147 F. 90 | 2d Cir. | 1906
This action was brought against a Connecticut corporation to recover salary alleged to have accrued to the plaintiff as its president for the period from March 1, 1/898, to March, 1901. The defense was originally a denial of liability, but by suggestion upon the record and by supplemental answer the further defenses were interposed of the abatement of the action by the dissolution of the defendant since the commencement of the action, and a subsequent decree barring the plaintiffs demand made by the state court of Connecticut in an action brought for dissolving and winding up the corporation.
The assignments of error present the questions of the general right of the plaintiff to recover salary upon the facts proved, of the effect of the dissolution of the -corporation as an abatement of the action, and of the effect of the Connecticut decree.
It appeared upon the trial that the plaintiff had been, from the organization of the defendant in 1890, its president and one of its largest stockholders. In 1893 a by-law was adopted by the corpora
Upon the foregoing facts we have no doubt that the trial judge properly left the cáse to the jury, with the instruction, in substance, that, if they found that the plaintiff after 1898 continued to perform large and important services for the defendant as its president, he-was entitled to be paid a salary commensurate with their value.
It is well settled that the officer of a corporation, who is a stockholder, is not entitled to compensation for the services performed by him as such officer, in the absence of any agreement or expressed assent by the governing body of the corporation that he shall be paid. In the absence of some promise in advance, the law implies that such services are performed without expectation of reward, and because of the interest of the stockholders in the affairs of the corporation.
It is plain that- the corporation in the present case, by its by-law, had promised that a yearly salary should be paid its president, and that the amount should be fixed after the expiration of each year of service. It was the meaning of the by-law, not that no salary should be paid unless one should be fixed at the annual meeting, but that one should .be paid and the amount fixed at the annual meeting, unless, it was considered that none should be allowed in excess of that which the treasurer had in the meantime advanced. Its true construction is not that the advances may be made at the discretion of the treasurer, but that he have the requisite authority to make them up to the specified limit. The by-law 'rebuts any presumption that the-officers named in it were to serve without compensation, and is in
The case is in some respects like that presented in Farmers’ Loan & Trust Co. v. Housatonic R. R. Co., 152 N. Y. 251, 46 N. E. 504. In that case resolutions had been annually adopted to pay the president a specified sum “for the ensuing year.” By the last resolution there was “voted to the president a salary of $5,000 a year.” Thereafter there was no resolution of the directors for 15 years, but the corporation continued to pay the salary of $5,000. A new president was elected, and served for two years without drawing any salary. The court, after suggesting that the resolution might be treated as standing authority for the payment of the salary of $5,000 to the individual who might fill the office, said:
“If that was not so. it was at least a question for the jury whether, from the existence of the resolution, the acquiescence of the directors, and the conduct of the plaintiff, it was not so understood and treated by the parties concerned.”
The circumstance that the duties of the plaintiff became less onerous to himself, and his services less valuable to the defendant, by reason of the relinquishment by the corporation of one branch of its business, did not absolve the defendant from all liability. It is only when there is such a change in the business of the corporation that the officer has no longer any duties to perform that the contract to pay salary may be considered abandoned or dissolved. Long Island Ferry Co. v. Terbell, 48 N. Y. 427. When the change is such as to minimize the value of the services, it is to be expected that the directors will take action to reduce the future salary; and, if they do not, it may be reasonably presumed that both parties understand the previous arrangement to be still in force.
It is unnecessary to decide whether the plaintiff would have been entitled to recover the amount of salary which had been fixed by the by-law, or at the meeting of stockholders in 1895, as tiie case was not left to the jury upon this theory. If there had been no change in the nature and extent of the services rendered by the president, in view of the fact that for several years subsequently that salary had been paid to him by the corporation, and in view of the explanation why no salary was paid during the remainder of his term of service, we think the jury would have been warranted in allowing him the amount which had been fixed by the corporation in 1895. When there has been a contract for service for a year, and the same service is continued for the succeeding year without any new contract, it is to be implied that the parties have assented to the renewal of the original contract. Wood, Master & Servant, § 96.
The contention that the action abated by the dissolution of the corporation would undoubtedly have to prevail, were it not for the effect of the Connecticut statute. Chapter 198, § 3396, Gen. St. Conn. 1902. The statute provides that all corporations “which arc dissolved by voluntary action, or by decrees of court, or by act of the General Assembly, shall be deemed to continue so far as to enable them to prosecute and 'Fiord suits by and against them.” It is-
The defense that the Connecticut decree was a bar to the action rests upon the following facts: After the present action had been commenced, and in March, 1902, a suit in equity was brought in a Connecticut state cotirt pursuant to the provisions of the Connecticut statutes by certain stockholders of the defendant to obtain a dissolution and wind up the affairs of the corporation. The statute authorized the court in which the suit was brought, among other things, to limit a time not less than four months for creditors to present their claims. The plaintiff was not named or served with process as a party to that suit. In May, 1902, the court made an order that all creditors present their claims within four months. The plaintiff did not prove his claim. In April, 1903, the court made a final decree adjudging, among other things, that all claims against the corporation, including specifically the plaintiff’s claim, had been forever barred. The only notice of the order to creditors to prove their claims which was ever given to the plaintiff was by publication in a Connecticut newspaper and the mailing of a copy addressed to him. During all the time from the commencement to the final decree in Connecticut the plaintiff was a citizen and resident of the state of New York.
The Connecticut suit was of the nature of a proceeding in rem, and concludes all creditors of the corporation, as well as all other persons interested in the res, so far as its decree dealt with the assets of the corporation of which the court acquired possession; and this is so whether the creditors were made parties in person or not, or whether or not there was ever any personal service of process upon them, if the substituted service was made in the manner authorized by the statutes of Connecticut; but the decree could not otherwise affect their demands against the corporation, unless these demands were adjudicated after due notice and an opportunity to be heard had been given to them; and this notice could only be effectually given as to nonresidents of the state by personal service of process. Cooper v. Reynolds, 10 Wall. 308, 19 L. Ed. 931; Hart v.
The judgment is affirmed.