edge which sustained it. Enforcing the rights of an individual against the corporation is quite a different thing, such as enforcing the transfer of shares of stock, compelling inspection of books and papers, or the issue of a certificate of stock in lieu of one which has been lost, and the like, but in such cases the general officers with such power and records must be within the state. This provision was inserted in this section by amendment in 1903, and has not yet been considered by the appellate courts. CONDUCT OF ELECTIONS Thus far, there has been only one decision on this subject. In a case where stockholders deposited their ballots without marking, or otherwise designating them as cumulative, they were allowed, before the votes had been canvassed or the result declared, to have their ballots returned and to so mark them." As to inspectors of elections, see By-Laws. WHO MAY VOTE. PROXIES, EXECUTION AND LIMITATION Section 321b of the Civil Code is as follows: § 321b. At all meetings of stockholders of corporations organized under the laws of this state, or in the case of corporations having no capital stock, then at all meetings of the members of such corporation, only the stockholders or members actually present shall be entitled to vote on any proposition, including the election. of directors and other officers of the corporation, unless proxies from absent or non-attending stockholders or members shall be held by some person or persons pres • See Thompson on Corporations, sec. 6741 et seq., and the many cases cited; Cook on Corporations. 7 Zierath etc. Drill Co. v. Croake, 21 Cal. App. 222, 131 Pac. 335. But the essential characteristic of a ballot is that it be secret; how secrecy can be preserved in cumulative voting is not apparent. ent at such meeting and shall be executed in accordance with the provisions of this section. Every such proxy must be executed in writing by the member or stockholder himself, or by his duly authorized attorney. No proxy heretofore given or made shall be valid. after the expiration of eleven months from the passage of this act, unless the member or stockholder executing it shall have specified therein the length of time for which such proxy is to continue in force, which must be for some limited period, and in no case to exceed seven years from the date of the execution of such proxy. No proxy hereafter to be given or made shall be valid after the expiration of eleven months from the date of its execution, unless the member or stockholder executing it shall have specified therein the length of time for which such proxy is to continue in force, which must be for some limited period, and in no case to exceed seven years from the date of the execution of such proxy. Every proxy shall be revocable at the pleasure of the person executing it; But a corporation having no capital stock may prescribe in its by-laws the persons who may act as proxies for members, and the length of time for which such proxies may be executed. Executors, administrators, guardians and trustees may give proxies. (Stats. 1913, p. 230; see, also, Civil Code, sec. 312.) Attention is called particularly to the provision concerning the limited time during which a proxy may be valid. It is modeled on the law of New York, and is a wise provision and will eliminate many uncertainties and controversies in such matters. It would seem that the provision making proxies revocable would prevent making any effectively irrevocable, and thus prevent the formation of "voting trusts" in that manner. Probably the only way of making a "voting trust" secure would be to transfer the stock on the books of the corporation to the trustees exercising the voting trust. Even in the absence of such a statute, many courts hold a proxy revocable, notwithstanding it states that it is irrevocable. A proxy can not appoint a proxy in his own stead; this is on the principle that a delegated power can not be re-delegated. A contrary opinion seems to be quite common. The appointment of a proxy by a proxy may be lawful under this section of the Civil Code, if such appointing proxy is duly authorized as attorney in fact to make such appointment. The proxy executed by the stockholder might be a sufficient power of attorney, if it clearly states that the proxy shall have such power. The presence of a stockholder in the meeting and his offering to vote is a revocation of any proxy given by him. Where a proxy is given to two or more persons they must all be present and cast the vote, unless it is granted to them, "or either of them," in which case such of them as are present may cast the vote. This section gives to corporations having no capital stock the right to prescribe in its by-laws who may act as proxies, but a corporation with a capital stock can not do this, as shown elsewhere under this subject. ELECTION TO BE ANNUALLY. WAIVER OF NOTICE BY STOCKHOLDERS Section 302 of the Civil Code is as follows: § 302. The directors of a corporation must be elected annually by the stockholders or members, and if no provision is made in the by-laws for the time of election, the election must be held on the first Tuesday in June. Notice of such election must be given as prescribed in section 301, unless all of the stockholders waive such notice in writing. (Amended February 22, 1909, Stats. 1909, p. 48.) The effect of this section is to make the tenure of office of the directors one year. An exception should be made as to the directors appointed in the Articles (Civil Code, sec. 290) for the first year. Giving effect to both these sections would reduce the term of the directors appointed in the Articles to the remainder of the year ending with the time appointed in the by-laws for the annual elections, and, if no such time is appointed in the by-laws, until the first Tuesday of June, under this section. The directors appointed in the Articles for the first year are not perfunctory. They do not hold office merely until the first meeting of stockholders. If a meeting of stockholders adopts by-laws in which they fix the time of annual elections at some future time, they can not elect directors before that time to displace those appointed in the Articles. It has been expressly decided that the directors appointed in the Articles have full power to conduct all the business of the corporation until the annual election, provided in the by-laws. The fact that section 306 of the Civil Code, requiring directors to be elected and by-laws to be adopted at the first meeting, was repealed in 1889 is in harmony with this view of the character and power of the directors named in the Articles; indeed its repeal is not in harmony with any other view. DIRECTORS HOLDING OVER No provision is made in the statutes for directors holding over, that is for their term continuing beyond the year for which they are elected, in case of a failure to elect new directors at any annual meeting. It is usual in other states to make such a provision in the by-laws, but such a provision in the by-laws would probably not be legal in this state, in view of the prohibition in the 8 Middleton v. Arastraville etc. Co., 146 Cal. 219, 222, 79 Pac. 889. sixth clause of section 303 of the Civil Code which expressly withholds the power of fixing the tenure of office of the directors in the by-laws. But section 314 of the Civil Code provides, in case of a failure to elect directors at the annual meeting, that the directors may order another meeting of stockholders, which would be an act performed after their term had expired. Many cases have arisen where acts of directors, performed long after their term had expired (no successors having been elected), were considered, and the validity or invalidity of their acts determined without this question arising or being determined. It could be debated whether directors holding over are directors de jure or de facto. In either case their acts would bind the corporation in favor of third parties; but the distinction might be important in controversies between the corporation and the stockholders." NOTICE OF MEETING The notice of the meeting for the election of directors shall be the same as is provided in section 301 of the Civil Code (the same as for meeting adopting by-laws), that is: "two weeks' notice by advertisement in some newspaper published in the county in which the principal place of business of the corporation is located, or if none is published therein, then in a paper published in an adjoining county, must be given by order of the acting president." If an official newspaper is established by the by-laws, of course, that newspaper must A case of conflict between directors holding over after a new board had been elected, pursuant to mandamus proceedings, should be read in extenso; it is not practical to state it here, Potomac Oil Co. v. Dye, 14 Cal. App. 674, 113 Pac. 126, 130. The statement that after the new board was so elected the old board ceased to have any power must be confined to matters strictly between stockholders, otherwise it would be subversive of all rules in regard to de facto officers. Cal. Corp.-12 |