44 Mo. App. 59 | Mo. Ct. App. | 1891
This was an action for the reasonable value of the services of the plaintiff as secretary of the defendant corporation for the period of one year. At the close of the evidence the court directed the jury that the plaintiff could not recover. He thereupon took a nonsuit with leave to move to set it aside, and, having made the motion unsuccessfully, brings the case here by appeal.
Payment of his services was resisted on the ground that, during the period within which the services were rendered, he was a director of the company, and that there was no by-law, resolution or contract of the corporation allowing him compensation for his services as secretary.
The corporation was organized under the laws of Illinois, and had its principal office at East St. Louis, in Illinois, but had a so-called branch office in St. Louis. The plaintiff was a stockholder to the extent of one-eighth of the capital stock. At the first meeting, at which directors were elected, he was chosen one of the directors. He was also at the same time elected secretary. The by-laws of the company empowered the
Another by-law was as follows : “No salary shall be paid to the officers of this company, until actual profits are made out of the business of this company, except to the secretary.”
The plaintiff’s evidence was to the effect that, during the year for which he now attempts to recover for his services as secretary, he also acted as the bookkeeper of a commercial house in St. Louis at a regular salary of $125 per month, with a donation, greater or less, according to circumstances, at the end of the year. He nevertheless found time to open and keep a regular set of double-entry books of accounts for the defendant corporation. During the year about $12,000 were disbursed by the defendant upon vouchers amounting to the number of about one hundred and fifty. There was some evidence of a rather indefinite character, from which the jury might have found the value of these services as bookkeeper to have been $50 or $60 a month.
We are of opinion that the judgment of the circuit court must be affirmed. The cases hold with great unanimity that the directors of a corporation are not entitled to compensation for their services - as directors, unless by statute, by-law or prior action of the stockholders ; that the law does not imply a promise on the part of the corporation to pay for such services; and that they cannot vote themselves compensation for such services after the services have been rendered. GTieeney
This rule has been extended to services rendered by officers of corporations, which are regarded as naturally incident to their duties as directors. On this ground it has been held that the executive committee of a joint stock company have no right to vote moneys to themselves in addition to their regular compensation. Blackford v. Ross, 5 Abb. Pr. (N. S.) 434. In Pennsylvania it has been held that the president of a corporation is not entitled to compensation for his services, unless an agreement for compensation has preceded the rendition of the services. Martindale v. Wilson-Cass Co., 19 Atl. Rep. (Penn.) 680. In a case in Oregon, where the by-laws of a corporation provided that the salary of the president should be fixed by the board of directors, but no action in that regard was taken before a claim was made by him for past services, which claim was allowed by the board of directors, it was held that the claim could not be enforced against the property of the corporation, subsequently assigned for the benefit of creditors. Wood v. Lost Lake, etc., Co., 23 Pac. Rep.
The supreme court of Illinois have also held that, where the director of a corporation performs services which may be regarded as incidental to his duties as director, as where he acts as treasurer of the corporation, his salary, fee or compensation as such must be fixed by the board of directors before he enters upon the duties of the special office ; otherwise he cannot recover any compensation afterwards. Holder v. Railroad, 71 Ill. 106; s. o., 22 Am. Rep. 89. To the same effect is Kilpatrick v. Penrose, etc., Co., 49 Pa. St. 118. The supreme court of Illinois have likewise held that a director of a railway company cannot recover from the
On the other hand, there is a considerable line of judicial authority to the effect that a director of a corporation may recover compensation from the corporation, upon an implied promise, for the reasonable value of special services rendered at its instance and request, which services are clearly outside the duties of a director. These cases have arisen in different ways, and, while their special holdings do not always fit the precise proposition here stated, they have generally been decided upon that principle. Henry v. Railroad, 27 Vt. 485 ; Hodges v. Railroad, 29 Vt. 220 ; Chandler v. Bank, 1 Green (N. J.) 255; Gardner v. Butler, 30 N. J. Eq. 702; LaFayette, etc., Ry. Co. v. Cheeney, 87 Ill. 446; Prilliman v. Mendenhall, 22 N. E. Rep. (Ind.) 247; Greensboro, etc., Turnpike Co. v. Stratton, 22 N. E. Rep. (Ind.) 247 ; Gridley v. Railroad, 71 Ill. 200 ;
We have thus reviewed, though necessarily in a summary way, many of the decisions in other American jurisdictions which bear upon this question. It is perceived that they are not so uniformly to the effect that a ministerial officer of a corporation, such as its secretary, being also a director, can recover for his services, on the theory of an implied contract, where his compensation has not been fixed by the board of directors outside of his own vote prior to the rendition of the services, as to require us to depart from our previously expressed views on the subject.
While this observation was not strictly necessary to-the decision of that case,- the principle there laid down was reaffirmed by this court in Besch v. Mfg. Co., 36 Mo. App. 333. In this last case a director of a corporation, who had been appointed its vice-president and superintendent, brought an action against the company to recover upon a contract for an increase of his salary as such vice-president and superintendent. He was not able to show a resolution of the board of directors authorizing the increase, but showed that the increase had been agreed upon by the other two directors of the corporation acting individually. This court held (reversing the circuit court) that he was not entitled to recover, unless he could show that the increase in his salary had been agreed upon at a regular meeting of the board of directors. This court in its opinion given by Judge Biggs reaffirmed the doctrine of the supreme court of Pennsylvania in Kilpatrick v. Penrose, etc. Co., 49 Pa. St. 118, in the following language: “The offices of a corporation are generally filled by the chief promoters of the corporation, whose interest in the stock is supposed to be a motive for executing the duties of the office without compensation, and this
Both of these cases were actions upon express contracts, and, therefore, it must be conceded that what was said in the opinion is not directly controlling as authority in this case, which is an action upon an implied contract. But the principles there laid down were not lightly considered ; and we see no reason for departing from them in this case.
But it is argued that the by-law above quoted, providing that “no salary shall be paid to the officers of this company, until actual profits are made out of the business of the company, except to the secretary,” provides by implication for compensation for the services of the plaintiff as secretary. We do not so interpret the by-law. We interpret it as being merely a prohibition against paying salaries to the officers of the company, except the secretary, until profits should be made, and as leaving the question, whether a salary should be paid to the secretary, open for future decision, depending upon experience as to the amount of work which might devolve upon that office.
Nor do we perceive any hardship in the view which we take. The plaintiff, being a director, might at any time, as soon as he discovered that the services required of him as bookkeeper of the company were onerous, have brought the question of his compensation before the board of directors, and procured the passage of a
We, therefore, affirm tie judgment of tie circuit •court. It is so ordered.