Dow v. River Farms Co. of Cal.

• Decision Date: 18 April 1952
• Citation: 243 P.2d 95,110 Cal.App.2d 403
• Court: California Court of Appeals Court of Appeals
• Parties: DOW v. RIVER FARMS CO. OF CALIFORNIA. Civ. 15009.

Page 95

243 P.2d 95

110 Cal.App.2d 403

DOW v. RIVER FARMS CO. OF CALIFORNIA.

Civ. 15009.

District Court of Appeal, First District, Division 1, California.

April 18, 1952.

W. P. Caubu, Robert E. Halsing, San Francisco, (Sullivan, Roche, Johnson & Farraher, San Francisco, of counsel), for appellants.

Devlin, Diepenbrock & Wulff, Sacramento, for respondent.

PETERS, Presiding Justice.

Plaintiff, Maxine B. Dow, is the widow of Edgar Laurence Dow, and the administratrix of his estate. In her representative capacity, on December 6, 1949, she brought this action against the River Farms Company of California to recover from it the sum of $50,000, alleging that the corporation had promised and agreed but failed to pay that sum to her husband. The corporation admitted that it had offered to pay Dow $50,000, but averred in its answer that Dow rejected the offer, that the cause of action was barred by the statute of limitations, and that there was no consideration for the promise. The trial court found in favor of the defendant on all issues, and plaintiff appeals.

Edgar Laurence Dow, a retired dentist, in 1913 incorporated the respondent corporation. He became a stockholder, director, president and general manager of the company at its inception, and remained as such until the time of his death in 1930. His estate is still in the course of administration, and appellant, who is now a director and, as administratrix, a stockholder of the company, is the administratrix of his estate.

From 1913 to the end of 1917 Dr. Dow served as president and general manager of the company without compensation. Starting on January 1, 1918, and continuing until his death in 1930, he received a salary of $1,000 per month for these services.

On July 9, 1917, the then board of directors met. Dr. Dow presided. He was requested to leave the room. In his absence the directors discussed paying Dr. Dow for his past services. They then passed the following resolution:

'Whereas, for the past four years and since the organization of this company, E. L. Dow has acted as the president thereof without compensation and has ungrudgingly and unselfishly devoted his time and attention to the affairs of this company and by his energy and efficient management has brought the company to a condition where it is this year about to provide a substantial return, and

'Whereas, E. L. Dow has never requested nor has he ever indicated that he expected any payment for said services,

'Now, Therefore, Be It Resolved, that it would be an injustice in view of the services rendered by Dr. Dow not to in some measure compensate him therefor, and

'Be It Further Resolved, that whenever this company has no floating indebtedness or on or about January 1st, 1918, the Vice President and the Secretary be and they are hereby authorized and directed for and in the name of this company and as its act to make a cash payment to E. L. Dow of the sum of $50,000 for and in consideration of his past services rendered, and

'Be It Further Resolved: That from and after January 1st, 1918 said E. L. Dow, as president of this company be paid the sum of $1,000 per month for his services as such.'

After the resolution was passed Dr. Dow was recalled to the room. There is a conflict as to what then occurred. John F. Humburg, who, at the time of trial was one of the two directors then surviving, and who was then still a director, testified that Dr. Dow was greatly surprised and then stated: 'I cannot accept it.' Hiram Johnson, Jr., who is the other surviving director who was present at the July, 1917, meeting, and who is also still a director, testified that Dr. Dow did not then or thereafter refuse to accept the $50,000 mentioned in the resolution.

After the July 9, 1917, meeting, Dr. Dow prepared a letter addressed to the directors formally rejecting the $50,000 payment and tendering his resignation. There was a controversy at the trial, and much is said in the briefs, as to whether this letter was ever signed by Dr. Dow. The original had been lost. The copy was not signed. A copy of this letter was attached to the answer showing a signature, and appellant failed to file the affidavit required by section 448 of the Code of Civil Procedure within the time there provided. She did move for relief under section 473 of the Code of Civil Procedure at the commencement of the trial, and the trial court permitted the filing of the affidavit and motion for relief, but indicated that it was taking the matter under advisement. The record does not show whether the motion was ever passed upon. Regardless of these facts, however, director Humburg testified that in the August, 1917, meeting of the board, Dr. Dow read the letter to the board, that the matter was then discussed 'and because he refused it we thought the thing was over, all that $50,000 bonus business. He refused it.' Johnson while he denied hearing the letter read, admitted that he had seen, at that time, an unsigned copy of it. This conflict was resolved by the trial court in favor of respondent. Therefore, whether the letter was signed or not is not an important matter--it was read to and considered by the board.

The letter reads as follows:

'San Francisco, July 21, 1917.

'Directors

'River Farms Company of California,

'San Francisco, California.

'Dear Sirs:

'I have carefully considered the very generous offer made by this board and expressed in a resolution passed at the last meeting in which you offered to pay me for services rendered this company, the sum of $50,000.00 on or about January 1, 1918 and a salary of $1,000.00 a month from that date.

'I wish to state that whatever services I may have rendered this company in the past has not been with any idea that I was to receive payment for the same. Some of your members have on several occasions during the past few years insisted that I should receive a salary. I believe that I have at all times consistently refused the same, as I probably realized better than any of you that this company was not in a condition to pay any salaries or any amounts that it could honestly avoid.

'I believe that my greatest incentive to work and whatever efforts I may have made to solve the many problems and difficulties that we have met has been the apparently complete support and loyalty of all concerned, also the confidence that you have displayed in supporting any suggestion or plans that I have offered not only with your money but with your hearty cooperation. I think it is needless for me to say that without your complete cooperation and unity of purpose of action that the successful conclusion that is a fact today, could not have been realized. This support combined with my complete confidence in the value of the property when reclaimed and financed has made my work interesting.

'It has been brought to my attention, however, that the action of this board at its last meeting was not satisfactory to some of the stockholders of this company.

'In view of this fact, I feel that I can not accept your very generous offer and I must insist that at this meeting you rescind the resolution passed at your last meeting. I wish, however, to assure the members who were responsible for this offer that they have my sincere thanks and also that such action and intention on their part more than repays me for any services that I may have rendered this company. I believe that you will agree with me when I state that the affairs of this Corporation representing an investment in excess of $4,500,000.00 in an agricultural proposition presents many intricate problems and should be handled in a very careful and efficient manner, and as these duties must largely and logically fall or come on the President, this office should be filled by someone who has not only the confidence of a majority of this board, but the confidence and complete support of at least all the large stockholders.

'I am forced to the conclusion that I have not this complete support and confidence that I feel is necessary for the best interests of the Company. I feel that it is best at this time to tender my resignation as President to take effect immediately if possible.

'The association with you during the past few years, has been pleasant and the work has been interesting. I thank you for your confidence and the loyal manner that you have stood by me during the past four years.

'Assuring you that I will at all times give all the assistance and advice if needed or requested to further the prosperity of this Company, I am,

'Yours very truly,

'ELD:HH'

There is no reference in the minutes of the July or August, 1917, meetings to this letter, nor was there a formal rescission of any part of the July resolution, nor do the books of the company contain any further reference to this $50,000 item. There is no evidence that Dr. Dow ever made a demand for the $50,000, and admittedly Mrs. Dow made no such demand until the filing of this suit. We do know that Dr. Dow continued to act as president of the board, and that starting January 1, 1918, and until his death in 1930, he received $1,000 a month for his services.

The complaint, in an attempt to avoid the statute of limitations, alleges that the corporation first became free of floating indebtedness in 1948. Much of the record is devoted to a discussion of this problem. The trial court found...