G.R. No. 1133. March 29, 1904

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3 Phil. 519

[ G.R. No. 1133. March 29, 1904 ]




In January, 1895, in the city of Manila, there were five steamship
companies, represented respectively by Messrs. Aldecoa & Co.,
Macleod & Co., and Francisco L. Roxas, and by the, plaintiffs, Don
Rafael Reyes and Don Francisco Reyes. These companies owned among
others the steamships Bauan, Espana, Saturnus, Bilbao, Serantes,
Herminia, Francisco Reyes, Chispa, Uranus, Venus, Taurus, Brutus,
Aeolus, Romulus, Butuan, Bolinao, Taal, Nuestra Senora del Rosario,
Nuestra Senora de Loreto, Nuestra Senora del Carmen, Luzon, Salvadora,
and Castellano.

The partners or stockholders of these firms having resolved to pool
their respective interests in the said steamers for the purpose of
forming an anonymous partnership or corporation under the name of
“Compania Maritima,” for the purpose of carrying this agreement into
effect, they executed a public instrument on January 23, 1895, by which
they organized the said company for a term of twenty years, with a
capital of 2,500,000 pesos, divided into 5,000 nominal shares of the
par value of 500 pesos each. Part of this capital, up to the sum of
1,508,000 pesos, represented the estimated value of the said steamers
which the parties to the agreement in question contributed to the new
company, transferring to it the ownership of the vessels to the extent
of their respective participation therein and receiving in payment
therefor 3,600 shares of the 5,000 which represented the entire capital
stock. The plaintiffs were among the founders of the Compania Maritima.
Don Rafael Reyes contributed the steamers Luzon and Salvadora at a valuation of 138,410 pesos, and an interest to the value of 4,341.47 pesos in the steamer Espana, valued at 73,000 pesos. Don Francisco Reyes
contributed his interest in the steamers Castellano, Nuestra Senora del Rosario, Nuestra Senora del Carmen, and Espana,
his interest in the first of which was valued at 17,037.61 pesos, in
the second at 18,031.48 pesos, in the third at 19,616.66 pesos, and in
the latter at 12,114 pesos.

The company was organized subject to the terms and conditions
included in its articles of incorporation, among which appear the

“(a) The Compania Maritima shall be
governed by its by-laws and by the Code of Commerce in force in the
Philippine Islands.” (Art. 1.)

“(b) The complete
exercise of the management and administration of this company, as a
corporate entity, corresponds to the shareholders sitting in general
committee. For the immediate exercise of these rights a board of
directors is established which shall have the character of an agent of
the company.” (Art. 18.)

“(c) General meetings shall
be held on the date designated with such shareholders as may be
present, whatever may be the number and value of the stock they
represent. From this rule are excepted meetings called for the purpose
of modifying or dissolving the company, extending the period of its
duration, or of reducing or increasing the capital stock, which meeting
shall be held if the shareholders present in person or by proxy
represent two-thirds of the shareholders in the company and two-thirds
or more of the nominal value of the capital stock.” (Art.22.)

The general meeting, legally constituted, shall represent all the
shareholders, and resolutions adopted thereby in accordance with the
provisions of these articles shall be binding upon all.” (Art. 25.)

The failure of shareholders to attend general meetings shall deprive
them of the right to oppose resolutions parsed by the majority,
provided that the resolution be not contrary to the articles of this
company.” (Art. 26.)

“(f) A majority vote shall be binding.” (Art. 32.)

“(g) The general meeting shall be empowered * * * to modify the regulations or articles of the company.” (Art. 33.)

“(h) The board of directors of this company shall consist of live directors, to be appointed by the general meeting.” (Art. 36.)

At the end of the general articles, and under the heading of ”
transitory provisions,” the articles of incorporation contain the
following clauses:

“(1) The first board of directors of this company
shall be composed of five directors, the board being exceptionally
empowered to appoint another member.

“(2) For each new company joining this company, one director shall be added if so resolved by the board of directors.

