johnston v. johnston

7/26/2019 Johnston v. Johnston

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660 OFFICIAL GETT

[o 3368 Je 0 4]

VoL No

. N JHS, AL pettio11rs ad appllee vs.U A H, espo1de a appela

PVE OO A; STCKHOL MEING WTIDR\Y T STO<IOD FFE-n an aual sohode

meet validly oneed te >drawal for siab!e easonbefoe the eence o a quor old be etee or dca·d

f a okoe \ hos o epeses the a jy of therpae stocs log t actualy defeat the exsence he uorm, ren ull d vi al fuher ransaos akeup ar uc \Vhdra•a, inld te eleio of ev esof direcos and oer o e corpoaton

2 . TBy h e \\e f autoy a aory o hvoes actual ede, lhog soe o e sooleror embers \\o ae re11t reuse o ¥ote ad hereforehe aoy of he oe cast ay be ess ta a najoyo e eons eet o s epreseed ths t eorythat Uoe >o hae a opouy vote ad eai touhey ae a aoiy o he sk 11 be e o qiece te reult of te oe ally ca (p 9 lecher orpraos, ol n the abene o anaory provi to tecotra i e hate' y \, he o at a orpoate

1eei may be ee by balot or iv v or y ho ohad 81, d)

3 . ; IITY A PRTE.ororate meetg shal be de h airess a gd fa1 oards \vho e ee a nd i �h a \: nabh1 x \ l]> n 1ng be n he oin an1ea? a ad ri an r ly 11 1�1<i h f pPlin! rh eo u •· nl dpacn h pl Hl voe o nng G l', ) Prlaeay patc o al he n o h a ad thing oo ,, 11ng } oy the la\ ootnp id

- n TCE PE CKIO ROL R BY

PX CR I: TEe all te holderae ree eer en or by oy dur te chole eetn \"ae hee s e oie is ey er presee ad aecece 8 S 2

APA fom a juget o t Cout o Fs saceof Zaboaga Cty oteo

he a ae statd te opo of t Co

San Jit, Afrc & Bedco o poets aappellat

bos Pl Lu) O o etto aappls.

A

the Cout of Fst se o aoaga pettoe·apl F oga lto e to a FelisaP ohsto e a petto o quo \vaato alegg tat Ve elete a to te tokhodes eeto te ohto e y 2 1 a



SPMBR 27 965 OFFCIA GAZTTE

\ in turn lctd spctivly as psidnt and gnamang vic-psidnt and assistnt gnal managand sctary-trsur i th mting of th board odirctos hld on th sam dat and ping in th minfor th oust of th rspondnts-appllnts ouis A Johnston, Elizabtl1 J An t and osario S. Johnston fonth positions of psidnt and gnal manag vic

prsidnt and assistnt gnl managr nd sctatas of th Johnston Lmbr Co, Inc Th pplntld th answ avri11g tht tl1 ws no lction onJuly 20, 963 11d claiming tht th ar occupying thocs n qstion bcaus thy ·r r-lctd as dictorsin th gula annul stockholdrs tg on April 2 963nd n turn rlctd s psidnt ad gnl mng,vc-prsidnt and assistnt nal mnag nd scrtry-as in th mting of th ord of dirctor�hld on th sam dt. Aft trial tl1 low court ndrdjdgmnt th dispositiv portion of Vhic rads thus:

"Wherefore, in vew he foreging, judgment s ereby rendeed

n o Pene nd gnst he Reondents declrnsd reponden e not ened he Oce n qen and stng hem r om he sme d rong hem om exersinge dues nd egs ernng eeo nd decrng ei a e g person eied o hod d exee e unons sd oes nd reng em o her s hren.

rom this dgnt th rspondts hav appld to tisCout

Appls an pplats ar sharoldrs of a famlstoc corporatio1 lno'v1 as th Jolston Lumb Co nc

