Steele v. Gold Fissure Gold Mining Co.

42 Colo. 529 | Colo. | 1908

Mr. Justice Gabbert

delivered the opinion of the court:

The relation of a director to the corporation which he represents in that capacity is fiduciary, and for this reason the law forbids him from making a contract in which his private interests may conflict with the interests of his principal. He cannot unite his personal and representative character in the same transaction. — Paxton v. Herron, 41 Colo. 147; Morgan v. King, 27 Colo. 539; Fishel v. Goddard, 30 Colo. 147; Mosher v. Sinott, 20 Colo. App. 454; Butts v. Wood, 37 N. Y. 317; Coleman v. 2nd Ave. R. R. Co., 38 N. Y. 201; Hoyle v. Pittsburgh & Mo. R. R. Co., 54 N. Y. 314; Martin v. Santa Cruz W. S. Co., 36 Pac. (Ariz.) 36; Ward v. Davidson, 89 Mo. 445.

Plaintiff was, therefore, disqualified from voting upon the resolution which purported to fix his-salary. He could not make a bargain with himself for a salary binding upon the company. Counsel for plaintiff contend that the vote of the other two directors was sufficient to render the resolution valid. By the resolution in question Bristol, as secretary and treasurer, was voted a salary. He, as well as plaintiff, was interested in its adoption and the object to be attained by its passage, i. e., securing a salary for each. Bristol was as much interested in its adoption as plaintiff, and being personally interested therein, was disqualified from voting thereon. The two directors, Bristol and plaintiff, were acting together to secure a contract from the company in favor of themselves. The resolution by which it was sought to make this contract could not have been passed except both voted thereon, because, with respect to plaintiff’s salary, he was disqualified from voting, and on the subject of the salary voted for Bristol, he was also' disqualified, but as each was personally interested in its passage, he was disqualified from voting upon it at all. It is essential that the majority of the quorum of a board of directors be disinterested with respect to the matter voted upon in order to render it valid and binding upon the corporation. — Smith v. Los Angeles I. & L. Coop. Assn., 78 Cal. 289; Mallory v. Mallory-Wheeler Co., 61 Conn. 131; Jones v. Morrison, 31 Minn. 140; Miner v. The Belle Isle I. Co., 93 Mich. 97; Graves v. Mona Lake Hy. M. Co., 81 Cal. 303.

Counsel for plaintiff cite Funsten v. Funsten Commission Co., 67 Mo. App. 559, wherein it seems to be held that a resolution of the character under consideration is divisible, and that the vote of Bristol could be counted in favor of that part of the resolution fixing plaintiff’s salary. We think this case is clearly opposed to the weight of authority, and clearly contrary to the universal doctrine that a director who is disqualified by reason of personal interest in the matter before a director’s meeting, loses his character as a director, and cannot be counted for the purpose of making it a quorum, nor can his vote be counted for the purpose of determining whether a resolution has been passed by a majority vote. Under this rule, it seems clear that when a director has a direct personal interest in the passage of a resolution, he is disqualified from voting upon it for all purposes, even though part of it may not relate to matters in which he has such an interest as, standing alone, would disqualify him.

It is next urged by counsel for plaintiff that the contract entered into by virtue of the resolution in question having been executed, the defendant is precluded from questioning its validity. There are cases to which this rule of law applies, but it is not applicable to the case at bar. Directors of a corporation are not entitled to compensation for their services in that capacity in discharging their ordinary duties, unless it is legally provided for —Brown v. Republican Mt. Silver Mines, 17 Colo. 421; Thompson on Corporations, § 4380; Arapahoe Inv. Co. v. Platt, 5 Colo. App. 515; McConnell v. Comb. M. & M. Co., 76 Pac. (Mont.) 194.

The rule is the same with respect to the president of a corporation. — 4 Thompson on Corporations, § 4682.

It does not appear from the resolution in question, or from the pleadings or evidence, that the compensation which the directors undertook to provide for the president was to be paid for anything more than such duties as he would ordinarily discharge in that capacity; so that it does not appear that by virtue of this resolution he performed any services other than those which he would have been required, in the absence of a legal agreement, to perform gratuitously. Therefore, he is not in a position to invoke the rule contended for by his counsel, because he does not appear to have performed any services other than he should have performed, and in order to recover for those, he must establish an antecedent, valid agreement by the corporation to pay for them. This he has failed to do.

The final question upon which counsel for plaintiff rely is, that all the stockholders were present at the time when the resolution fixing his compensation was passed, and therefore it will be presumed that, although the resolution was not regularly passed by the board, that the corporation assented thereto. The record does not sustain the contention as to the presence of all the stockholders. It was not a stockholders’, but a directors ’, meeting, in which the stockholders took no part as such; but waiving this question, inasmuch as the wives of the directors were not present, it will not be presumed that their husbands had any authority to represent them; neither is there any evidence to the effect that they claimed to have such authority. The members of the board only assumed to act in the capacity-of directors.

The judgment of the district court is affirmed.

Affirmed.

Mr. Justice Campbell and Mr. Justice Maxwell concur.