These officers shall be distributed among the five steamship companies
which have come together for the purpose of forming this company, so
that each office of director shall be held by one of the members of
each one of the said steamship companies.

“(4) The period of duration of this first board shall be eight years from the date of the organization of the company.

For the first period of eight years the directors shall be: His
Excellency Mr. Zoilo Ybafiez de Aldecoa, Mr. Alejandro Macleod, His
Excellency Mr. Francisco L. Roxas, Mr, Rafael Reyes, and Mr. Francisco

“(6) The directors appointed for the first period may
at any time and for any reason be substituted by members or attorneys
in fact of the organizing firms, to be designated by them.

After the expiration of the first eight years the general meeting of
stockholders shall appoint the five directors referred to in article
36—one for a year, another for two years, and so on successively up to
five years, three of whom at least shall be selected from among, the
members of the former board.

“(8) The remuneration to be received by the first board of directors shall be 2 1/2 per cent of the total receipts.

The first financial half year of the company shall commence on the day
of its organization and expire on the 30th of June, 1895.

The steamship companies which have contributed vessels to the
organization of this company shall have the option to continue
supplying the vessels respectively contributed by them with tackle and
provisions, provided that this be done at the most advantageous prices
in the market. After the expiration of the said term of eight years the
board of directors shall be at liberty to determine this matter at

By virtue of the appointment made in the fifth transitory provision,
the plaintiffs at once became directors of the Compania Maritima,
together with the three other gentlemen named therein.

In a general meeting of shareholders held September 10, 1895, it was
resolved to add one more director to the five already in office, and to
confer upon him the powers of the general administrator of the company.
Mr. John T. Macleod was appointed to this office.

February 22, 1897, another general meeting of shareholders was held.
In this meeting among other things it was resolved (1) to reduce to
five the number of directors, one of them to act as administrator or
manager of the company; (2) to reduce to 1 per cent of the total
receipts the compensation to be paid the board of directors, the sum to
be divided among the five directors in equal parts; (3) to eliminate
all the transitory provisions inserted at the end of the general
articles of the company; and (4) to immediately remove from office the
gentlemen who at that time composed the board of directors of the

This resolution was passed by a majority vote. The plaintiffs voted
against it, and the minutes show a protest made by Don Rafael Reyes to
the effect that he would not assume any of the responsibility which
might devolve upon the company by reason of the said resolution.

In consequence of the resolution to remove the gentlemen who at that
time composed the board of directors, a taken for the election of those
who were to succeed them in the office. The vote resulted in the
appointment as directors of Messrs. Aldecoa & Co., Macleod &
Co. (as attorneys in fact of Don Neil Macleod), Echeita &
Portuondo, Ynchausti & Co., and Don Juan T. Macleod, the latter to
be also the manager of the company. The result was that two years and a
month after the plaintiffs had been appointed to the office of
directors of the company, which office they were to hold for a term of
eight years, they were removed therefrom.

Upon the facts stated, the truth of which was admitted by both
parties to the suit, the plaintiffs brought this action in the Court of
First Instance, praying for judgment against the Compania Maritima for
payment to each one of them, as damages, of one-half of 1 per cent of
the total receipts of the said company during the years 1897, 1898,
1899, 1900, 1901, and 1902, which should have been paid them as
compensation assigned to the first board of directors appointed when
the company was organized, and which they would have received had they
not been deprived illegally and unjustly, as they allege, of the
enjoyment of their offices as directors, which they contended they were
entitled to continue to hold during the said six years until the
expiration of the period of eight years for which they had been
appointed by virtue of the transitory provisions contained in the
articles of incorporation of the said company.

