In the Matter of the Election of Directors of Conlon Electric Washer Company, Inc. Thomas Conlon and Others, Petitioners, Respondents; Conlon Electric Washer Company, Inc., and Others, Appellants

In the Matter of the Election of Directors of Conlon Electric Washer Company, Inc. Thomas Conlon and Others, Petitioners, Respondents; Conlon Electric Washer Company, Inc., and Others, Appellants. First Department, July 9, 1915. Corporation — election of directors — right of stockholder to vote — resolution placing stock in trust until paid for. Where a resolution authorizing the issuance of thirty shares of preferred and thirty shares of common stock to a certain person, provided that they be held in trust for him by a person named, ‘ ‘ until payment of said thirty shares of preferred stock,” whereupon they, together with share for share of the common stock, were to be transferred to the purchaser, the latter having paid for twenty of the shares and having made a ten per cent deposit on the purchase price of the balance, became the equitable owner of the shares paid for, and his trustee was entitled to vote thereon at an election of directors. Said resolution should not be construed to mean that the whole thirty shares remained the property of the corporation as unissued stock, so that no vote could be taken thereon until the whole number of shares had been paid for. Appeal by the Conlon Electric Washer Company, Inc., and others, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 19th day of May, 1915, setting aside the election of directors of the Conlon Electric Washer Company, Inc., and directing that a new election be had. Francis X. Carmody, for the appellants. John M. Nolan, for the respondents. [MAJORITY — Scott, J.:] Scott, J.: There are several provisions of the order appealed from which seem to us to he of doubtful validity. Among these is the vacatur of the election of the two directors who were unanimously elected, and the provision that at the new election the stock should be voted as it was owned at the date of the election ordered to be set aside. It is unnecessary, however, to discuss these provisions of the order. The question whether or not a new election should be had turns upon the right of Walter J. Conlon to vote upon the shares of stock held by him in trust for delivery to Wm. F. Haynie when he should pay for them. The precise terms of the resolution under which this stock was issued do not appear, but the statement of their purport made by Haynie, and not disputed, is 1 ‘ that thirty shares of preferred and thirty shares of common stock of the company be issued to W. J. Conlon to be held in trust by him for me until payment of the said thirty shares of preferred stock, whereupon the preferred stock paid for was to be transferred to me, together with share for share of said common stock.” It appeared that before the election Haynie had paid to the company and it had accepted payment for twenty shares of the stock, and a ten per cent deposit on the purchase price of the remaining ten shares. The justice at Special Term construed the resolution to mean that the whole thirty shares remained the property of the company, as unissued stock, until the full purchase price was paid for thirty shares. We do not so construe the resolution as recited by Haynie. Equitably, at least, he became the owner of and entitled to the beneficial use of the stock as he paid for it, unless it was expressly provided, as it does not appear to have been, that he should be entitled to none- of the stock until he had paid for all. If we are right in this construction, at least twenty of the votes which Conlon tendered on account of this stock in Haynie’s interest were properly received and counted, and these votes were sufficient to elect Haynie, Moran and Regina Conlon, even if all the other votes condemned by the Special Term were thrown out. The order appealed from must be reversed, with ten dollars costs and disbursements, and the proceeding dismissed, with ten dollars costs. Ingraham, P. J., Clarice, Dowling and Hotchkiss, JJ., concurred. • Order reversed, with ten dollars costs and disbursements, and proceeding dismissed, with ten dollars costs.