Burch v. Northon Hotel Co., 120.

• Decision Date: 03 January 1933
• Docket Number: No. 120.,120.
• Parties: BURCH v. NORTHON HOTEL CO. et al.
• Court: Michigan Supreme Court

261 Mich. 311

246 N.W. 131

BURCH

v.NORTHON HOTEL CO. et al.

No. 120.

Supreme Court of Michigan.

Jan. 3, 1933.

Appeal from Circuit Court, Wayne County; Theodore J. Richter, Judge.

Suit by Edwin A. Burch against the Norton Hotel Company and others. From a decree dismissing the bill, plaintiff appeals.

Affirmed.

Argued before the Entire Bench, except FEAD, J.Bulkley, Ledyard, Dickinson & Wright, of Detroit (Charles H. L'Hommedieu and Robert W. Conder, both of Detroit, of counsel), for appellant.

Behr & Coolidge, of Detroit (Fred A. Behr, of Detroit, of counsel), for appellees.

WIEST, J.

Plaintiff, a minority stockholder in the Norton Hotel Company of Detroit, filed the bill herein to obtain a decree requiring defendants Charles W. Norton, Preston Norton, and Ralph Norton to refund to the corporation excess salaries paid to them for ten years preceding September 13, 1929, the time of filing the bill. The bill was dismissed, and plaintiff reviews by appeal. The salary of Charles W. Norton, from time to time, was fixed by resolution of stockholders at annual meetings, and the salaries of the other defendants, it is claimed, were fixed by their father Charles W. Norton, as manager. The circuit judge found that the salaries were not exorbitant, and that of Charles W. Norton, in each instance, was fixed by resolution of the stockholders, and plaintiff was present and voted for the same or his proxy so voted, and his failure to complain during the ten years of great profit, during which he received 113 per cent. return on his investment, constituted estoppel and laches.

During the ten-year period the company not only declared 113 per cent. in dividends to its stockholders but paid in full a funded indebtedness of $125,000, and $25,000 of bank indebtedness. The board of directors of the company during the ten years consisted of four men of affairs, outside of the Nortons, and at no time was the board dominated by defendants Norton. Plaintiff, as a director, was not satisfied at all times with the salary voted to Charles W. Norton, and, at one time, threatened suit if the action of the board was not submitted to the stockholders. The action of the board was submitted to the stockholders and approved. This attitude of plaintiff probably accounts for the annual submission of the salary to stockholders.

We quote now from the brief of plaintiff:

‘On January 24, 1919, the directors voted C. W. Norton a salary of $500.00 per month for services during the construction of the hotel from November 1, 1915, to June 1, 1919, and to continue at the same figure. Mr. Burch was not present at this meeting and on hearing of the action of the directors insisted that the matter be submitted to the stockholders. This was done and they approved the action of the directors. Mr. Burch did not vote becuase it was clear that there was a majority in favor of the motion. * * *

‘On May 10, 1920, the stockholders by resolution increased the defendant C. W. Norton's salary to $10,000.00 per year. On January 8, 1923, the stockholders by resolution increased the defendant C. W. Norton's salary to $12,000.00 per year. On January 14, 1924, the stockholders by resolution increased the defendant C. W. Norton's salary to...