The court below considered that the principal question at issue was
whether the general meeting of shareholders had or had not authority to
rescind and set aside the transitory clause by which the plaintiffs
were appointed directors of the Compañia Maritima for a period of
eight years, or, in other words, whether the plaintiffs were entitled
to compel the company to respect and maintain their appointments during
the said period of time in conformity with the terms of the transitory
provisions. This question the court below decided in favor of the
plaintiffs and rendered judgment against the Compañia Maritima for the
payment of the amount demanded in the complaint, and of the costs of

The court based his decision in part upon the conclusion that the
transitory provisions referred to constituted a lawful and binding
agreement between the parties who executed the articles of
incorporation of the Compañia Maritima, and also between the plaintiffs
and the company, and that they could not therefore be altered without
the consent of all concerned; that according to a decision of the
supreme court of Spain dated June 30, 1888, the by-laws and regulations
of an anonymous mercantile company or corporation constitute a special
law which regulates and determines the rights and obligations of each
and everyone of the shareholders, and that therefore in order that the
resolutions passed by the general meeting of stockholders be valid and
binding upon the members, it is an indispensable requisite that such
resolutions conform in every respect to the terms and conditions of the
partnership agreement, which is to be strictly construed.

The defendant excepted to the judgment of the court below. No motion
was made for a new trial and consequently this court can not review the
evidence or retry the issues of fact, its jurisdiction being limited
solely to deciding the questions of law raised in the bill of
exceptions. (Code of Civil Procedure, sec. 497.)

In its assignment of errors the appellant company contends in the
first place that the judgment of the court below is contrary to the
provisions of articles 117 and 122, paragraph 3, and article 151 of the
Code of Commerce in force in the Philippines.

Article 117 reads as follows: “The contract of a mercantile
partnership, entered into with the essential legal requisites, shall be
valid and binding upon the parties thereto, whatever may be the form,
conditions, and lawful and honest combinations subject to which the
contract is entered into, provided they are not expressly prohibited in
this code.”

The judgment appealed is not contrary to the provisions of this
article. It does not disregard the validity of the contract of
partnership by which the Compañia Maritima was created. On the
contrary, the judgment is based upon the assumption that it was a valid
and binding contract, and declares that the transitory provisions
included in the articles of incorporation of the company are valid and
binding upon those who took part in the execution of that contract, and
upon the defendant company itself.

Nor is the judgment contrary to the provisions of paragraph 3 of
article 122, as erroneously contended by the defendant company. We are
referred to this provision of the law by the defendant in support of
its contention that the administrators of anonymous partnerships or
corporations are under the law removable agents, and that in
consequence they may be removed from office whenever the company may
deem such action necessary or conformable to its interests. According
to this theory the removal of a director is an act which is wholly
discretionary and which may be performed at any time by the company by
which he may have been appointed.

The removability of managers of anonymous partnerships or
corporations is not a new principle in the law merchant. The doctrine
contained in the present Code of Commerce upon this point is also to be
found in the former Code of 1829, which was extended to these Islands
by royal cedula of July 26, 1832. Article 265 of this code provided
that such administrators might be removed “at the will of the
partners.” Notwithstanding the breadth of the wording of the law—which
by the way has been stricken from the text of article 122 of the
present code—it has never been considered that the partners could
remove the administrators at their caprice, whenever they might see fit
to do so; it has always been considered necessary that there should be
some lawful cause justifying the removal.

In corroboration of this doctrine we refer to article 27 of the
royal decree and regulations of February 17, 1848, for the execution of
the law of January 28 of the same year concerning mercantile stock
companies, a decree which, although no longer in force, may
nevertheless serve as a guide in reaching a proper conclusion upon the
point under discussion. This article read as follows:

“As provided in article 265 of the Code of Commerce (of 1829), the
administrators of anonymous stock companies are removable at the will
of the partners when there are just and legal grounds for removal, or
in accordance with whatever may have been agreed upon in this respect
in the articles of the company.”

This provision, which to a certain extent was an explanation of the
true legal meaning of the removability of the administrators of
anonymous partnerships or corporations, is in itself sufficient to show
that the power vested in the shareholders to remove such administrators
from office is not and should not be considered as being omnipotent and
arbitrary, but limited solely to cases in which some cause for removal

Sr. Eixala, in his work entitled Instituciones del Derecho Mercantil de Espana, also lays down the rule that administrators of anonymous partnerships may be removed “when there is just cause therefor.”

