Commonwealth v. Bringhurst. COMMONWEALTH V. BRINGHURST. (103 Penn. St. 134.) Corporation-right to vote by proxy. Unless the right is conferred by charter or by-laws, members of a corporation may not vote by proxy. UO WARRANTO. The opinion states the point. The de fendant had judgment below. R. C. Dale and Samuel Dickson, for plaintiffs in error. George R. Van Dusen and W. Heyward Drayton, for defendants in error. MERCUR, C. J. The relators are stockholders of the Philadelphia Iron and Steel Company. It was incorporated by special act of 12th of April, 1867. The contention is whether the stockholders may vote by proxy in the annual election of officers of the corporation. Section 2 of the act declares "the affairs of said company shall be managed by a board of five directors, one of whom shall be the president, who shall be chosen by the stockholders. All elections shall be by ballot, and every share of stock upon which the required installments have been paid shall entitle the holder thereof to one vote." Section 3, inter alia, authorizes the corporation to "make all needful rules, regulations and by-laws for the well ordering and proper conduct of the business and affairs of the corporation. Provided the same in no wise conflict with the Constitution and laws of this State or of the United States." The charter in no wise refers to voting by proxy. No by-law has been adopted authorizing the stockholders to so vote. In the absence of any express authority in the charter, and without any by-law authorizing it, the question is whether the stockholders may vote by proxy. In other words, is it a power necessarily incident to the corporate rights of the stockholders ? A corporation is the mere creature of the law. It cannot exercise any power or authority other than those expressly given by its charter, or those necessarily incident to the power and authority Commonwealth v. Bringhurst. thus granted, and therefore, in estimation of law, part of the same. Wolf v. Goddard, 9 Watts, 550; Diligent Fire Co. v. Commonwealth, 75 Penn. St. 291. The right of voting at an election of an incorporated company by proxy is not a general right. The party who claims it must show a special authority for that purpose. Ang. & Ames Corp., § 128; Philips v. Wickham, 1 Paige, 590. In this case Chancellor WALWORTH says, the only case in which it is allowable at the common law is by the peers of England, and that is said to be in virtue of a special permission of the king. He adds, "it is possible that it might be delegated in some cases by by-laws of a corporation, where express authority was given to make such by-laws regulating the manner of voting." In People v. Twaddell, 18 Hun, 427, it was held a stockholder cannot so vote unless expressly authorized by the charter or by-laws. Taylor v. Griswold, 2 Green (N. J.), 222, holds that a right of voting by proxy is not essential to the attainment and design of a charter, and even a general clause therein authorizing the company to make by-laws for its government was insufficient of itself to give that right. In State v. Tudor, 5 Day (Conn.), 329, there was no clause in the charter authorizing the stockholders to vote by proxy; yet the company made a by-law authorizing them to so vote. The validity of this by-law was sustained by a majority of the court. So in People v. Crossley, 69 Ill. 195, effect was given to a by-law of the corporation, authorizing voting by proxy, the by-law not being in conflict with the Constitution and laws of the State. That a right to vote by proxy is not a common-law right, and therefore not necessarily incident to the shareholders in a corporation, appears to have been recognized in Brown v. Commonwealth, 3 Grant, 209, and in Craig v. First Presbyterian Church, 88 Penn. St. 42; s. c., 32 Am. Rep. 417. The selection of officers to manage the affairs of this corporation requires the exercise of judgment and discretion. They must be elected by ballot. The fact that it is a business corporation in no wise dispenses with the obligation of all the members to assemble together, unless otherwise provided, for the exercise of a right to participate in the election of their officers. Although it be designated as a private corporation, yet it acquired its rights from legislative power, and it must transact its business in subordination to that power. As then the relators cannot point to any language in Smith v. National Life Insurance Company. the charter expressly giving a right to vote by proxy, and it is not authorized by any by-law, they have no foundation on which to rest their claim. Judgment was correctly entered for the defendants on the demurrer. Judgment affirmed. SMITH V. NATIONAL LIFE INSURANCE COMPANY. (103 Penn. St. 177.) Insurance · forfeiture — paid-up policy. Where a policy of life insurance provided that the company, if requested, should "after the payment of premiums for two full years, issue a paid-up policy," but was conditioned to be void for non-payment of premiums when due, held, that such request would not be effectual if not made until after a default in payment of premiums. A CTION of damages for refusal to issue a paid-up policy. The opinion states the case. The defendant had judgment below. Arthur M. Burton, for plaintiffs in error. R. C. Dale, S. Dickson and Wm. McGeorge, for defendant in error. CLARK, J. The policy in suit was issued by the National Life Insurance Company of the United States of America, on the 20th of October, 1868; it was upon the life of William Hastie Smith, to his wife Isabella, in the sum of $3,000. The