Looker v. Maynard

This was an information in the nature of a quo warranto, filed August 1, 1896, in the supreme court of the state of Michigan, by Fred A. Maynard, attorney general of the state, at the relation of Joseph W. Dusenbury and Will J. Dusenbury, against Oscar R. Looker, Charles A. Kent, Will S. Green, William A. Moore, Louis H. Chamberlain, William C. Colburn, Benjamin J. Conrad, John J. Mooney and Michael J. Mooney, to try the rights of the defendants and of the relators respectively to the offices of members of the board of directors of the Michigan Mutual Life Insurance Company. The right to those offices was claimed by the defendants under the original articles of association of the company, under the general laws of Michigan; and by the relators under a statute subsequently enacted by the legislature of the State, which the defendants contended to be unconstitutional and void as impairing the obligation of the contract made between the state and the corporation by its original organization.

The Constitution of Michigan adopted in 1850, art. 15, § 1, is as follows: 'Corporations may be formed under general laws, but shall not be created by special act, except for municipal purposes. All laws passed pursuant to this section may be amended, altered, or repealed.' 1 Charters and Constitutions, 1008.

The general law of Michigan of March 30, 1869, entitled 'An Act in Relation to Life Insurance Companies Transacting Business within this State,' contained the following provisions:

By § 1 'any number of persons not less than thirteen may associate together and form an incorporated company for the purpose of making insurance upon the lives of individuals, and every insurance pertaining thereto, and to grant, purchase, and dispose of annuities.'

By § 2 'the persons so associating shall subscribe articles of association, which shall contain. . . 4. The manner in which the corporate powers are to be exercised, the number of directors and other officers, and the manner of electing the same, and how many of the directors shall constitute a quorum, and the manner of filling all vacancies. . . . 7. Any terms and conditions of membership therein, which the corporators may have agreed upon, and which they may deem important to have set forth in such articles.'

By § 5 'the articles of association shall be submitted to the attorney general for his examination, and, if found by him to be in compliance with this act, he shall so certify to the secretary of state.' Stat. 1869, No. 77; 1 Laws of Michigan of 1869, p. 124.

Under that statute the Michigan Mutual Life Insurance Company was duly organized July 3, 1870, with articles of association, the fourth of which provided as follows:

'The corporate powers of the company shall be exercised by a board of directors, which shall consist of twenty-one members, which may be increased at the option of the board to not more than forty. The first meeting for the election of directors shall be called by the present officers, and held as soon as practicable after these articles shall take effect. No person shall be eligible who is not owner of at least ten shares of the guarantee capital of the company, and at least two thirds of the directors shall be residents of the state of Michigan. The board, at their first meeting, shall divide themselves by lot into three equal classes, as near as may be, whose terms of office shall expire at the end of one, two, and three years respectively, and thereafter one third of the directors shall be chosen annually for the class whose term then expires, who shall hold office for three years or until their successors are elected; but the first board of directors, whose terms shall not have expired previous to the last Tuesday in January, shall continue in office until the last Tuesday in January following. The election of directors shall be had at the annual meeting of the company, which shall be held on the last Tuesday in January, at the office of the company in Detroit. They shall be chosen by ballot, and a majority of all the votes cast shall elect. Every shareholder shall be entitled to one vote for directors for every share of guarantee capital standing in his name on the books of the company, and may vote in person or by proxy. And every policy holder insured in this company for the period of his natural life in the sum of not less than $5,000 shall also be entitled to one vote in the annual election of directors, which vote must be given in person.'

In 1885 the legislature of Michigan passed an act entitled 'An Act to Secure the Minority of Stockholders, in Corporations Organized under General Laws, the Power of Electing a Representative Membership in Boards of Directors,' the 1st section of which provided as follows: 'In all elections for directors of any corporation organized under any general law of this state, other than municipal, every stockholder shall have the right to vote, in person or by proxy, the number of shares of stock owned by him for as many persons as there may be directors to be elected; or to cumulate said shares, and give one candidate as many votes as will equal the number of directors multiplied by the number of shares of his stock; or to distribute them on the same principles among as many candidates as he shall think fit. All such corporations shall elect their directors annually, and the entire number of directors shall be balloted for at one and the same time, and not separately.' Stat. 1885, chap. 112; Public Acts of 1885, p. 116.

Directors were elected in accordance with the articles of association until the annual meeting of January 28, 1896, when, the whole number of directors being twenty-seven, of whom nine were elected annually, the whole number of votes for directors was 4893; the nine defendants received 3655 votes each; and Joseph W. Dusenbury, representing in his own right or by proxy 1238 shares, undertook, under the statute of 1885, to multiply the number of his shares by nine making the number 11,142, and, dividing this number equally, cast 5571 votes for himself and 5571 and Will J. Dusenbury; and, if his claim had been allowed, they two, the relators in this case, would have been elected directors. But his claim was rejected, his vote was allowed on 1238 shares only, and the nine defendants were declared elected, and assumed and have since exercised the offices of directors.

The supreme court of Michigan held the statute of 1885 to be constitutional and valid, and adjudged that the relators were elected directors, and should have been so declared. 111 Mich. 498, 69 N. W. 929. The defendants sued out this writ of error.

Mr. C. A. Kent submitted the case for plaintiffs in error.

[Argument of Counsel from pages 49-51 intentionally omitted]

No brief was filed for defendants in error.

Mr. Justice Gray, after stating the case, delivered the opinion of the court: