Bennett v. St. Louis Car Roofing Co.

• Decision Date: 10 November 1885
• Citation: 19 Mo.App. 349
• Parties: T. E. BENNETT, Respondent, v. ST. LOUIS CAR ROOFING COMPANY, Appellant.
• Court: Missouri Court of Appeals

19 Mo.App. 349

T. E. BENNETT, Respondent,

v.ST. LOUIS CAR ROOFING COMPANY, Appellant.

St. Louis Court of Appeals, Missouri.

Nov. 10, 1885.

APPEAL from the St. Louis Circuit Court, AMOS M. THAYER, Judge.

Reversed and remanded.

LEO RASSIEUR and DEXTER TIFFANY, for the appellant: Directors stand in the relation of trustees to the stockholders, and can not dispose of the trust property to promote their individual interests; hence, compensation fixed by themselves after they are elected, the office not being salaried prior to their resolution, the resolution does not amount to a contract. Dunstan v. Gas Co., 3 Barn. & Ad. 125-129; Holder v. R. R. Co., 71 Ill. 106; Cheeney v. R. R. Co., 68 Ill. 570. Fixing compensation of officers should be authorized by organic law or by-law, otherwise the stockholders have a right to presume that they are to act as trustees gratuitously. Loan Ass'n v. Stonemetz, 29 Pa. St. 536. There being no by-law or legal resolution, the vote of the board can not be considered a contract with the officer. Butts v. Wood, 37 N. Y. 318.

F. M. ESTES, for the respondent: A corporation loses its general power of removal after it makes a special contract. In such case it is bound like a private person. Trustees v. Shaffer, 63 Ill. 243. Where it is shown that a railway director rendered services for the company apart from his duty as director, he may recover for such services. R. R. Co. v. Sage, 65 Ill. 328. When a director of a railway company is appointed by a resolution, an agent to perform duties not pertaining to his office of director, he may recover for such services when rendered by him. Cheeney v. R. R. Co., 68 Ill. 570; Shackelford v. R. R. Co., 37 Miss. 202.

ROMBAUER, J., delivered the opinion of the court.

The plaintiff's petition states that on or about July 1, 1883, he was, by a majority vote of the board of directors of the defendant, elected to fill the position of vice-president and secretary of the defendant for the period of one year. That, on said above mentioned date by a majority vote of the board of directors of the defendant, a salary of one hundred and fifty dollars per month was voted the plaintiff for his services as aforesaid.

That the plaintiff performed all of the services incident to said office and incumbent upon him as such vice-president and secretary, for the period of one year. That he had been paid on account for said services the sum of one thousand and fifty dollars, leaving a balance due the plaintiff of seven hundred and fifty dollars; that he has demanded of the defendant said sum, and payment thereof has been refused; wherefore he prays judgment.

The answer admits all the allegations in the plaintiff's petition, except that any balance was due to him, and sets up by way of avoidance, that the plaintiff was one of the directors of said company, and that he being present at a meeting of said board of directors held December 28, 1883, it was determined by a majority vote of the said board that from and after February 1, 1884, the office of vice-president and secretary should cease to be a salaried office. That the plaintiff was fully paid up to said first day of February, 1884, etc.

The reply admitted the resolution of December 28, 1883, in the defendant's presence, but claimed that it was passed against the defendant's protest, and then states, “the plaintiff for a further reply states that the board of directors of the defendant, was composed of only three persons, and the plaintiff denies that he is bound by the action of said board of directors.”

On the trial of the cause the defendant offered in evidence the resolutions of the board of directors of July 6, 1883, and December 28, 1883; but the court rejected the evidence as immaterial, stating that the plaintiff was entitled to judgment upon the admissions contained in the pleadings, and rendered judgment accordingly.

Whether this ruling of the court was correct, is the only matter submitted for our consideration upon this appeal.

That directors stand in the relation of trustees to the stockholders, and can not dispose of the trust property to promote their individual interests, may be conceded. That, however, does not prevent their employing in good faith, one of their number to perform services for the corporation, which are not necessarily incident to his duties as director. The compensation, however, should be fixed by by-law or resolution before the services are actually rendered, so as to contain the necessary elements of a contract supported by sufficient consideration.

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