When a director makes an assignment of his estate for the benefit of § 40 creditors he ceases to be a director de jure, and the company may declare his office vacant and elect his successor, but as to the third parties dealing in good faith with the company, without notice of any infirmity in the title of the director, he must be regarded as a director de facto. (Kuser v. Wright, 52 N. J. Eq., 825, reversing Wright v. First Natl. Bank, 52 N. J. Eq., 392.)

A person is not a director, though nominated and elected, until he has accepted the office either expressly or impliedly. (Whittaker v. Amwell Natl. Bank, 52 N. J. Eq., 400, 415.)

This section is held not to apply to the first directors of a consolidated company. (Camden, &c. Co. v. Burlington Carpet Co., 33 Atl. Rep., 954.)

40. Stock books to determine who may vote.

In case the right to vote upon any share of stock shall be questioned, the inspectors of the election shall refer to the stock books of the corporation to ascertain who are the stockholders, and in case of a discrepancy between the books, the transfer book shall control and determine who are entitled to vote.

P. L. 1825, p. 83; R. S. (Ed. of 1846), p. 139, §8; Act of 1875, § 45. As to what are "stock books" and "transfer books" see Section 33 (as amended in 1898).

Inspectors of election.-The statute does not in express language re quire inspectors of election; the election must be by ballot, unless the certificate of incorporation otherwise provides (Sec. 34). It is usual, however, to provide in the by-laws that at all elections of directors, two judges or inspectors shall be appointed by the chairman of the meeting.

They are ordinarily sworn to the faithful performance of their duty, and when the polls are closed they present a written report. Except at the first election, no person who is a candidate for election as director can be an inspector, and if elected his election is void (Sec. 35). The powers of inspectors are purely ministerial. They must receive the votes, count them and certify to the result.

If the right to vote is challenged they must refer to the books and ascertain whether the person offering the vote is a registered holder of stock. The books of the company are the only evidence they may receive on this question, and where this evidence is conflicting the transfer book controls. If a share has been transferred within twenty days next preceding the election, any vote offered on it must be rejected. (Election of St. Lawrence Steamboat Co., 44 N. J. Law, 529, 539; Downing v. Potts, 23 N. J. Law, 66.)

Representatives, executors, guardians and the like, must be permitted to vote on the shares they represent upon producing satisfactory evidence of their representative capacity. (See Section 37; Election of Cape May, &c., Nav. Co., 51 N. J. Law, 78.)

Inspectors of election cannot reject a vote offered by proxy because

41-42 the written proxy was not acknowledged or proved. If the proxy is regular in form and apparently the act of the stockholder, the inspectors should receive the votes offered under it. (Election of St. Lawrence Steamboat Co., 44 N. J. Law, 529, 539.)

Evidence of power to vote.-Under the statute the books of the corporation constitute the only evidence as to who are the stockholders entitled to vote at an election of directors. (In re Election of Directors of Cedar Grove Cemetery Company, 61 N. J. Law, 422.)

At an election of directors of a corporation, two sets of directors were elected, one by persons shown by the original stock book, ledger and transfer book of the company to be the owners of a majority of the stock, and the other set by persons shown by such books to own only a minority of the stock, but by another stock book, specially prepared for the election, shown to own a majority of the stock. Held, that the directors elected by the persons shown by the original books to own a majority of the stock were the directors, under Corporation Act, Sections 33, 40, providing that the stock books of a corporation, and, in case of a discrepancy between them, the transfer book, shall determine who are stockholders entitled to vote for directors. (In re Election of Directors of Consolidated Telephone & Telegraph Co., 43 Atl. Rep., 433.)

41. If the election for directors of any corporation shall not be held on the day designated by the act or certificate of incorporation or by-laws the directors shall cause the election to be held as soon thereafter as conveniently may be; no failure to elect directors at the designated time shall work any forfeiture or dissolution of the corporation, but any justice of the supremecourt may summarily order an election to be held upon the application of any stockholder, and may punish the directors for contempt of court for failure to obey the order.

R. S. (Ed. of 1846), p. 139, § 9; P. L. 1874, p. 37; Act of 1875, § 46. (Hoboken Building Assoc'n v. Martin, 13 N. J. Eq., 427.)

42. Supreme court may summarily investigate complaints. touching elections.

The supreme court, upon application of any person whomay be aggrieved by or complain of any election, or any proceeding, act or matter in or touching the same, reasonable notice having been given to the adverse party, or to those who are to be affected thereby, of such intended application, shall proceed forthwith, and in a summary way hear the affidavits, proofs and allegations of the parties, or otherwise inquire into the matter or causes of complaint, and thereupon establish the election so complained of, or order a new election, or make

such order, and give such relief in the premises as right and § 42a justice may require; the court may, if the case require it, either order an issue to be made up in manner and form as it may direct, to try the rights of the respective parties to the office or franchise in question, or may give leave to exhibit, or direct the attorney-general to exhibit, an information in the nature of a quo warranto in relation thereto.

