Opinion
Rehearing Granted Oct. 11, 1928.
Application by the Consumers’ Salt Company and C.L. Mullholand for writ of mandate requiring J.R. Riggins to deliver the corporate seal, books, etc., to petitioners.
Writ denied.
Superseding former opinion in 270 P. 392 COUNSEL
Harry M. Irwin, of Los Angeles, for petitioners.
Newby & Newby, of Los Angeles, for respondent.
OPINION
CRAIG, J.
The petitioners are a corporation organized under the laws of this state and a stockholder claiming to be its newly elected secretary, who pray a writ of mandate requiring the respondent Riggins, Mullholand’s predecessor, to deliver to them the corporate seal, books, papers, etc., of said corporation. Respondent contends that his alleged successor was not legally elected, and is therefore not entitled to hold the office of secretary, or to demand possession of its records.
It appears that prior to said election, and on September 16, 1927, in a suit involving the ownership of certificate No. 40, for 225,000 of a total issue of 300,010 shares outstanding of the capital stock of the corporation, judgment was rendered decreeing that one B. D. McAlvay was the rightful owner thereof, and that said certificate be canceled and a new one issued to him therefor. On November 15, 1927, the defendant in that proceeding, petitioner herein, appealed from such judgment, and respondent alleges that, solely for the purpose of staying execution pending the appeal, he caused said certificate to be canceled, a new one numbered 47, for the same number of shares, to be issued, and deposited with the clerk of the superior court.
It is also alleged that the new certificate bore a statement in writing that it was issued only upon condition that judgment be stayed, under the provisions of section 944 of the Code of Civil Procedure, to abide its final determination, and that the same conditions were entered in writing upon the stock books of the corporation. Thereafter, and on July 16, 1928, at a stockholders’ meeting, which was regularly called, Mullholand and McAlvay and three other stockholders were declared elected directors, for each of whom the former voted 93,750 shares, and the latter voted 225,000 shares. A meeting of directors was then called for the election of officers, whereupon the petitioner Mullholand was declared elected secretary. He thereafter demanded of respondent Riggins, the former secretary, possession of the office and its paraphernalia, which was refused.
The petitioners contend that, notwithstanding the appeal, certificate No. 40 was canceled and a new one issued by action of the corporation, that the sole test of the right to ownership of stock is the entry thereof in the corporate books, and that the judgment was self-executing. Respondent insists that by appeal and deposit of said certificate the judgment was stayed, and hence that it was of no force or effect; that McAlvay was not the owner of the 225,000 shares which he voted for the election of Mullholand as director, and that the latter was therefore not legally qualified for the office of secretary or entitled to possession of the records demanded.
The provisions of the Code of Civil Procedure applicable to the instant controversy are as follows:
Section 943 recites, in part, as follows:
"If the judgment or order appealed from direct the assignment or delivery of documents or personal property, the execution of the judgment or order cannot be stayed by appeal, unless the things required to be assigned or delivered be placed in the custody of such officer or receiver as the court may appoint, or unless an undertaking be entered into. ***"
Section 944 provides that:
"If the judgment or order appealed from, direct the execution of a conveyance or other instrument, the execution of the judgment or order cannot be stayed by the appeal until the instrument is executed and deposited with the clerk with whom the judgment or order is entered, to abide the judgment of the appellate court."
Section 946 further provides:
"Whenever an appeal is perfected, as provided in the preceding sections of this chapter, it stays all further proceedings in the court below upon the judgment or order appealed from, or upon the matters embraced therein. ***"
If the petitioners be entitled to the relief prayed, we think it settled beyond question that mandamus is the proper remedy. Potomac Oil Co. v. Dye, 10 Cal.App. 534, 102 P. 677. However, that petitioners’ interpretation of section 312 of the Civil Code, and decisions construing the same, that "every person, *** having stock in his own name on the stock-books of the corporation at least ten days prior to the election," is entitled to vote under all circumstances, is not supported by the authorities cited. Petitioners’ argument is founded upon the theory that one may not go behind the legal title of stock as disclosed by the corporate books to determine ownership for voting purposes. In the instant case, however, the ownership of said stock is a question in litigation, the certificate in question was issued and deposited with the clerk for the purpose of staying the operation of a judgment declaring petitioner Mullholand to be the owner, and the face of the corporate books definitely show that fact. The judgment is not vacated by such appeal and deposit, but it is held in abeyance pending appeal, and the certificate is ineffective for any purpose, since a reversal of the judgment would render it a nullity. Di Nola v. Allison, 143 Cal. 106, 76 P. 976, 65 L. R. A. 419, 101 Am. St. Rep. 84; United States Oil & Land Co. v. Bell (C. C. A. 9th Cir.) 219 F. 790. This question was presented under a similar statute in Durfee v. Harper, 22 Mont. 373, 56 P. 589, wherein it was said:
"The object of the law in requiring an executed certificate to be deposited with that official was to preserve the rights of parties until it might be determined by this court who owned the stock; and until such determination there could be no delivery of it, and no exercise of ownership by using those incidental rights dependent upon the decision of this court as to the ownership. A contrary ruling would oftentimes make a stay of execution by appeal valueless; for it would not stop the doing of acts to prevent which the suit may have been brought, and which, if done, are equivalent to the possession of all that the lower court may have awarded the successful party."
That B. D. McAlvay is even a legal stockholder is a question depending upon a judgment which is temporarily suspended; hence the official capacities of C. L. Mullholand as director and secretary are likewise contingent upon McAlvay’s title to the stock. To decide the question presented by this proceeding would require anticipation of an affirmance of the judgment upon appeal, which involves issues not before us.
The writ of mandate is denied.
We concur: THOMPSON, J.; HAZLETT, Justice pro tem.