CHAPTER VII.

CORPORATE MEETINGS.

§ 48. Requisites. Whatever may be the effect of acquiescence, every member has the right by timely objection, to insist that powers reserved to the corporation at large shall be exercised in corporate meeting. And this means a meeting duly called, warned and held. The call must be made by the proper authority; dye notice must be given of the time and place of holding and, in some cases, of the business to be transacted; the required number of members or shares must be present or represented; and the requisite number of votes must be cast. What constitutes a proper call, due notice and a sufficient quorum and vote depends upon the nature of the meeting and the business done; and the subject is not free from confusion. It must always be remembered that, subject to the charter, which, in its turn, may be subject to some governing statute, the by-laws of a corporation may lawfully regulate the matter and that the provisions of the statute, charter and by-laws are controlling in the order named. Where there are no such special provisions, the principles established by the weight of authority are the following:

First. In the normal course of its career, every corporation holds at periodic intervals, usually annual, its regular

meeting, the time and place being fixed by the charter or by-laws. A regular meeting is a general one, that is to say, open for the transaction of any business; nor is any member entitled to previous notice either of the meeting or of the business proposed to be done.

Second. A meeting held between the regular intervals is an extraordinary meeting, of which a member is entitled to notice of the time, place and object.

Third. If the power to be exercised is statutory, and the statute provides for a meeting "called for that purpose"; or if the statute in terms provides for notice of the purpose, then it must be given, whether the meeting be regular or extraordinary.' Courts, however, are reluctant to inter

1 Insurance Co. v. Farquhar, 86 Md. 674. The present law of Maryland is found in Code (1911), Art. 23:

SEC. 14. Every corporation, which is subject to the provisions of this article, shall hold annually a stated or regular meeting for the election of directors and for the transaction of general business; the time and place of holding such meetings, and the notice to be given thereof and of the business to be transacted thereat, may be regulated by the by-laws; and unless otherwise provided by the bylaws, each shareholder or member shall be given notice of the place, day and hour of such meeting in the manner provided for in the next succeeding section; and such annual meetings shall be general meetings—that is to say, open for the transaction of any business within the powers of the corporation without special notice of such business, unless such notice is required by this article or by the by-laws.

SEC. 15. At any time in the interval between regular meetings, extraordinary meetings of the shareholders or members may be called by the president, or by a majority of the board of directors, or by a majority of the executive committee (if the by-laws provide for an executive committee, and confer such power upon such executive committee), upon ten days' written or printed notice, stating the place, day and hour of such meeting and the business proposed

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fere with the action of the requisite majority on the ground merely of irregularity in the call and notice. In Shaw v. Davis, 78 Md. 318, the view of an English judge is quoted with approval: "In my opinion, if the thing complained of is a thing which in substance a majority are entitled to do, or if something has been irregularly done, which the majority of the company are entitled to do regularly, or if something has been done illegally which the majority has the right to do legally, there can be no use in having litigation about it, the ultimate end of which is only that a meeting has to be called and that ultimately the majority gets its wishes."

$49. By whom corporate meetings may be called. In the absence of special provisions (statutory, charter or bylaw, in the order named), the power to call extraordinary. meetings is vested in the board and not with the president or other officer. Such special provisions are usual; and in this State they are as follows (Code 1911, Art. 23, sec. 16):

"Upon the request in writing delivered to the president or secretary or any director, of a majority of all the mem

to be transacted thereat; such notice shall be given to each shareholder or member by leaving the same with him or at his residence or usual place of business, or by mailing it, postage prepaid, and addressed to him at his address, as it appears upon the books of the corporation; and no business shall be transacted at such meetings except that specially named in the notice.

SEC. 23. Notice of the time, place and purpose of any meeting, whether required by the by-laws or by any provisions of this article, may be dispensed with if every member or shareholder shall attend in person or by proxy; or if absent shall by writing, to be filed with the records of the meeting, waive such notice.

See further as to waiver by actual presence, Handley v. Stutz, 139 U. S. 417; Tompkins v. Sperry, 96 Md. 560.

bers, or of the holders of a majority of all the shares outstanding and entitled to vote, it shall be the duty of such president, secretary or director to call forthwith a meeting. of the shareholders or members. Such request shall state the purpose of the meeting, and notice thereof shall be given as required by the next preceding section. If the person to whom such request in writing shall have been delivered shall fail to issue a call for such meeting, within three days after the receipt of such request, then the shareholders owning a majority of the voting shares, or members constituting a majority of all the members, may do so by giving fifteen days' notice of the time, place and object of the meeting by advertisement inserted in a newspaper published in the county or city in which the principal office of the corporation is situated."

§ 50. Quorum. In every association the number of members whose presence is necessary to constitute a meeting is called a quorum.1 And the older law draws a distinction between bodies having a fixed and definite number of members and those in which the number is fluctuating. In the former case, a majority of the membership constitutes a quorum for the transaction of business; in the latter, the members who actually appear after all have been warned, may hold a valid meeting. And the corporation will be

1 "It was usual to nominate members of a committee of whom (quorum) a certain number must be present to form a meeting”— Skeat's Etymo. Dict.-Quorum.

2 In England it seems that at least two natural persons must be present to hold a corporate meeting and that one man, with proxies, will not do: Sharp v. Dawes, 47 L. J., Q. B. 104; but see East v. Bennett Bros. (1911), I Ch. 163. See also, contra, the instructive opinion in Morrill v. Little Falls Co., 53 Minn. 371; the same case is reported with a valuable note on the subject of quorums, in 21 L. R. A. 175.

bound by any act which a majority of those voting resolve upon,-members present but not voting being presumed to acquiesce in the result. The modern law draws this same distinction and somewhat illogically treats the membership of a stock corporation as a fluctuating body. A valid meeting of the directors requires the presence of a majority of the whole board; a meeting of shareholders duly called and warned may be held by those actually appearing in person or by proxy, although they represent less than a majority in interest; and a major part of the shares voting may bind the corporation. Of course, a statute, or the charter or bylaws may determine the quorum; and if a particular power is vested in the majority or some greater number of the members or shares, this number must be present and represented or there can be no meeting.1

§ 51. Voting. Every member is entitled to one vote which must be cast in person and not by deputy; and this is true both as to stock and membership corporations where the rule has not been changed by statute or charter. Such changes have, however, been made almost universally, and so natural is the modern policy which allows a vote for each share and permits voting by proxy, that it is hard to realize the statutory origin of the right. In Taylor v. Griswold, 14 N. J. L. 222, decided in 1834, the question was as to the

1 Code (1911), Art. 23, sec. 17, provides that all meetings of the shareholders or members shall be held within the State and requires a majority in interest of all the stock outstanding and entitled to vote, or a majority in number of all the members (present in person or by proxy) to constitute a quorum; and exception is made in the case of mutual insurance companies. A by-law in conflict with the statutory provision would be invalid. Darrin v. Hoff, 99 Md. 498.