Braslan v. Superior Court

BEATTY, C. J.

Petition for writ of certiorari. The attorney general commenced an action against the Hnion Savings Bank of San Jose and its seven directors, in_ pursuance of the provisions of section 11 of the amended bank commissioners’ act (Stats. 1895, p. 175), to enjoin them from the transaction of any further business and to compel a liquidation of thé affairs- of the bank. Subsequent to the commencement of the action, and to the appearance of the original defendants therein, several of the directors ‘ resigned, arid the petitioner claims to have been elected in place of one of them; but it is not shown that he was ever substituted as a defendant, or that he entered an appearance or gave any notice to the court or to any of the parties of his election as a director.

This bqing the situation of affairs, the attorney general, by leave of the court, filed and served upon the defendants who had appeared a supplemental complaint, alleging that all the directors of the corporation had resigned and that there were no directors, and praying the appointment of seven directors by the court. To this supplemental complaint an answer was filed containing no direct denials of its allegations, but merely alleging the fact that at different dates several of the directors had resigned, that their resignations had been accepted by the remaining directors and other persons elected in their place. Among other similar allegations it was alleged that this petitioner, at a date prior to the filing of .the supplemental complaint, had been elected a director in place of one who had resigned, and that he had entered upon the discharge of his duties; but it did hot allege that he was still a director. It was also alleged in this answer to the supplemental complaint that six of the directors last appointed—all of them,, that is to say, except Braslan, the petitioner here—had resigned, and their formal resignation was attached to the answer, which was signed by an attorney at law describing himself as attorney for all the defendants and their successors, except Braslan. Ho summons, citation, or other notice of the proceeding appears to have been served upon Braslan, but the matter was submitted to the court “on the pleadings,” whereupon the court appointed a full board of seven directors of the corporation. This is the order which the petitioner seeks to have reviewed, and such are the facts disclosed upon the hearing of a rule to show cause why a writ of certiorari should not issue.

The petitioner contends that the order appointing a full board of directors, which practically ousts him from an office to which he claims to have been duly elected, was in excess of the jurisdiction of the court, and void, because it was made without notice to him, and because it' does not appear that the occasion had arisen for action by the court.

' Upon these propositions the first question to be considered is whether the law under which the court was proceeding gave the petitioner any right to personal notice of the application for the appointment of directors to fill vacancies. The statute is by no means explicit or plain upon this point, but I think it may be gathered from its various provisions that the intention was to invest the superior court with a very extensive authority and jurisdiction over the corporation during the whole progress of liquidation, and, among other things, authority to fill all vacancies in the board of directors as often as they might occur, if the remaining directors failed or were unable to fill them. To call the powers of the court into action for this purpose I do not think a supplemental complaint is necessary, or even appropriate. The proceeding is independent and collateral, and may be taken by or on behalf of any party interested by petition to the court, based upon the fact of malfeasance, neglect, or vacancy caused by death or resignation. When the court is asked to remove a director for fraud, malversation, or neglect, the statute expressly provides for a citation to the person accused and a hearing, but no notice is provided for when the court is asked to fill a vacancy. It may be contended, however, that, in the absence of such a provision, the director whose place is alleged to have become vacant is, if living, entitled to notice upon general principles, in order that he may have an opportunity of showing that he has not vacated or abandoned the office. This is certainly a reasonable contention, but, whether well founded or not, it does not help the case of this petitioner, because here all the directors of the corporation, of whose existence the court was advised, and whose places the court was asked to fill, were notified of the proceeding. The petitioner had never, so far as appearsi, made known to the court, or to the other parties interested, the fact that he was, or claimed to be, a director, and the only mode of notifying him would have been by a general notice to all the world. But no such notice is prescribed or authorized, and, therefore, unless the court can proceed to act upon an alleged vacancy without notice to every unknown claimant of the office it cannot act at all, and the -statute is in this respect nugatory. But this result cannot be allowed, and, therefore, I conclude that a director, or one claiming to be such, is not entitled to notice of an application to fill a vacancy unless he has given previous notice of his incumbency.

Upon the second point the case is more simple. Treating the so-called supplemental complaint as a petition to fill a vacancy, and allowing that a petition by the attorney general need not be verified, it stated a case calling for the action of the court; and, even if the answer could be construed as making an issue upon the allegation of a vacancy in the directorship claimed by petitioner, still the only way it raised such issue was by the affirmative allegation that petitioner had been appointed to fill a vacancy admitted to have been created by the resignation of another director. Therefore, the burden of proof was upon those alleging the appointment, and since the whole matter was submitted on the so-called pleadings without further evidence, the court did not even err, much less exceed its jurisdiction, in declaring a vacancy and proceeding to fill it.

The writ is denied and the proceeding dismissed.

Van Dyke, J., concurred.

Temple, J., concurred in the judgment.