Opinion bv
Mr. Chiee Justice Stereett,We are not convinced that any harm can come to this appellant from permitting the interlocutory decree appealed from to stand and the cause to proceed to final hearing and decree in ‘the court below; nor, are we satisfied that there is anything in •the record as presented that would justify us in sustaining either of the specifications of erroio'
In general, the present holders of stock have a primary right *579to subscribe in proportion to their holdings for any new issue. The stockholders themselves certainly may determine otherwise and order a sale to the public, and payment of-the proceeds into the treasury. But this is exceptional and the exercise of a reserve power which should not be permitted unless' there is a clear intent of the stockholders to do so.
The issue of stock in the present case was not within this power. It was made by a de facto board on the heels of a disputed election followed by quo warranto proceedings which resulted in ousting them. No opportunity was given the other party or the public to subscribe until after Stevens had taken three hundred and fifty shares which was not only a majority of the new issue but gave him a majority of the whole. The effect was to enable him to control future elections, and thus by his own act, while his party were wrongfully filling office, to change the balance of power and the control of the corporation. There can be no reasonable doubt that this was the intent, though the court did not specifically find that fact, being of opinion that as such was the effect the intent was not material.
A ratification by the stockholders would have made the new issue valid, but the acts of the meeting on July 4, 1894, were not a ratification, because they were not a fair expression of the stockholders’ will on the subject. No one was present but the de facto officers themselves, who knew their acts were objected to. The other stockholders were absent-in consequence of an injunction issued by the court against holding the election which was.the chief ■ purpose of the meeting.' It is true the injunction did not in terms prohibit the meeting for other purposes, but as every stockholder knew that' the main business was the election which would terminate the long standing contest for control, they had fair justification for supposing that when the election was enjoined there remained nothing to do at the meeting but the formal routine to which no one attached any importance, and therefore for staying away. In view of the circumstances, a court of equity should not hold them bound-by action sprung upon them, without notice, by the opposition who were thus accidentally in control of the meeting.
lleddig being apparently a bona fide purchaser without notice, the acts of the de facto board are binding on the corporation as to him, but his vendor, Stevens, was rightly prevented from *580obtaining any advantage by his sale of the stock illegally issued to himself, by enjoining a corresponding number of votes on his old stock until the status of the new issue should be finally determined.
Inasmuch as the case goes back for such further proceedings as to the court below may appear to be just and equitable, it is neither necessary nor desirable that we should express any further opinion as to the merits of the controversy, or make any suggestion as to what further action should be taken.
As the case progresses to final hearing, questions that now appear to be worthy of notice may be eliminated from the case, and others of controling effect may arise. What we have said in justification of the interlocutory decree is predicated of the facts as they now appear from the record before us.
The appeal is therefore dismissed with costs to be paid by appellant; and it is ordered that the record be remitted to the court below for further proceedings.