231 Mass. 513 | Mass. | 1919
This is an action on three notes each signed by the defendants. They admitted the execution of the notes and set up (inter alla) the defence of illegality. The presiding judge directed the jury to return a verdict for the plaintiff and the case is here on an exception taken to that ruling.
The evidence was in substance as follows: The notes were made
The plaintiff testified that when the time came for the advances to be made he agreed to take $45 a week in cash and $80 in two notes of $40 each signed by the defendants one note to be payable in six months and the other in a year. The first two six months’ notes so given were paid when due. The notes sued on were the
The plaintiff’s main answer to the defence of illegality is that by the true construction of article 1 of the contract of December 19 the $600 there specified was to be paid to the plaintiff by the defendants and by him applied in payment of his unpaid subscription to the capital stock of the corporation. We cannot accede to that contention. The provision made by the article is that the plaintiff “shall be credited” with $600 not that he shall be paid $600. That means “credited” by the corporation.
It must be taken that the plaintiff was elected president of the corporation under St. 1903, c. 437, § 18. It follows that when elected he was elected for the period of one year. But it did not appear when he was elected and so it did not appear when the period of one year (for which he was elected) began to run. For all that appeared his election as president may have taken place December 20,1915, and consequently there may have been but one day of his unexpired term left when the agreement of December 19, 1916, was made. It did not appear that the $150 per week which the plaintiff testified was the “ salary” he was receiving from the corporation was paid to him as president. The plaintiff in his testimony went no further than to state that he “received a salary. of $150 per week.” Doubtless the jury could have found on this evidence that this salary of $150 per week was received by him for his services as president. But we are not concerned with that. What we are concerned with is that on the evidence the jury were not. bound to find that the plaintiff was entitled to receive anything from the corporation on January 1, 1917. If it be assumed that, being employed by the week, he could not be discharged without a week’s notice and in the absence of such a notice without payment of a week’s salary (Frati v. Jannini, 226 Mass. 430), he had more than a week’s notice; for the contract was made on December 19, 1916, and he was to “terminate his employment” on January 1, 1917.
The payment of $600 out of the funds of the corporation when nothing was due to the plaintiff (if the jury found that to be the fact) would have been a fraud upon the stockholders and the agreement that the ¡$600 should “be applied on account of his indebtedness . . . .for unpaid stock subscriptions” would have been in violation of.St. 1903, c. 437, § 14. If so, the whole contract would have been an illegal one. See, for example, Palmbaum v. Magulsky, 217 Mass. 306. It follows that the notes sued on given pursuant to its provisions would have been illegal also and this is a defence which can be set up in an action between the parties to the notes.
We have not found it necessary to consider the true construction of the sixth clause of the agreement, since we are of opinion (for the reasons stated) that the jury were warranted in finding that the agreement was an illegal one quite apart from that provision of the contract.
Exceptions sustained.