Timme v. Kopmeier

162 Wis. 571 | Wis. | 1916

Siebeckee, J.

The trial court found that Meta Kop-meier had no notice or knowledge of the making of the contract between plaintiff and defendant for the repurchase of' the stock by defendant from plaintiff and that she at no time consented thereto or ratified it. We have examined the evidence and find that plaintiff’s evidence and that of Meta Kop-meier is in sharp conflict on the point as to whether or not she had knowledge of the contract between plaintiff and defendant. It is contended that the facts and circumstances-show that Mrs. Kopmeier tacitly consented and acquiesced' in having her husband represent her interests as a stockholder at corporate meetings and in the transaction of its business. If such consent and acquiescence were not positively refuted by other evidence in the case we would be disposed to accede to this claim. But Meta Kopmeier testifies positively that she had no information of the transaction and this contract; that although she made diligent effort to ascertain about the-affairs of the company from her husband ■ and others she wholly failed to get the requested information; that she never-assented to the contract, and that none of the stockholders and officers were authorized to represent and act for her in-the matter. Although the facts and circumstances might permit of an inference in conflict with these positive declarations of Mrs. Kopmeier, we cannot say that the trial court’s finding on this point is against the clear preponderance- of •the evidence. We are of the opinion that tbis finding of fact ■cannot be disturbed by tbe court. This state of facts on this point distinguishes this case from the case of Jones v. Williams, 139 Mo. 1, 39 S. W. 486, 40 S. W. 353, relied on by appellant. In that case the court found that a contract of repurchase of stock executed by one who was a stockholder and ■director was not the personal contract of such director but the contract of the corporation.

The principal controversy in this case arises on the question of the validity of the contract. The trial court filed an ■opinion in writing giving a full review of the cases before him and a full statement of the grounds for his decision. The court held that the provision of the contract whereby plaintiff and defendant agreed that in the event that plaintiff’s “employment with said company is discontinued,” either by mutual agreement or by plaintiff’s death, “or by the act of ■either said party of the first part or said company,” or by operation of law or for any other reason, then plaintiff shall ■sell and defendant shall purchase “ ‘all of [plaintiff’s] said stock and pay therefor the full face or par value thereof plus pro rata share of accumulated profits of said company,’ is'contrary to public policy and renders the agreement illegal and unenforceable, unless made with the knowledge and consent of all the stockholders of the corporation.” The court declares this result must follow though it appears as fact in the case that the contract between plaintiff and defendant was made in good faith and that neither party had any intent of securing any secret or special benefit therefrom to the prejudice or disadvantage of the other stockholders.

Directors of a corporation occupy a position of trust and -confidence and are considered in the law as standing in.a fiduciary relation toward the stockholders and as trustees for them. The directors of a corporation ar.e not permitted to •use their position of trust and confidence to further their private interests, nor to become parties to contracts concerning «corporate affairs intrusted to their management which eon-fliet with a free and impartial discharge of their duties toward the stockholders. Any participation by them in contracts dealing with matters of corporate interest which is antagonistic to their free and impartial discharge of official duties is denounced by the law, unless all of the stockholders with full knowledge assent thereto. This doctrine is declared in West v. Camden, 135 U. S. 507, 10 Sup. Ct. 838, to-be applicable “to the directors of a private corporation, charged with duties of a fiduciary character to private parties, on the view that it is public policy to secure fidelity in the discharge of such duties. (Citing.) We think this principle is equally applicable on the ground of public policy, although there was not to be any direct private gain to the defendant; for ... it was the right of the other stockholders ... ‘to have the defendant’s judgment, as an officer of the company, exercised with a sole regard to the interests of the company.’ ” These principles are recognized and applied in Sauerhering v. Rueping, 137 Wis. 407, 119 N. W. 184. Under the facts of the instant case the defendant became interested in purchasing plaintiff’s stock whenever any of the contingencies specified in the contract happened. The defendant as director had a voice in determining whether or not plaintiff was to continue in tire management of the corporate business and whether or not plaintiff’s management was for the general interest of the corporation and its stockholders. 'Obviously his duties as director and his private interest under the contract to repurchase plaintiff’s stock upon the conditions stated were antagonistic and his private interests might oblige him to act contrary to his duties toward the other stockholders. Under such circumstances such contracts are held void on the grounds of public policy unless all of the stockholders assent thereto. The transactions showing how plaintiff came to be employed and put into office by the corporation and his purchase of the stock and the making of the contract for resale thereof to defendant are closely interwoven and show that the plaintiff, the corporation, and the defendant were thereby mutually induced to make these arrangements by which plaintiff became interested as stockholder and officer. The case of Wilbur v. Stoepel, 82 Mich. 344, 46 N. W. 724, involved' a contract like the one here, with two directors on the one part, without the assent of all the stockholders. The court in speaking of the antagonistic relation of such directors as contractors and corporate officers declares:

“Their natural desire and inclination would be to continue the plaintiff as manager, although it were against the interest of the other stockholders, . . . but for the agreement which might render them liable for the payment of a large sum if they failed to retain him. Nor is such contract made valid by the good faith of the parties to it. Its effect upon stockholders who are not parties to it, or do not consent to it, is the same in the one case as in the other. The law therefore wisely condemns and prohibits all such contracts.”

Of other cases cited to our attention the following recognize the same doctrine and apply it to contracts of this character under varying circumstances: Guernsey v. Cook, 120 Mass. 501; Withers v. Edmonds, 26 Tex. Civ. App. 189, 62 S. W. 795; Noel v. Drake, 28 Kan. 265; Sims v. Petaluma G. L. Co. 131 Cal. 656, 63 Pac. 1011; Singers-Bigger v. Young, 166 Fed. 82. Whether or not a contract between the parties to this action which provided only for an option on the part of Timme to demand a repurchase of the stock by defendant in the event of his discontinuance in the service of the corporation would be condemned by "this rule of public policy, is not necessarily involved here and we express no opinion on that point. The case of Bonta v. Gridley, 77 App. Div. 33, 78 N. Y. Supp. 961, is in conflict with the foregoing authorities, as are some arguendo observations in other eases, but we are persuaded that the better rule is' as held in the Wilbur and other cases above cited.

By the Court. — The judgment appealed from is affirmed.