Third Department, September, 1913. [Vol. 158. remuneration and profit from the capital that he has invested therein.' The court among other things found at the request of the defendants: "There has been and is no mismanagement and no waste on the part of the defendants or any of them in their conduct of the affairs of the United States Express Company." "No conspiracy has existed, or does exist among the defendants, or any of them, whereby the control of the United States Express Company was to be given, or was given over, to the defendants, Weir, Fargo and Stetson, or any of them, or to the defendants American Express Company and the Adams Express Company, or either of them." "There has been no cessation of effort by the officers and directors to retain and increase the business done by the United States Express Company in competition with the Adams and American Companies." 'There has been no cessation of effort on the part of the officers and directors, or any of them in doing all that they could to make the United States Express Company prosperous and to increase its business and earnings." The evidence fully sustained such findings of the trial court. The court also found that the plaintiff had no adequate remedy at law. The court held, as conclusions of law, that the United States Express Company was a joint stock association, its shareholders amenable to chapter 245 of the Laws of 1854, and the statutes amendatory thereof and supplementary thereto; that the resolution by the then acting directors of the United States Express Company to elect Levi C. Weir and James C. Fargo directors was in direct violation of the intent and meaning of the articles of agreement of said association, that no directors should be concerned with or interested in any business in opposition to the business and interests of the United States Express Company, and that neither was eligible to be elected a director thereof; that the plaintiff was entitled to a decree of this court directing the proper officers of the United States Express Company to give due notice of and to hold a meeting of the shareholders of the United States Express Company for the purpose of electing seven directors upon the board of direct App. Div.] Third Department, September, 1913. ors of that company; that the defendants, who were officers of the Adams and American Express Companies, were entitled to judgment against the plaintiff dismissing the complaint upon the merits, and that the plaintiff was entitled to recover costs of the action against the individuals constituting the board of directors. Exceptions were duly filed by the unsuccessful defendants, and from the judgment entered upon such decision this appeal has been taken. We apprehend it will not be contended that the plaintiff was entitled to the decree granted upon the ground of mismanagement, waste, fraud or conspiracy upon the part of the directors, and as justifying such belief we have referred at some length to the findings upon these charges. From the opinion of the learned trial court it appears that its decision was based upon the ground that the articles of association were unwarranted under the common law, and that chapter 245 of the Laws of 1854 furnished the exclusive source of the power governing the associates in making their articles of association, and, hence, that as such articles of the associates could not confer greater powers than were given by such act, the plaintiff, as matter of law, was entitled to a decree directing the calling of a shareholders' meeting and the election of a full board of directors. With this conclusion we cannot agree. The cases of Duvergier v. Fellows (5 Bing. 248) and Blundell v. Winsor (8 Sim. 601), cited in the opinion below, cannot be considered as of any weight in view of the later decisions. (Matter of Aston, 27 Beav. 474; affd., 4 De G. & J. 320; Harrison v. Heathorn, 6 M. & G. 81, 137; Lindley Company Law [6th ed.], 183.) In Phillips v. Blatchford (137 Mass. 510) Justice HOLMES writing the opinion says, referring to partnerships with transferable shares, and citing the above English cases: "The grounds upon which they were formerly said to be illegal in England, apart from statute, have been abandoned in modern times.' The court at Special Term has quoted at some length from the opinion in People ex rel. Platt v. Wemple (117 N. Y. 136), which related to the imposition of a tax on the corporate franchise or business of the United States Express Company, as indicating that it was not the articles of association but the APP. DIV.-VOL. CLVIII. 25 Third Department, September, 1913. [Vol. 158. statutes of the State which made it a valid and effective entity. The question there at issue was whether the company was taxable under the provisions of chapter 542 of the Laws of 1880, entitled "An act to provide for raising taxes for the use of the State upon certain corporations, joint-stock companies and associations," and the amendments to said act, and the question as to whether the organization was illegal at common law was not up for decision, but the court said, after citing the cases of Duvergier v. Fellows and Blundell v. Winsor (supra): "It is not necessary, however, to assert in what cases such a combination of individuals would now be deemed illegal at common law, for the statutes of the State render the arrangement possible, and in our opinion the association in question is within their purview." The court then entered into a discussion as to the effect of the articles of agreement having been executed immediately prior to the time when the act of 1854 went into effect, and alluded to the fact that the extended existence of the company began in 1864 when the law was in full force, and concluded that the company was subject to the imposition of the tax. * * The United