Accoring to Artcl II ction 1 o th b-ws of tsaid corpoton th nnual mtin of stocholdrs shalb hld in th prncipl oc of th copotion at Zm

boana ity in th month o April Pusuant to th provisions of th bylws th annua stockholdrs mtng forth yar 963 Vs schduld for April 2 963 h pupos of th nting, mon othrs was to lct a n' stof dirctos who would in tn choos th nw ocrs ofth coporation.

n April 2, 963 a schdud, th stockholdrs composdof Louis A Johnston . oan Johnston lizbth J•4ra1t, Rosario S ohnston and rn Johnston mt tth prncpal plac of businss of th corporaton at 23adrid t., Zmboanga it Afe th mtng wsclld to od b spondnt ois A. Johnston, who ws

thn prsiding, th corport scrtary ws rqustd byth said rspodnt to mk a fomal rport of th numbof stocks rprsntd n th mting to dtrmin if thrxstd quorum Immdiatl thrft prois andpo'vs of atton psntd for rcord purposs ndfo th uidn of th sctry. Upon his nam bing

090

66



6162 OFICAL GZETT VOL. 1 N. 39

clled pettione . Log Joh11ston hmself the owner o305 shaes of the total of 2462 shaes of the copotossued ad outstdng on Apl 2 1963 peseted a poxyby hs mothe els P. Johnsto also pettone n thscse, who oned 320 shaes; aothe poy by hs wfeee R Johsto lkewse a pettoe hee who \ved5 shaes; d the duly edosed cetcates of stock of

Josephne JB Slos eodo . Slos Joseph J Slos adAlbet J Slos equestng that the she coveed by thesd ctctes totllg 35 be egsteed d lsted thebooks of the copoton fo votg pposes hs eqestws deed by he Cha. Belevng tlat he would not llowed to vote the shaes Vhch he ced fom the Slosfmly oga Johston mmedtely set fo the ognalowes n ode t they could vote sd shes n hsfvo. hs pompted the ha to fom ogn Johs�to tht he ld ot lso be llowed to vote the 37shes of the te bet S ohston whch he hd eevotng pevous yeas hs cpacty s dmnstato ofthe teste estate of the decesed docketed as spcal cseNo 387 of the Cout of st Instace of Zambong othe goud that sd dmnstato ce had aledy btermted ogn ohston dened tht the dmsto case hd aedy been closed ad mted tlatssum tht ths ws so stll he should be lowed tovote he shes of the lte Albet S Jol1nston asmch she s s h ud of ll he mno hde of tledecesed by vtue of specal case o 57 of the sme ct.s gme·t howeve as uled out by the a potngout tat n ode fo hm to ote sd shes as gdthe se must st be egisteed n the nmes o the YdsAt ths juctue F Loa Johnston epeset 1242

of the 262 shaes of the copoaton d hs-wfe eeJohnsto ccomped by the two wyes waked ot ofthe oom whee the meetng Vs beng held he espondents ho'eve med ad caed o wth the meetgad electd themselves dectos and oces o the copoto he met of Apl 2 1963 ws ot ecognzedby the petoes who mtaned that t ws hed bymo stoholdes

My 29 1963 Log Johnston Vote lette tothe pdent of the copoton equestg pesolly ad bhlf of the mno hes of bet S Johnsto dof esa P Johnston that meetg of stockholdes becalled on June 5 163 pusuat to the povsons of thebylaws "to tke up such mattes s shold hve bee tkenup dng the egl nul meetng (hs D 5.) esponse to ths ette espodet Lous A Johnsto ssued otce of speca stockholdes mee hch sttesmong othes the followg:



SMBR 27, 9 OFA GAZTT

"Thi note beng called t the inst .ne f M Lgan Johnson

n the sis f hi lm tht he repreents the majty tests o the Cmpn

As indated n th lette f M Log hntn dted 29,163 mttes \Vhh e nt tkn up, nt nhd in thegua annal shdes men hed lt pl wll etaen p n thi spl sthlder' eetng

he ns end f hs speal sohlde eetng hall

e s lls: Fnaa Re ddtona epot the Psdnt n the eatns o t

snes nd the sttu the ompan mmendtns nd psls of the resden (Ex )

Puruat t ti ice, ater tckler meetig al1e at te ricial ce te crrati uly 2063. Durig tat eeti \Vic va eie by re-et ui t ate te rll a cae aa uum a eclare F La t mve r eeleci a e\v ar iectr, cai terea vai meetig il 2 963 ecaue tr a quru e i >vic a uly ece by remet a eru y te air F La iite tat i ti ¥a re a ake r a ivii te ue but te air t a it rmrulig. Seig tat e e a/ eeete teajit te tc te cati F ga t te a ee iate i et iect,•ic iai te Cai veule, a ater mvig ra ivii te ue e ece y t,ic e ir lieie ·ule te etitie cat teirvte i aY eir iee Te electe t te eba ee F ga t Iree . t FeliaP t ui A t a liabet Araeta

meiately te te electi te ai irectr, Fga 11t ivie ui A t a liabet Araeta t atte te a meetig ic i blc alig utai Te t reet eclie te ivitati aig tat tey " t ecgize tat y.' Pe�tier cvee a a bar a electe te ll\gcer: F ga t, eiet a geeral aager;re . t viceeiet a aitat geeraaaer a eia P t, ecretayreaurerAer te electi te etiier t te ce avmetie tey ae a ea te reet r tturver te rec a uti11 teir ective

iti ut a t ea a re by e reet te itat etiti qu aat a ei curt

e cucial iue i i aeal ae () \veter r te aelat vee alily electe a iectr a ce te cati i te eetig ril 2 93 2

3



4 OFFICIA GAZETTE VL. 1 N. 3

whether or not the apellees were duly eleed as dirorsand ocers of the ororaion in he meetin of Juy 20,*

Apellees and appellants are agreed hat the meeng ofApri 2, was vaidly onened Howevr, before theexisene of a quo·um ould determined or delared,etitioner F ogan Joson who owned and/or repre-

sened 22 shares of he otal of 22 shares of the orporaton or more han 50 peren of the orporaion's oustandin shares, wlked out of the meeting onvined tha

the rulngs of the Chair with reard to hs requess to oe the shares of he Slos family and of he mnor hdrenof Alber S. Johnston were unreasonable and ontrary o he sp of he ororaton aw e soholders who\Vere ef behind an who arred on with he meetng reresened the mnory and dd ot onse a quorum andit is lear that hey ould not have alidy transated fur

ther busnss mu h less hae eleted a new set of boardof diretors Seton 1 of the Corporaton La (A No

159) as amended expitly requires the presene of a quorum at all eleons of diretorsS A all lcis drrs thr mus prs, thr

prs r by rprsai authzd t ac by wi prxyh 'rs t ajry h sbscbd captl sck ttl r, i hr captal sck a ary h

brs d t . Th lcis us b by balts advy sckhld d sl1all ha righ t t prs by pr;-y th ub ars stck sadg at h d i byJaws i hs w a th sck bks h c·prati ad sad sckhdr ay t sch ubr shars r as ay pss a hr ar dircrs r h ayclat sad ars d gi cadda as ay s as

th ubr dc b lcd ultpld by h b hs shars shal qual, r h ay dsribut h h sa pr

cipl amg as ay caddas as h shal s t: Prdd Thah hl ubr ts cas by h shall cd h ubr shars wd by as shw by bks t rprai ulpld b y h w l ubr drctrs t b c! Ad prdd, Tha sck dclard dqu by h bard drctrs r upad bscrps sall b d Uss hr>s pd d th articls crpra r h byws brs crp8 s whc ha capa sck ay as ay s as thr a drctrs t b cd b ay ca r a caddat Drcrs rcg h hght ubr s ha b dcard lcd Ay tg hsckhldrs r bs cad r ay lct ay adu day day r rm t r ay ras c s

