§ 21. 1. By the English statutes meetings of railway companies are distinguished as "ordinary" and "extraordinary." That distinction, in this country, is expressed by the term, general and special. Ordinary meetings are the annual and semi-annual meetings of the company, and such others as are held at stated times. and for defined objects, according to the provisions of the charter and by-laws; and extraordinary meetings are such as are held by special call of the directors, or other officer, whose duty it is made to call meetings of the company, in certain contingencies usually defined by the statutes.1

2. Notice of special meetings must be issued in conformity to the charter and statutes of the corporation, and, where no special provision exists, must be given personally to every member.2

3. Notice of special meetings should ordinarily specify the general purpose and object of the call. But it is said this is not indispensable, when it is for the transaction of ordinary business, and that giving security for the debt of a bank, by mortgage of its real estate, is of this character. But where the business is * unusual and important, as the election or amotion of an officer, the making of by-laws, or other matter affecting the vital interests and fundamental operations of the corporation, and on a day not 18 & 9 Vict. c. 16, § 66.

* Wiggin v. Freewill Baptist Society, 8 Met. 301. This view seems to be countenanced by Lord Kenyon, in Rex v. Faversham, 8 T. R. 352; Rex v. May, 5 Burrow, 2681; The King v. Langhorn, 4 Ad. & Ellis, 538. See, also, cases cited in the argument of this case. But all the cases agree, that if the members attend even without notice, it is sufficient. The King v. Theodorick, 8 East, 543. A meeting may be general for most purposes, and also special for

a particular purpose; Cutbill v. Kingdom, 1 Exch. 494.

appointed for the transaction of business of this character, or of all business of the corporation, the notice must state the business, or the action upon it will be held illegal and void.1

4. But, as a general rule, it may be safely affirmed, perhaps, that in regard to general meetings of the company, which are for the transaction of all business, no notice of the particular business to be done is necessary.5

And all the members of the corporation are presumed to have notice of their stated meetings and are bound by the proceedings at such meetings; but there is no presumption that they know what is done at such meetings, so as to affect them with notice of any thing done there contemplating future action at any other time than the stated meetings."

5. The adjournment of a general meeting is not a special meeting, but the mere continuance of the general meeting, and requires no notice of the business to be transacted.5

But if the adjourned meeting be for the transaction of any other business than the mere completion of the unfinished business of the stated or special meeting, as the case may be; and more especially, where the business is of a character which could not have been legally transacted at the former meeting, it will not afford any warrant for its legality, that it is done at an adjourned meeting from one legally constituted originally. But the publicity and general notoriety of a transaction may be sufficient

4 Rex v. Doncaster, 2 Burr. 738; Angell & Ames, §§ 488-496. In the case of Zabriskie v. C. C. & C. Railw., before the District Court for the Northern District of Ohio, 10 Am. Railw. Times, No. 15, s. c. affirmed 23 How. (U. S.) 381; this subject is discussed by Mr. Justice McLean, and he concludes, that where the question to be determined by the company was the guaranty of the bonds of a connecting railway to a large amount, under the statute of the state, which required the consent of a meeting of the shareholders, in which two-thirds of the capital stock should be represented, it was indispensable that the call for the meeting should state the business to be transacted, and should be given long enough before the time of the meeting to enable the remotest shareholders in the country to obtain notice and be able to attend, or communicate with their agents, or proxies, and also to enable the resident agents of foreign shareholders to communicate with the owners. This seems but a just and reasonable limitation upon the power of corporations, in regard to special meetings.

16.

5 Warner v. Mower, 11 Vt. 385; Wills v. Murray, 4 Exch. 843. • The People v. Batchelor, 22 N. Y. 128.

7 People v. Batchelor, 22 N. Y. 128; Scadding v. Lorant, 5 Eng. L. & Eq. See Smith v. Law, 21 N. Y. 296.

ground for presuming knowledge of the appointment of one to a corporate office, even to the extent of subjecting such corporator to a penalty for non-acceptance.8

6. By the English statutes, railways may act in either of three modes: First, By the general assembly of the shareholders, which, as between them and the directors and other agents of the company, has supreme control of its affairs: Second, By its directors: Third, By its duly constituted agents. The same general princi

ple is applicable in this country, and at common law.

7. And where the by-laws require the meetings of the company to be held at a particular place, as the counting-house of the company, and the record, or evidence, does not show that the meetings were held at a different place, it will be presumed they were held at the place designated.10

8. Every shareholder is, ordinarily, entitled to participate in the meetings of members of the corporation duly called, and to vote upon all his shares, according to the mode prescribed in the charter and by-laws of the company, and in conformity with the general laws of the state. But it seems not well settled whether by-law of the corporation will be sufficient to entitle the members to vote by proxy, and whether some legislative sanction is not requisite to that effect. But where the charter provided that "each person being present at an election shall be entitled to vote," it was held to mean actual presence, and votes by proxy were properly excluded.12

8 City of London v. Vanacre, 5 Mod. 438.

9 Walford on Railways, 70.

10 McDaniels v. Flower Brook Man. Co., 22 Vt. 274.

"State v. Tudor, 5 Day, 329; where, in mere business corporations, it was considered that a by-law was sufficient to give the power to vote by proxy. But in Taylor v. Griswold, 2 Green, 222, the contrary opinion is maintained. . See also, 2 Kent, Comm. 294. There seems no question that in public and eleemosynary corporations the members must attend in person.