The rule could not be otherwise upon consideration of the provisions
of the Code of Commerce itself. The directors or administrators of
anonymous partnerships in many respects stand on the same footing as
mercantile agents, as both of them act by virtue of a commercial
agency. Sr. Eixala in his work above cited, says expressly “that the
administrators of anonymous societies should be considered as factors.”
This doctrine is fully confirmed by judgment of the supreme court of
Spain dated April 2, 1862, in which the court declares that “the
managing director of a manufacturing establishment [the case concerns a
director of a manufacturing corporation denominated ‘The Barcelona
Bronze and Metal Foundry’] can in law be regarded in no other light
than as a factor.”

Article 283 of the Code of Commerce is explicit upon this point.
“The manager,” it says, “of a manufacturing establishment or commercial
concern, authorized to manage it and to make contracts connected
therewith with such limited or extended powers as the owner may have
seen fit to confer upon him [and this is unquestionably the status of
the directors or administrators of anonymous partnerships] shall be
regarded in law as a factor, and shall be subject to the provisions
contained in this section.” (Sec. 2, title 3, book 2, of the Code of

In accordance with the provisions of articles 299 to 302, inclusive,
contained in the section above cited, a factor whose contract with his
principal has been made for a fixed period can not without just cause
be discharged before the expiration of the term agreed upon, under
penalty, in case of wrongful discharge, of payment by the principal to
him of such damage as he may have suffered thereby. For the reasons
which we have stated we consider this provision applicable to managing
directors of anonymous partnerships or corporations, and consequently
we hold that they can not be removed before the expiration of the
period for which they were appointed without just cause

There is no reason for considering such administrators as less
advantageously situated than are factors, in view of the analogy
existing between them, which we have demonstrated.

The Compañia Maritima, as appears from its answer (p. 17 of the bill
of exceptions), passed a resolution which resulted in the removal of
the plaintiffs from the offices as directors of the company before the
expiration of the agreed period of eight years “upon consideration of
the damage which would result to all the shareholders if the former
condition of affairs were to continue, by reason of the considerable
disproportion existing between the compensation of the directors and
the profits upon the capital, and between the compensation and the
service rendered in consideration thereof.” There is no proof of any
other ground which might have justified the removal, nor is it even
alleged. The only reason was one of convenience. It is very obvious
that the mere convenience of one of the contracting parties is not and
can not be a just cause for the rescission of the contractual
obligations assumed in favor of the other, and the premature removal of
the plaintiffs from their office was in effect a rescission of the

Nor is the judgment appealed in conflict with article 151 of the
Code of Commerce. The submission to the vote of the majority of the
stockholders in general meeting provided hy that article is limited
solely to such matters as may be proper for the deliberation of that meeting, and the limitation is expressly stated in the article cited.

The defendant company alleges that the removal of the plaintiffs was
merely a consequence of the modification of the articles of the company
resolved by the general meeting of shareholders, and that this
modification constituted a matter proper for its deliberation, both
because this is to be inferred from paragraph 3 of article 168 of the
Code of Commerce, and because article 33 of the articles of in
corporation of the Compania Maritima expressly empowers the general
meeting of shareholders to modify those articles.

Assuming the existence of this power, which in truth may be regarded
as unquestionable, the question is reduced to determining its scope and
the limitations imposed upon it by the law. The defendant company
contends that this power implies or rather is equivalent to the
power to change the nature of the company, the condition of its
existence, its organization, its purpose, and modus operandi.
can not assent to this interpretation. The share-holders of an
anonymous company or corporation could not, for example, resolve by a
majority vote that it should be changed into a general partnership and
bind the minority to submit to such a resolution which, by making them
general partners, would necessarily result in increasing their
liability for the company debts. Nor could such a majority, against the
will of the minority, change-the principal purpose for which the
company was formed, as, for instance, by investing in mining operations
the capital of the company, which, according to the second of the
articles of incorporation in this case, was to be used exclusively for
purchasing and chartering vessels, in writing marine insurance, and
entering into other contracts and business operations proper to
maritime commerce.