consideration of the contract, apart from the representations made in the application, was the sum of $46.59, in hand paid, and the semi-annual payment of a like sum, on or before the 20th October and April, in every year, during the continuance of the policy until fifteen full payments were made; the last to be made on the 20th April, 1883. The policy contained the following provision: "And the said company further agree that after due payment of premiums for two full years, they will, if requested, on the surrender of this policy duly receipted, issue another policy, payable as herein provided, on VOL. XLIX-16 Smith v. National Life Insurance Company. which no further premium shall be required on the life of the person whose life is hereby insured, for as many fifteenth parts of the original amount hereby assured as there shall have been complete annual premiums paid." The plaintiff paid the premiums regularly for ten years; the semi-annual premium for October, 1878, and those subsequently accruing were not paid. On the 2d of October, 1880, application was made for a paid-up policy for $2,000, being ten-fifteenths of the amount of the original, according to the provision of the clause above quoted. This application was refused by the company upon the ground that under the express terms of the policy the plaintiffs had forfeited their rights under it by non-payment of premiums. This action was therefore brought to recover damages for such refusal. In the clause quoted there is no limitation as to the time when a policy must be surrendered in order that the holder may receive a paid-up policy for a fractional part of the original sum, excepting that the surrender must be "after due payment of premiums for two full years." The policy further provides however: "This policy is issued and accepted by the insured and the holder thereof on the following express conditions and agreements : "Second, that the premiums shall be paid in cash on or before the days upon which they become due at the branch office of said company in the city of Philadelphia, or to their duly authorized agents, when they produce receipts signed by the president or secretary. Fifth, that in case of the violation of the foregoing conditions, or any of them, or of the insured dying by his own hand or in consequence of a duel, or in consequence of violating the laws of the United States or of any nation, State or province, this policy shall become null and void, and all payments thereon shall be forfeited to said company." Under the rule of construction which requires that full effect must be given to every stipulation in a contract, the provision first quoted must be read in connection with the second and fifth conditions. The obvious and natural meaning of these conditions taken together is that unless the premiums are paid on or before the day upon which they become due respectively, the entire policy shall become void; and all payments made shall be forfeited to the Smith v. National Life Insurance Company. company. The payment of the premiums constitutes not only the consideration but the condition of the contract. The provision for forfeiture is not limited to the first two annual premiums, it is general and applies to all. In the previous clauses of the policy the number and amount of these premiums are particularly specified, and the time is fixed for the payment of each, the last being payable on the 20th day of April, 1883. The second condition requires that "the premiums shall be paid in cash on or before the days upon which they become due." There is no discrimination or distinction; the condition is applicable to all. The effect of the second and fifth conditions therefore when read in connection with the previous clause, providing for a surrender of the original and the issue of a paid-up policy, is to abridge its operation and only to give it effect when that surrender is made in the life-time of the policy. That is to say, during some current year for which payment has been made and before or on the day the annual premium is payable. If any condition of the policy is violated the whole instrument by its own terms is rendered null and void; and when the policy became void none of its provisions remained, neither party had any further rights under it. The policy was however by its terms non-forfeitable, if the assured chose at the proper time to avail himself of the right it secured. He had a special right peculiar to the holder of this class of policies upon discovering his inability to pay at the time fixed by the conditions of his contract to surrender and avoid a forfeiture. That right existed until forfeiture occurred; then all rights ceased. This construction results from the obvious force of the language employed, indeed the words of the policy admit of no other. A condition in a policy of insurance being the language of the company, must, if there be any ambiguity in it, be taken most strongly against them; if reasonably susceptible of two interpretations it is to be construed in favor of the assured so as not to defeat without plain necessity his claim to indemnity which it was his object to secure; but we discover no ambiguity here, the expression of the policy is clear and its meaning unmistakable. Any other construction would be plainly contrary to the express condition that if "the policy became null and void" all payments made thereon shall be forfeited to said company. The several contracts upon the construction of which were ruled the cases of Dorr v. Insurance Co., 67 Me. 438; Johnson v. In |