12 Broom. v. Comm. 2 Phila. 156.

SECTION V.

Election of Directors.

1. Should be at general meeting, or upon spe- 3. Company bound by act of directors, de

facto.

cial notice. 2. Shareholders may restrain their authority. 4. Act of officer de facto, binds third persons.

§ 22. 1. The election of directors is regarded as more important to the interests of the company than most other business, inasmuch as, when duly elected, they hold office for a considerable term, and have all the powers of the corporation in regard to the transaction of its ordinary business, unless specially restrained. They should, therefore, be elected at the regular meetings of the company, and even vacancies should not properly be filled at special meetings, unless special notice of that particular business had been given according to the laws of the company, which include its charter and statutes, and the general laws of the state applicable to the subject.

2. The shareholders may, in a proper assembly, pass statutes, general or special, which shall control the directors, as between them and the company. Where the by-laws of the company * require notice of the meeting for electing directors, but do not specify the time or mode of such notice, it must be given accord

1 But where the charter vests the control of the concerns of the company in a select board or body, the shareholders at large have no right to interfere with the doings of these, their charter agents. Commonwealth v. Trustees of St. Mary's Church, 6 Serg. & R. 508; Dana v. Bank of the United States, 5 Watts & Serg. 223, 247; Conro v. Port Henry Iron Co., 12 Barb. 27. And courts are always reluctant to interfere with the conduct of directors of a corporation, even at the instance of a majority of the shareholders, and ordinarily will not, when such directors have acted in good faith. State v. The Bank of Louisiana, 6 La. 745.

But in Scott v. Eagle Fire Co., 7 Paige, 198, it was held, that the directors of a joint-stock corporation may be compelled to divide the actual surplus profits of the company among its stockholders from time to time, if they neglect or refuse to do so, without any reasonable cause. But if they abuse their power to make dividends of surplus profits, by dividing the unearned premiums received by them, without leaving a sufficient fund, exclusive of the capital stock, to satisfy the probable losses upon risks assumed by the company, it seems they will be personally liable to such creditors of the company, if, in consequence of extraordinary losses, the company should become insolvent so as to be unable to pay its debts.

ing to the requirements of the general statutes of the state upon the subject.2

3. But the company cannot object that its directors, who have acted as such, were not elected at a meeting properly notified.3 Nor can the validity of the acts of the directors be collaterally called in question on the ground of irregularity in the notice of the meeting at which they were elected. Where the charter fixes the number of directors, and vacancies occur, the act of the board is not thereby invalidated, provided a quorum still remains.5

*4. An election of directors will not be set aside, because the inspectors of the election were not sworn as required by the statute. This statute is merely directory, and, so far as third persons are

* Matter of Long Island Railroad, 19 Wend. 37; s. c. 2 Am. Railw. C. 453.

3

Sampson v. Bowdoinham Steam Mill Co., 36 Maine, 78. Where persons have acted as directors of a railway company, the court will not summarily inquire into the validity of their appointment. Tindal, C. J., said: "If the shareholders allow parties to act as directors, it may be they have no right to turn round in a court of justice and say, that such parties were not properly elected." The Thames Haven Dock & R. Co. v. Hall, 5 Man. & Gr. 274–286. In a late case, Port of London Assurance Company's case, 5 De G. Mac. & G. 465; s. c. 35 Eng. L. & Eq. 178, one registered insurance company agreed to sell its business to another registered insurance company, and a deed of assignment was accordingly executed, whereby the latter company covenanted to indemnify the former against all claims. After the business had been carried on for some time by the purchasing company, that company failed, and both companies were wound up under the Winding-up Acts. On the official manager of the selling company tendering a proof against the purchasing company, in respect of claims satisfied by the selling company, one part of the deed of assignment was produced having affixed to it the seal of the purchasing company, but another part, alleged to have been executed by the selling company, was not forthcoming.

Held, first, that after what had taken place, it was unnecessary to determine whether the selling company had executed the purchase-deed, or whether its directors had exceeded their powers in making the sale.

Secondly, that where a purchaser has enjoyed the subject-matter of a contract, every presumption must be made in favor of its validity.

Thirdly, that if all the proceedings on the part of the directors of the purchasing company, with reference to the purchase, had not been in strict accordance with their own deed of settlement, still, if the contract with the other company was the means of the purchasing company coming into existence, they could not act in contravention of that contract.

Chamberlain v. Painesville & Hudson Railw. Co., 15 Ohio N. S. 225. * Walford on Railw. 71, 72; Thames Haven R. v. Rose, 4 M. & G. 552.