The reason for this is that in every contract of partnership there
is always something fundamental and unalterable which is beyond the
power of the majority, and which, constituting the rule controlling
their resolutions, prevents the will of the greater number from
becoming the absolute arbiter of the interests of the minority. Without
this necessary limitation the power of members in anonymous
partnerships, in which to a certain extent it may be said that numbers
are everything, would be absolute and irresistible, and might easily
degenerate into an arbitrary tyranny. The minority would be completely
wiped out and their rights would be wholly at the mercy of the abuses
of the majority, for they would have no means whatever of defending
themselves against its impositions if the resolutions of the majority,
as contended for by the appellant, were in every case to be binding,
even though manifestly unjust and injurious to the interests of the
minority. This rule, which must be observed, this limit which can not
be passed by the mere will of the majority and upon which it acts as a
veto, is to be found in the essential compacts of the partnership which
have served as a basis upon which the members have united and without
which it is not probable that they would have entered the association.

In speaking of anonymous partnerships in his work already cited, Sr.
Eixala says: ” The resolutions of the boards passed by a majority vote
are valid * * * and their authority for passing such resolutions
is unlimited; provided that the original contract is not broken by
them, the partnership funds not devoted to foreign purposes, or the
partnership transformed, or changes made which are against public
policy or which infringe the rights of third persons.”

Article 7 of the royal decree and regulations of February 17, 1848,
again cited here as a legal precedent, also provided as follows: “The
regulations of stock companies shall comprise provisions relative to
the administrative control of the enterprise and the management of its
operations, in conformity with the basis established in the
articles of association.”

If the articles or regulations must respect this conformity, it follows
that the modification, the mere modification of them, must also be
always subordinate to this rule, for otherwise the legal requirement of
this conformity would’ be wholly illusory.

The judgment of
the supreme court of Spain of June 30, 1888, cited by t]ie court in its
decision, fully confirms the doctrine expressed by declaring that in
order that “resolutions passed by a general meeting of stockholders be
valid and binding upon dissenting members, it is an indispensable
requisite that they conform absolutely to the compacts and conditions of the articles of association, which are to be strictly construed.”

In the second conclusion of law contained in that decision, the
court says further that “the power conferred by the articles [and it
might have been added by the Code of Commerce] to renew the company by
a resolution of the general meeting of shareholders can not be considered as including the power to alter in whole or in part the essential basis of its constitution * * * because that would be equivalent to an essential novation of the original contract, which consequently could on’ly be binding upon such
of the shareholders as had consented thereto.”

The supreme court of Spain, in a decision of June 8, 1875, held also
that “the clear and express provisions of the articles of a company can
not be altered by a subsequent resolution of the members to the
prejudice of those who did not consent to such resolutions.”

As the court below correctly stated in overruling the demurrer to
the complaint: “It is to be supposed that the defendants contributed
their vessels in consideration of the benefits conceded to them by the
articles of association, and that without these benefits they would
not have become partners, nor would they have contributed their vessels
to the enterprise. No one can complain of the appointment of
administrators during the first period of eight years, for this was the
agreement between the founders of the company, which was assented to by
those who subsequently became interested therein.”

The appellant admits this conclusion of the court below to be
correct, as may be seen on page 14 of its brief, which contains the
following statement: “It is said that they are special compacts
[referring to the transitory provisions which contain the appointment
of the plaintiffs] and without denying that this is so, we would add
still further that perhaps they were necessary conditions for the
association of the five companies and to the existence of the Compañia
Maritima.” This being so, and the appointment of the plaintiffs to the
office of directors of the company for a period of eight years being an
essential condition and a fundamental basis of the company, it is
evident that it could not be set aside or disregarded upon the pretext
of a modification of the articles because the power to modify these
articles does not and can not be made to include that of altering the
fundamental compacts and conditions upon which the association rests,
to the prejudice of some of the members, without their consent and
against their will. Such an alteration would not be a simple
modification of the articles, but would be an essential novation of a
part of the contract, and from this point of view the majority is
without legal power to coerce and bind the minority.