P. L. 1825, p. 83; R. S. (Ed. of 1846), p. 139, § 7; Act of 1875, § 44.

A stockholder is a person aggrieved within the meaning of the statute. (Election of St. Lawrence Steamboat Co., 44 N. J. Law, 539.) The Court may set aside the election and order the admission as directors of the persons properly elected. (In re Election of Cape May, &c., Nav. Co., 51 N. J. Law, 78.)

The inquiry before the Court is limited to the consideration whether or not the election complained of has been conducted according to the statutory provisions. (In re Leslie, 58 N. J. Law, 609.)

Where the stockholders of a corporation assemble in two bodies at the time and place appointed for an election of directors, and cast their ballots at separate polls, the court, in ascertaining the result of the election pursuant to investigation under Section 42 of the General Act, may consider the ballots cast at both polls. (In re Election of Directors of Cedar Grove Cemetery Co., 61 N. J. Law, 422.)

42a.

*

Chancellor may summarily investigate complaints touching elections. May restrain persons from exercising offices pending investigation.-Any person who may be aggrieved by or complain of any election for directors, or any proceeding, act or matter in or touching the same, may make application by petition to the chancellor, who, after requiring reasonable notice to be given to the adverse party or to those who are to be affected thereby, shall proceed forthwith and in a summary way to hear the affidavits, proofs and allegations of the parties, or otherwise inquire into the matter or causes of complaint, and thereupon establish the election so complained of, or order a new election, or make such order and give such relief in the premises as right and justice may require.

Pending the hearing and determination of any application to investigate an election of directors the chancellor may by order restrain the persons claiming to have been elected to the office of director from exercising any of the functions and duties of the office.

(Supplement of March 24, 1899. P. L., 1899, p. 563.)

* Arbitrary number; section inserted here merely for convenience of reference.

§ 43

This act confers upon the Chancellor jurisdiction over corporate elections concurrent with that of the Supreme Court. The Chancellor is enabled, however, to give more prompt relief than the Supreme Court, as he may at the outset of the proceedings restrain the persons claiming to be elected as officers from exercising their office during the pendency of the proceedings. Under the law as it stood before this act was passed, the Chancellor always refused to take jurisdiction of cases affecting corporate elections unless there was some element of fraud, breach of trust, or breach of agreement, or other specific ground for equitable relief. (See Johnson v. Jones, 23 N. J. Eq., 216, 226; Mechanics' Nat. Bank v. Burnet Mfg. Co., 32 N. J. Eq., 236, 239; Kean v. Union Water Co., 52 N. J. Eq., 813.)

43. Annual report to secretary of state.

Every domestic corporation and every foreign corporation doing business within this state, shall file in the office of the secretary of state within thirty days after the first election of directors and officers and annually thereafter within thirty days after the time appointed for holding the annual election of directors, a report authenticated by the signatures of the president and one other officer, or by any two directors of the company, stating:

I. The name of the corporation;

II. The location (town or city, street and number, if number there be) of its registered office in this state, and the name of the agent upon whom process against the corporation may be served;

III. The character of its business;

IV. The amount of its authorized capital stock, if any, and the amount actually issued and outstanding;

V. The names and addresses of all the directors and officers of the company and when the term of office of each expires;

VI. The date appointed for the next annual meeting of the stockholders for the election of directors;

VII. Whether the name of such corporation has been at all times displayed at the entrance of its registered office in this state, and whether such corporation has kept at this registered. office in this state a transfer book, in which the transfers of stock are made, and a stock book containing the names and addresses of the stockholders and the number of shares held by

them respectively, open at all times to the examination of the § 43 stockholders as required by law; provided, however, that the requirement of this subdivision shall not apply to foreign corporations nor to any railroad or canal corporation; and further provided, that no part of this section shall apply to corporations as are now by law under the supervision of the department of banking and insurance.

If such report is not so made and so filed the corporation shall forfeit to the state two hundred dollars, to be recovered with costs in an action of debt, to be prosecuted by the attorney-general, who shall prosecute such actions whenever it shall appear that this section has been violated; and further provided, if such report be not so made and filed, all of the directors of any such domestic corporation who shall willfully refuse to comply with the provisions hereof and who shall be in office during the default shall at the time appointed for the next election, and for a period of one year thereafter, be thereby rendered ineligible for election or appointment to any office in the company as directors or otherwise; no director shall be thus disqualified for the failure to make and file such report if he shall file with the secretary of state, before the time appointed for holding the next election of directors after said default, a certificate stating that he has endeavored to have such report made and filed, but that the officers have neglected to make and file the same, and shall report the items required to be stated in such annual report so far as they are within his knowledge or are obtainable from sources of such information open to him, verified by him to be true to the best of his knowledge, information and belief; the secretary of state shall, upon application, furnish blanks in proper form and shall safely keep in his office all such reports, and shall prepare an alphabetical index thereof, which reports and index shall be open to the inspection of all persons at proper hours.

2. In case any domestic corporation, or any foreign corporation authorized to transact business in this state, shall fail to file such report within the time required by this section, or in case the agent of any such corporation designated by any such corporation as the agent upon whom process against the corporation may be served shall die, or shall resign, or shall remove from the state, or such agent cannot with due diligence be