" Th scducd dat lci drctrs h crpra

pil 94 s past ad •ld appa h s cs has bc t ad acadc H\r, ths s s cti 1964 has as yt b hld i iw th ac tha a wr rlia uc suspdg h ci 9 Vas bad by h applls r th Cur F Iac Za bga <urig h pdcy hs appal



SEPER 27 9 OFFICIAL GAZET

o if here ae ot peset or repeente y roxy t temeetg of o\vers of mjorty of the subcre cl ockettle to ote o f thee e o cpl st mjorty of temembe ete to ote (As ded y Ac No 358) ·

The by-aws of the Johnston Lumber Co., nc. provdesthat:

"Se 4 A quoum t y meetg of the tocoer ll cot

of mjory of he otg to o te comy epetd o o y roxy mjorty of sch uou cy eo tt y come bfore e meet e excet oe eerl tter wch te Jws of te Ppe Ieue te rmte ote of gee roorto At

Ex 9)

It fo}os as a neessary and logica onseqene that fthe eecto1 of the drectors of the corporaton after the wthdrawa of ogan ohnston 'as nu and vo thesbsequent meetng of the oard at whh Lous A ohnsto was eected presdent and genera manager zabeth Araneta as vcepresdent ad assstant genera manager,and Rosaro S ohnston as secretartreasrer, was ike

wse n and od or those who sbseuent onvenedto hoose the oers of the oporaton were not dretorsat a n the ees and co�templaton of aw

Appeants, however, ntend that nasmuh as F Loganohnston amtted o rossexamnaton that hs purposen otng the meetng \Vas to deerate eeat the exstene of a quorm the asee of a oun dd ot poducethe eect o ulng e poe tat tanspredater alkout, ting Fetcher n spport of theontention

"Ue y-> rog tt joy of tochoe slcotute uorm t ll mee sokole ee d p·

ptg t w•meetg o whu jsfb rre e or y g o defet he electo othoe rectors ered y mort Hee s ColbBkg o 16 Del C 2 15 A ; 5 Fee

The contnton s untnae t s to e noted that eventhe authorty cted by the appeants impes that a stockhoder ca, for jstabe reaon, break the qorum by wthdrawn rom the metng evewng the reord, we "ndthat Logan ohnston thdew from the meetng o Apr2, 93 ecause appeant ous A ohnston persstent ·u wthout reson verued hn on hs eqests to votthe shares of the Sos amy and of he mnor hdrenof Aert S ohnston

Appeant Louis A ohno as presdng oe of themeetng shod have aoe appeee F Loga ohnstoo vote the hares whh he ha< vad puhased rom theSlos amy he excse oee hn that there was nome maa tme for the regtraton of the stks in



SPTMBR 27, 65 OIA GAZETT

b sstained. oroer th athortis invokd by the appelants prsppss th istenc of a quorm fomallydclared befor the withdrawal occrred Said athoritisar not applicable to this case bcaus her thr was noforma declaration of a quorm bfor th withdrawal fromth eting by ogan Johnsn.

ppelants arg in their brif that Althogh thr was

no formal dcaration of t pesence of a qorum tsdd not rnt th mtng from startn p 2) bcase th qestion of qorm was ner raised in said mt-i11g and as testid to by Eiabth Aranta a formadeclaration of the prsnce of qorm Vas not customayin meetins of the Johnston Lmbr Co Inc. h argu-mnt is otannt ad ithout merit are ot hrconcerned ith the validity of th commencemnt of thmeting are agreed that the meetin as properlyconod. hat t1 applls ar qesioning is whetheth mting aftr the wthdrawal therefrom by F oaJohnston cold aldly cotin and et a new st of

board of dirctors of th corporation. Whether or not hqstion of qorum as raisd h fact emains thatafter sch wthdrawal there was no more quorm and emai11in mnoriy stocholdes could not alidly transactany futh usiness Anent te tstmony of EliabethJ Aata th same is rfted by th utes of th cor-oation Exhibits B 2 C C which show that theusual pactic among t1 shaehodes is to declar thexistence of a qorm foe pocedin to frthbsinss