States Express Company is the creature of contract and exists by virtue of its articles of association and not by statute. As was said in Matter of Jones (172 N. Y. 575): "A joint stock company has never appealed to the sovereignty of the State for the right to exist, but by articles of association, which take the place of the charter of a corporation, the associates have been content to do business subject to the individual liabilities of partners. * The principal feature of the joint stock association is the right of perpetual succession. In this respect it is like a corporation, and enjoys all the advantages flowing from such a privilege. * It is competent for private individuals to create a joint stock association, issue shares of stock, and in that form dispose of property by last will and testament. The associates by contract have created the same situation as to shares of stock that a corporation secures by charter. As to the nature * * * * * of the shares of stock issued by a joint stock association, the same general principles of law are to be invoked that apply to a corporation.' App. Div.] Third Department, September, 1913. "The joint stock association is not of statutory origin, as is the corporation, but the creature of the common law." (Hibbs v. Brown, 190 N. Y. 167, 192.) "Even if, unlike a partnership which it really is, it can be said to exist as an artificial being, it owes its existence not to the State but to the contract of its members and may, therefore, be said to exist wherever it does business or owns property. In that sense its analogy to a corporation is to one organized under the laws of two or more States." (Matter of Willmer, 153 App. Div. 804, 806.) "The articles of association of an unincorporated joint stock company bear the same relation to it that the charter bears to an incorporated company. They regulate the duties of the officers and the duties and obligations of the members of such a company among themselves; they specify the capital, limit the duration and define the business of the company.' (Bray v. Farwell, 81 N. Y. 600, 608.) We are of the opinion that the articles of association were fully warranted under the common law; that the United States Express Company was thereby constituted a legal entity with the right of existence to such time as it might see fit to extend the same; and that the five shares held and owned by respondent are subject to the provisions of the articles of association as fully as though he were one of the original shareholders. Relative to the contention of the respondent that the provisions of the articles of association requiring the affirmative action of the shareholders owning and holding two-thirds of the stock in order to obtain the holding of a meeting for the election of directors are illegal, we are referred to no authority to that effect. Upon the other hand this court only recently held that a provision of a certificate of incorporation of a business corporation, wholly depriving the preferred stockholders of the right to vote for directors was valid. (People ex rel. Browne v. Koenig, 133 App. Div. 756.) That the shareholders may devolve the sole management of the affairs of the association upon the board of directors is provided by the Joint-Stock Association Law (Consol. Laws, chap. 29 [Laws of 1909, chap. 34], § 3), but we find no provision of law Third Department, September, 1913. [Vol. 158. prescribing the manner in which the directors shall be chosen, nor limiting the right of a voluntary association to itself prescribe the method of choosing directors, nor fixing a definite term of office, neither are we referred to any authority to the effect that it was unlawful for the associates to provide in the articles of association that in the event of a vacancy occurring in the board of directors the same should be filled by the remaining directors. It would seem that one shareholder would have the right, by proxy or otherwise, to empower another shareholder, although he might be a director, to cast the vote of the former at an election to fill a vacancy in the board of directors. The provision in question was apparently adopted in order to secure stability in the management of the affairs of the association, harmonious action upon the part of its board of directors, and to avoid the necessity of an election by the shareholders whenever a vacancy might occur in the board of directors. In order further to assure stability in management a mere majority of shares was deprived of the right of choosing directors, which might result in frequent changes in the policy of administration; but in order to correct abuses which might arise in the management of the affairs of the association, or dissatisfaction with the action of the board in filling vacancies, the power of displacing directors was vested in the owners and holders of two-thirds of the shares through a meeting of shareholders which should be called at their request. It may also be observed that under the original division of shares this provision prevented each of the two largest shareholders, even though he might have acquired the ownership of all the remaining shares, from ousting the other from the position of associate in the management of the affairs of the company. No statutory authority was necessary to give each associate the right to say who should act for him in filling a vacant directorship. This was a right which of itself belonged to every shareholder. The fact that the right given to the board of directors to fill vacant directorships created the board a self-perpetuating body did not render illegal the article relating thereto. The Banking Law (Consol. Laws, chap. 2 [Laws of 1909, chap. 10], $ 137 [amended by Laws of 1912, chap. 237, and Laws of 1913, chap. 113]), relating to the election |