And, taking into consideration another phase of the question, it
also appears to be evident that if the managing directors can not be
removed from their offices without just cause, as above stated, the
general meeting of shareholders was without authority to direct, as it
did, the removal of the plaintiffs without just cause. From this point
of view it may be said that this removal as effected was not, nor could
it be, legally speaking, subject-matter for the deliberations of that

From this it follows that the judgment below is not in conflict
with the articles of association of the Compañia Maritima, or of its
articles or resolutions legally passed, as alleged by the appellant, in
the second assignment of error. Far from it; the court on the contrary
has strictly followed the agreement expressed in the contract by
refusing to enforce a resolution of the general meeting of shareholders
arbitrarily removing the plaintiffs from office, because the court
considered it to be contrary to the stipulations contained in that

The defendant in its third assignment of error contends that the
judgment appealed is at variance with the facts established, the
allegations, and the proof.

This supposed variance is presented by the appellant in the
following argument: “The plaintiffs are given one per cent of the
gross, or total receipts, each defendant being given one-half of 1 per
cent as though on the 22d of February, 1897, there had been only five
directors of the Compañia Maritima, the fact being, and it was so
alleged, that the directors were seven in number, and they were to
receive among them all 2 1/2 per cent of the gross receipts; and
consequently the share of each one would not be one-half of 1 per cent.
Furthermore, the directors were only entitled to receive this
compensation if they were present at the meetings of the board and in
proportion to the number of times that they were so present, and the
court does not find in his decision that the plaintiffs were present at
all the meetings of the board of directors, which was the service for
which the compensation of 5 per cent was to be paid, which compensation
was not to be given to each director individually, much less to the
Messrs. Reyes in particular.”

Without going into the contrary allegations of the parties with
respect to the number of directors which the Compañia Maritima had, and
which according to the seventh paragraph of the complaint was seven,
while in the answer only six were mentioned, the sixth being Mr. John
T. Macleod, as to whom the appellees say in their brief (p. 40) that he
was appointed with the condition of not being given any participation
in the compensation of the board of directors-—without going into this
the plaintiffs stated in paragraph 12 of the complaint the following:
“And as those who acquired these rights were five, and the board of
directors of the company was reduced to five, among whom the
remuneration fixed for the board was to be distributed, at the time the
plaintiffs were removed, their participation in this compensation,
fixed by paragraph 8 of the transitory provisions, and of which they
were deprived, must necessarily be one-half of 1 percent each of the
total receipts, or 1 per cent for both.”

It was the province of the court below in making his findings upon
the evidence introduced to find the facts to be as alleged ill that
part of the complaint. And such was doubtless the conclusion upon which
he based the amount of the damages for which he gave judgment against
the appellant, and upon this allegation, which certainly was not denied
in the answer, it follows, therefore, that the judgment is not at
variance with the facts alleged in the complaint.

It is true that the judgment does not express the finding that the
plaintiffs were present at all the meetings of the board of directors,
but it was not necessary to make such a finding because this fact would
naturally be presumed, the contrary not having been proven or even
alleged. At all events the burden would have been upon the defendant to
prove the impossibility of their being present, because this is not to
be presumed but proven.

There having been no motion for a new trial in the court below, we
are without jurisdiction to review the evidence introduced at the
trial. Consequently we can not take into consideration or make any
finding as to the alleged variance between the judgment and the proof,
even if the evidence were what the appellant contends it is.

