43 Colo. 345 | Colo. | 1908
delivered the opinion of the court:
The Denver Club was incorporated ‘ under the laws of this state, not for pecuniary profit but for social purposes. The sum of $35,000 was subscribed by its members as a building fund. Plaintiff, a member of the club from the beginning, was one of "the subscribers to this fund, and to him, as to the others, was issued and delivered a receipt or certificate as follows:
“D. C. No. 27. $1,000.00
“THE DENVER CLUB
“Building Fund.
“The Denver Club has received from E.- "W. Rollins the sum of one thousand dollars, on account of the construction of the club house in the city of Denver.
“The above sum is to be repaid at the convenience and pleasure of the club with interest at the rate of 6 per cent, per annum. In consideration of the several subscriptions of other members of the 'club to the fund of thirty-five thousand dollars, of which this is a part, it is agreed by the holder hereof that no demand will be made for the payment of this. obligation, or any part' therof, until it can be prudently discharged in the discretion of the board of directors, from the surplus revenue of the club. All dividends upon the principal and payments of interest will be made pro rata.
“This certificate is transferable upon the books of the club' only in person or by attorney on the surrender of this certificate properly indorsed.
*348 “Witness the corporate seal of said clnb, and the signature of its president and secretary hereto affixed at Denver, Colo., this 1st day of September, A. D. 1887.
“Edward F. Bishop,
“Secretary;
‘ ‘ Henry R. Wolcott,
“President.
“ (Seal of the Denver Club.) ”
No part of the principal or interest having been received, plaintiff, on June 5th, 1903, demanded payment of the principal and interest without result, and six days later brought this action against the club. After alleging its incorporation, the execution and delivery by it of the certificate, nonpayment and demand, the complaint thus sets out the breach of the contract:
“That the said amount and the interest thereon could have long since been prudently discharged, and that the board of directors of said club, under the exercise of the supposed discretion confided to them by the terms of said instrument, are improperly, wrongfully and illegally refusing to exercise any discretion whatever in an attempt to compel this, plaintiff to surrender the said instrument upon the payment of the principal thereof, requiring, as a condition precedent to the payment of any sum whatsoever, the forfeiture of the accrued interest thereon. ’ ’
• The complaint further alleges that defendant’s board has refused to declare any dividends on this series of instruments, although having moneys on hand applicable to that purpose, but on the contrary, from time to time has violated that portion thereof which provides that “all dividends upon the principal and payments of interest will be made pro rata, ” in that it has heretofore paid several of the instru
In its answer the defendant says that it did not execute, though its officers, without authority, may have executed and delivered this certificate to the plaintiff; admits that neither the principal nor interest thereof has been paid, and denies that it could have been prudently discharged by the exercise of the discretion vested in its board, and denies that it has wrongfully or illegally refused to exercise, or that it has wrongfully or illegally exercised, any discretion given to it by the certificate, or that it ever attempted to compel plaintiff to forfeit any interest thereon. It alleges that during the lifetime of these instruments it has never had any surplus revenue, out of which only, if at all, it was obliged to pay these instruments. It admits that all of them, except that of the plaintiff, have been paid, but without interest; that it offered to treat plaintiff1 in the matter of payment as it did all other certificate holders, and in order to pay them the club, not having any surplus revenue for such purpose, was obliged to and did borrow the money therefor.. This new matter in the answer was denied in the replication.
We have made this summary of the contents of the pleadings to bring out clearly the issues which the parties themselves tender, particularly in view of the fact that plaintiff in argument has attempted, to ignore the case which he made in his complaint and to base his recovery upon other grounds..
As preliminary to the main discussion we notice the point made by defendant, to which a large part of the briefs of both parties is devoted, that the contract embodied in this certificate was not made by or under the authority of the club as a corporation, but, at most, is an agreement of its officers. There
The foregoing'summary of the pleadings sufficiently discloses that plaintiff’s interpretation of the contract when he drew his complaint was not that there was an absolute promise by the club to pay a sum certain within a reasonable time, but that the promise was to pay the certificate out of the surplus revenue of the club, when in the discretion of its board of directors, after the same was on hand, such payment could prudently be made. In harmony with such interpretation plaintiff averred that the discretion vested in the board had not been prudently exercised, since the particular fund out of which the instrument was to be paid was in the hands of the club for that purpose and the board wrongfully refused to make the required application. The same thought was in plaintiff’s mind in the production of his evidence, practically the whole of it .being an attempt to prove that the defendant had accumulated a surplus revenue sufficient to pay the certificate, or, if it was not on hand, it was because the. board had mismanaged its affairs and wrongfully qxercised or refused rightfully to exercise its discretion in appropriating the. club’s income. The plaintiff’s brief, however, is not altogether consist
If in this case tbe club bad accumulated surplus revenue which could prudently be applied to tbe liquidation of these instruments and tbe board bad wrongfully refused to make tbe application, or if it was shown that its willful mismanagement, amounting in law to fraud or bad faith, or wrongful exercise of discretion, bad prevented the accumulation of a surplus, with a view of escaping liability, tbe law would not permit such conduct to defeat plaintiff’s claim. Tbe plaintiff sought by tbe evidence to show, and upon such showing wholly relied for a recovery, that tbe defendant did have a surplus revenue out of which payment should have been made; and attempted to show further that if such revenue bad not been acquired, it was because tbe income of tbe
If such a rule applies to a private corporation organized for profit, for a stronger reason should a member of a social club be required to make a strong showing of mismanagement of its affairs by the board of directors, of which he had knowledge and made no complaint, before he can be heard to say that such mismanagement has resulted to his injury.
The judgment of the trial court, which was that the plaintiff failed in his proof of the material allegations of his complaint, is sustained by the evidence, and, therefore, is affirmed. Affirmed.
Chief Justice Steele and Mr. Justice Goddakd concur.