Cochran v. Jefferson County Lumber Co.

• Decision Date: 03 October 1939
• Docket Number: No. 25018.,25018.
• Citation: 132 S.W.2d 32
• Parties: COCHRAN v. JEFFERSON COUNTY LUMBER CO.
• Court: Missouri Court of Appeals

132 S.W.2d 32

COCHRAN v. JEFFERSON COUNTY LUMBER CO.

No. 25018.

St. Louis Court of Appeals. Missouri.

October 3, 1939.

Rehearing Denied October 27, 1939.

Appeal from Circuit Court, Jefferson County; Robert I. Cope, Special Judge.

"Not to be reported in State Reports."

Action by William A. Cochran against the Jefferson County Lumber Company upon a mutual running account allegedly existing between defendant and plaintiff, who was defendant's secretary and manager from date of defendant's incorporation until June 1, 1937, the date of plaintiff's alleged dismissal by defendant. From a judgment for plaintiff, the defendant appeals.

Affirmed.

H. Chouteau Dyer and J. Raymond Dyer, both of St. Louis, and Edgar & Matthes, of De Soto, for appellant.

R. E. Kleinschmidt, of Hillsboro, for respondent.

BENNICK, Commissioner.

This is an action upon a mutual, running account allegedly existing between defendant, Jefferson County Lumber Company, and plaintiff, William A. Cochran, who was defendant's secretary and manager from and after January 23, 1929, the date of the incorporation of the company, until June 1, 1937, the date of plaintiff's alleged dismissal by defendant. Following a trial of the issues to a jury, judgment was entered for plaintiff for the aggregate sum of $2,004.94, and defendant's appeal to this court has followed in the usual course.

Admitting an indebtedness to defendant for $33 for materials furnished him by the latter and for which sum he claims to have given defendant credit on the account, plaintiff sued for the amount of salary and bonus allegedly due him for services rendered defendant under an oral employment agreement entered into with defendant's president acting for and on behalf of the corporation.

In his petition plaintiff alleged that at the time of the incorporation of the company and on many occasions thereafter, it was expressly agreed by and between him and Kottmeier, the president and controlling stockholder of the corporation, that he was to receive as compensation for his services as secretary and business manager of the company the sum of $35 a week and a bonus of 20% of the net profits of the company, the weekly salary to be paid in cash, and the 20% bonus to be paid one-half in cash and one-half in capital stock of the corporation to be issued to plaintiff on the basis of $100 a share par value.

It was further alleged that the records and minutes of defendant at the time of its incorporation had recited that plaintiff's salary was to be $35 weekly and bonus in such amounts as should thereafter be determined by the board of directors; that it was agreed and understood by and between plaintiff and Kottmeier, as president and agent of the corporation, that plaintiff's bonus was to remain at 20%, one-half to be paid in cash and one-half in stock, until expressly and formally changed by the board of directors in actual session; that said board of directors had never met and formally determined any salary or bonus whatever for plaintiff, nor had there been any meetings of the board of directors from the date of the incorporation up to April 10, 1937 (the date when plaintiff was purportedly notified by defendant that effective as of that date, his services would no longer be required); that defendant and its board of directors, by failing to meet or act in the matter and by permitting the president of the corporation to completely dominate and control its affairs, had ratified and approved the agreement made between plaintiff and Kottmeier on behalf of defendant; and that defendant had paid plaintiff his weekly salary in full up to and including April 10, 1937, and had paid a part of the bonus of 20%, paying a portion thereof in cash and a further portion thereof by the issuance of defendant's stock.

It was then alleged that plaintiff had faithfully performed all his duties as secretary and business manager of the company from the time of the making of the agreement and the incorporation of the company up to and including April 10, 1937, and that he had thereafter performed such of his duties as he was permitted to perform until June 1, 1937, so as to have been entitled to payment of his weekly salary and bonus up to such latter date.

Judgment was prayed for the sum of $7,746.39, the balance allegedly due plaintiff from defendant on account, whether to be satisfied by the payment by defendant of the amount of the entire judgment in cash or by the issuance to plaintiff of shares of stock in accordance with the terms of the alleged employment agreement.

In its answer, in addition to a general denial, defendant specifically denied that it had ever employed plaintiff as its business manager or that its by-laws had made provision for such an office, and then set up that plaintiff had resigned as secretary of the corporation on April 10, 1937, and had been removed from the board of directors by action of the stockholders on June 1, 1937; that the oral employment agreement alleged by plaintiff, if made (which defendant denied), was invalid under the Statute of Frauds in that it was not to be performed within one year; that even if entered into with Kottmeier (which defendant denied), the agreement was nevertheless not binding on defendant in that it had not been first submitted to and approved by defendant's board of directors as required by one of defendant's by-laws which provided that no obligation involving the company in excess of $2,500 should be authorized or consummated by any officer of the company until or unless it was first submitted to and approved by the board of directors; and that plaintiff had been paid in full for all services rendered.

In his reply plaintiff denied that he had ever resigned as secretary, business manager, or director of the company, but again alleged that he had performed all the duties he was permitted to perform until June 1, 1937, when he was unlawfully removed from defendant's employ by action of the stockholders. He then alleged that he was ignorant of the provisions of the by-laws for the reason that Kottmeier, who controlled defendant's affairs, had refused him access to defendant's corporate records and had not permitted any directors' or stockholders' meetings to be held from the date of defendant's incorporation to June 1, 1937; and he finally set up that by reason of the fact that defendant had knowingly accepted his services as defendant's manager and had knowingly permitted Kottmeier to create obligations on the part of the company in excess of $2,500 without first having secured the approval of the board of directors, defendant was estopped to deny that plaintiff had served as its business manager or to deny the validity of the agreement entered into between plaintiff and Kottmeier.

For its first point defendant argues that the court should have sustained the demurrer to all the evidence upon the theory that the alleged employment agreement which was pleaded by plaintiff as the basis for his claim against defendant was terminated at its inception by action of defendant's board of directors. Defendant concedes that plaintiff's own evidence did not show such termination, but it insists that he is bound by his pleadings, and that his evidence contradictory of his pleadings is therefore entitled to no consideration.

The point arises out of the allegation in plaintiff's petition to the effect that it had been agreed and understood by and between him and Kottmeier, as president and agent of defendant, that plaintiff's bonus was to remain at 20% of defendant's net profits, one-half to be paid in cash and one-half in stock, "until expressly and formally changed by the board of directors in actual session". Plaintiff's evidence did not substantiate the fact that there was any such qualification or limitation contained in the employment agreement, but assuming that plaintiff was to be none the less bound by such allegation, defendant calls attention to the alleged minutes of the first meeting of the board of directors on February 1, 1929, which showed that plaintiff's salary was fixed at $35 a week, "together with an annual bonus to be determined when the financial results for the fiscal year have been ascertained, and such additional amounts as the board may designate from time to time, and/or as the financial results obtained may justify". In other words, it is defendant's contention that at such meeting the board of directors did expressly and formally change the terms of the employment agreement from those which were pleaded by plaintiff in his petition, and that consequently the precise agreement sued on, even if ever entered into, ceased to exist on the date of such formal action by the board of directors, one week after defendant's incorporation.

The trouble with defendant's position is that in stating its point most favorably to itself, it has failed to take into account the complete record in the case. While there may have been certain inconsistencies between what purported to be the minutes of a board of directors' meeting on February 1, 1929, and the agreement alleged in plaintiff's petition, defendant overlooks, not only plaintiff's own testimony that...