W now onsd te tin of July 2 6. hismting was popely connd resnt thrin ee althe respondens as vll as petitions Loan Johnstonand Irene Johnston he oll \as called and th prsncof a quorm vas declared by appellant Lois A. Johnstonas prsidng ocr. Logan Johnston at the tim hldand/ or rprsented a n1aj oiy of the stos of th corpration. His majority holding was r qstioned btas admittd by th respondnts After a quorum hadbeen decd ogan Johnson movd for the electionof a nw board of dictors contndin that thre as noalid meeting on April because thre was 1 quorm.s motion as dly secondd by Irn Johnston bt thhair oerled it He maintaind that there was noqorm at the tin of pil and insistig that hs

motion as poper and duly secondd h oved fo a diision of hose he Chai howe doded the issea1d tansferd to anothr sbct F Loan Johnstonnominatd a bloc o dirtors omposed o hmsel eneJohnston_ Flsa Johnston ous A. Johnston and Eliza

667



TMBER 2, 196 OFICAL GAZETT

sch (cororate) meetings, including tat of apeaing fromte decison of te cair and dslacng te resdng ocer by vote of te meetng" 64, Ibd) Parliamentaryractice of aealing rom te decision o te car and tetang control of te meetng by majory s te aw"footnote 65 bid)

Neter may te election ed on July 20 1963 be assailed

on te gond tat te notie called for a secal stock-holders meetng and tat the agenda dd not seccalynclde te election of a new board of directors. It isadmitted by the aellants tat te meeting of Jly 20 wascalled rsant to te etter of F Logan Jonston datedMay 29 196, reqesting tat "! iew of te abortedmetng ed last Ar 2 1963 * " a meetng o stockoders be caled to tae p sc matters as hold hae been taken during tl1e anua meetng In te noticessed by Louis Jonston it was stated tat the meeting\V being caled at the instance of F ogan Johnston whoclaims to reresent a maoty of te stocks of te comany

and tat As ndcated in the etter o r ogan Jonston,dated ay 29, 1963 mattes whic were not taken ornot 11sed, in te regar annua stockodes meetnged last Arl 2 196 \V be taken u in ts secialstokolders' meeting" Uon tese consideratons tesochoders of te cororaton ne a F. ogan Jonston old ress or te electo11 o a ne board o drecors n te Jly 20 meeng and te sockodes erereare for it

A notc sing hat h·e would b ondrd t ca mn qo 'lain o h propy magn nd noic of • cooron nd ch cion a ngh b dmdxd and ncary n oon h\vih od b akn

scn noc h ch cosdon mh no hg oo and dcos." (Lwnc _ . N Pr E Co 15 (2d) 220 1 p (2d 765; 5 Fch Cc o 62

Besdes all te stockoders wee resent ete n ersonor by roxy drng the meetng of Jly 20 and \Vatevedefect tere was in te notice \as cred by teir resenceand aciescence

In h c o n h nic n nao h bn o ncd and n abnc o arncnd conn by U o h khod n c-n no ihn ho o noc od Th arnc d consn of thocod how ds a an ca nnhoh no nbrcd wihin oc (8 CJS 1231

e code ron te foregon tat e tra ordid not er n oding at te eecto o dreors n teJy 20 meeng as roer as e as e sbseen election of e ocers of te coorao hed on te same date

6169



670 OFAL AZT VoL 6 N 39

W o o u appal i ar al p V css agas appla

SO ORDR

Cocepon a Gatmatan, cur

Jwgment afrmed.

johnston v. johnston

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