparently was very well attended.
On March 15, 1968, the president and the secretary of the club served five days' notice by mail of an "Annual Membership Meeting" to be held on "March 20, 1968." This notice reads in part as follows:
"FDR-WOODROW WILSON DEMOCRATS INC.
Annual Membership Meeting
Wednesday, March 20, 1968 -- 8:30 p.m.
(This is a continuation of the annual membership meeting that was recessed on February 28, 1968.) Date for continuing was set by Board of Directors as per resolution passed at that meeting.)" It was at this meeting of March 20, 1968, that the challenged election of directors was had.
The provisions of section 22 of the General Corporation Law are applicable where there is a claimed failure to elect directors of a membership corporation (cf. Matter of Atwater, 85 N. Y. S. 2d 738; see General Corporation Law, § 6). Section 22 of the General Corporation Law, as here pertinent, provides: "If the election has not been held on the day designated, the directors shall call a meeting forthwith for the election of directors, giving notice thereof as provided in respect of the annual meeting." It was, therefore, incumbent on the Board of Directors -- since the election here involved had "not been held on the day designated" (General Corporation Law, § 22) -- to call a meeting, "giving notice thereof as provided in respect of the annual meeting" (id.) The club's by-laws provide for at least seven days' written notice for the annual meeting. Only five days' notice was given. The notice, therefore, failed to comply with section 22 of the General Corporation Law and with the club's own by-laws, both of which must be given effect together.
The meeting of March 20, 1968, was not an "other meeting," for which only five days' notice would have been sufficient. Indeed, the instant notice plainly states that it is an "Annual Membership Meeting" and that it is "a continuation of the annual membership ...