The fourth assignment of error rests upon a false assumption. In
this assignment it is stated that “the judgment is erroneous in that it
condemns the Compañia Maritima to the payment of damages by reason of
the nullity or invalidity of a resolution passed by a general meeting
of shareholders, there having been no action brought concerning the
nullity of such resolution, and there being no judgment declaring it
null or invalid, and furthermore because this resolution, even if null,
has been confirmed by the plaintiffs themselves.” The judgment does not
say a single word about the nullity of that resolution, but simply
rests upon the breach by the defendant of the conditions stipulated in
the contract of partnership to the prejudice of the plaintiffs. This
breach, disregarding entirely the question of the validity or nullity
of the resolution in question, is sufficient legal ground to support a
judgment for damages under the provisions of article 1101 of the Civil

The decision contains no finding whatever as to acts performed by
the plaintiffs which might be interpreted as a confirmation by them of
the resolution by which they were removed. For the reasons stated
above, we can not review the evidence upon this point nor take it into
consideration in deciding the case. The only fact alleged in the answer
upon this point is that the plaintiffs, after the 22d of February,
1897, withdrew from the vaults of the company the stock there deposited
by them as security for the discharge of their duties as directors.
This fact has been denied by the plaintiffs (p. 41 of their brief), who
state that they did not withdraw the said stock, but that it was
returned to them when they were removed from office. Be this as it may,
the fact remains that this act can not be interpreted as a waiver of
their right to impugn the resolution by which they were removed, for it
was a mere consequence of the cessation—certainly not imputable to
them—of the causes which had made that deposit necessary. As the sole
purpose of this deposit was to guarantee the performance by them of
their duties as directors, there certainly was no reason why the
security should subsist after the plaintiffs had ceased to exercise the
office, even though their removal therefrom was against their will and
as a result of an arbitrary and unjust resolution of the majority of
the shareholders of the company.

With what we have stated the second question of law raised in the
judgment as to whether the appointment of the plaintiffs as directors
under the transitory provisions was personal to them or a right granted
to the companies they represented is no longer of importance. However
this may be, it is certain that the plaintiffs and not the company they
represented were entitled to receive and did receive personally that
part of the compensation which corresponded to them as members of the
board of directors. Consequently they were directly and personally
damaged by their removal from the office by which they were deprived of
that remuneration. If damage exists, and that damage affects them
directly and personally as stated, it is very clear that they can not
be denied their right to maintain an action for the reparation of that
damage, even supposing that the damage might also have affected, in a
different way, the companies in question, because it is a matter of
justice that any person unjustly damaged is entitled to recover
compensation for the damage suffered from the person by whom it has
been caused. The different firms, whether they were the ones which
founded the Compania Maritima, or whether they were mercantile
companies represented in this city by the directors of the Compania
Maritima as alleged in the appellant’s brief, might perhaps have
considered themselves as entitled to demand that any vacancy in the
board of directors caused by the withdrawal of the plaintiffs should be
filled by some one or more of their members during the first period of
eight years, in accordance with the provisions of transitory clauses 3
and 6. But that is not the question in this case. The question to be
determined here is whether the general meeting of shareholders of the
Compania Maritima had a right to remove the plaintiffs from the board
of directors without just cause before the expiration of the period of
eight years fixed in the articles of association. This presents the
question from an entirely different point of view

The decision of these questions necessarily involves that of the
exception taken by the defendant to the order of the court overruling
the demurrer, which exception was relied upon in this instance solely
with respect to the second ground of the demurrer, to the effect that the facts alleged in the complaint do not constitute a cause of action in
favor of the plaintiffs.

The questions raised upon this point go to the merits of the case and
are those which have been already determined. The complaint states
facts sufficient to constitute a cause of action in favor of the
plaintiffs. We therefore declare that the court below did not err, but
on the contrary acted in accordance with the law in overruling the
demurrer upon this ground.

For the reasons stated, the judgment below is affirmed with the
costs of this instance against the appellant. Judgment will be entered
accordingly twenty days from the date of the filing of this decision,
and the case remanded to the trial court for execution thereof. So

Arellano, C. J., Torres, Cooper, Willard, and McDonough, JJ., concur.

Johnson, J., did not sit in this case.

Date created: January 22, 2019


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