Bolte ex rel. Themselves & All Other Stockholders in the Club Stables, Ltd. v. C. H. Bellina, W. E. Bellina, H. H. Perry & Club Stables, Ltd.

• Citation: 15 Haw. 151
• Parties: C. BOLTE, E. K. BULL, J. J. SULLIVAN AND PAUL R. ISENBERG, ON BEHALF OF THEMSELVES AND ALL OTHER STOCKHOLDERS IN THE CLUB STABLES, LIMITED, A CORPORATION, v. C. H. BELLINA, W. E. BELLINA, H. H. PERRY AND CLUB STABLES, LIMITED.
• Decision Date: 06 August 1903
• Court: Supreme Court of Hawai'i

15 Haw. 151

C. BOLTE, E. K. BULL, J. J. SULLIVAN AND PAUL R. ISENBERG, ON BEHALF OF THEMSELVES AND ALL OTHER STOCKHOLDERS IN THE CLUB STABLES, LIMITED, A CORPORATION,

v.C. H. BELLINA, W. E. BELLINA, H. H. PERRY AND CLUB STABLES, LIMITED.

Supreme Court of the Territory of Hawai‘i.

Submitted June 17, 1903.

Decided August 6, 1903.

APPEAL FROM CIRCUIT JUDGE, FIRST CIRCUIT.

Syllabus by the Court

Directors stand towards the corporation in the relation of trustees to a cestui que trust and when they vote to themselves salaries or other compensation for services such salaries or other compensation cannot be allowed to stand unless shown to be fair and reasonable.

Robertson & Wilder for the complainants.

T. McCants Stewart for the respondents.

FREAR, C.J., GALBRAITH AND PERRY, JJ.

OPINION OF THE COURT BY PERRY, J.

This is a bill in equity praying for an injunction restraining the respondent C. H. Bellina, the manager and a director of the respondent corporation, from paying to himself and to the respondents W. E. Bellina and H. H. Perry, as assistant managers, they being also directors, certain salaries alleged to be exorbitant and excessive and for an order requiring those three respondents to repay to the corporation all moneys received by them as salary from September 10, 1901, over and above the amount of a reasonable compensation for the services rendered by them. The court below, upon motion of respondents, dismissed the bill at the close of the complainants' case “for insufficiency of proof and lack of equity.” It is from that ruling that the present appeal was taken. Complainants Isenberg and Sullivan have, however, subsequently withdrawn their appeals.

Undisputed evidence shows that the respondent C. H. Bellina was appointed manager of the corporation by the directors at a meeting held on September 9, 1901; that in the end of that month he fixed the salaries of W. E. Bellina and H. H. Perry as foremen or assistant managers at $200 each per month and that in addition to such salaries the foremen had the use, free of charge, of a cottage belonging to the corporation theretofore rented at the rate of $20 per month; that at a meeting of the directors held November 14, 1901, the directors present being Bolte, Perry and the two Bellinas, the salary of the manager was fixed at $300 per month to date from September 10, 1901, Bolte voting against the motion on the ground that such salary would be excessive; that no formal complaint was made against the salaries until August 5, 1902; that on the last named date, at a meeting of the directors at which were present Bolte, Isenberg, Perry and the two Bellinas, Bolte moved, seconded by Isenberg, that the three salaries in question be reduced $100 per month each, but the motion was lost, the three other directors voting against it; that no further action was taken or complaint made by Bolte or Bull until December 1, 1902, on which day they addressed a letter to the Board of Directors, protesting against the salaries as being unreasonably high, claiming that each of the three men had been overpaid $100 per month, asking the Board to demand repayment of the excess amounting in all to $3933.30 and, in case of non-compliance with such demand, to institute in the name of the corporation appropriate proceedings to compel such repayment, and giving notice that they themselves, the writers, would bring suit if the Board failed to do so; that at a meeting held on December 11, 1902, the two Bellinas and J. J. Carreiro being the only directors present, the Board, acting upon that letter, refused to comply with the requests made or to reduce any of the salaries and passed a resolution declaring the compensation to be reasonable and ratifying and confirming its own action and that of the manager in the matter and allowing and confirming all payments theretofore made on account of such salaries; that H. H. Perry left the employ of the corporation in ...