Edwards v. Keller
| Decision Date | 28 October 1939 |
| Docket Number | No. 12780.,12780. |
| Parties | EDWARDS v. KELLER et al. |
| Court | Texas Court of Appeals |
Appeal from District Court, Dallas County; Sarah T. Hughes, Judge.
Suit by W. W. Edwards against the Great Republic Life Insurance Company for breach of employment contract, wherein Jack Keller, receiver, was vouched into the suit to effect collection of the claim out of the estate of the Great Republic Life Insurance Company, in hands of the receiver. From judgment for the defendants, the plaintiff appeals.
Affirmed.
J. E. Newberry and Montgomery & Campbell, all of Dallas, for appellant.
Hughes & Monroe and P. P. Ballowe, all of Dallas, and John L. Flynn, Asst. Atty. Gen., of California, for appellees.
Jack Keller, of Dallas, per se.
Appellant, W. W. Edwards, instituted this suit against Great Republic Life Insurance Company, a corporation, to recover damages for the breach of a contract of employment. Jack Keller, receiver, was vouched into the suit to effect collection of the claim out of the estate of the corporation in the hands of the receiver. This appeal is from a judgment in favor of appellees.
The material facts are, in substance, as follows: The Great Republic Life Insurance Company was a corporation chartered under the laws of the State of California, with its principal offices in that state, with permits to do business in the States of Oklahoma and Texas. The business affairs of the corporation were under the management and control of a board composed of eleven directors, elected within the limitations of and subject to the laws of the chartered state and the by-laws of the Company. The directors were elected annually by the stockholders of the corporation and clothed with authority to select annually the president, vice-president, secretary and treasurer, and appoint five of its members as an executive committee. The by-laws, material here, dealing with the duties of the president, provide: "Subject to the approval of the executive committee, the president shall appoint and fix the compensation or salary of all clerks or other employes not appointed by the board of directors, and may dismiss such clerks and employes", and "He shall countersign all checks, sign certificates of stock, sign policies of insurance, and sign such contracts and other instruments in writing as are first approved by the board of directors or the executive committee". The by-laws further provide that the executive committee shall keep minutes of its proceedings and, "within the limitations of and subject to the laws of the state and the by-laws of the company, and the rules, orders, contracts, resolutions, and approval of the board of directors, have control of the moneys and other property of the company, of the investment of its funds, and all purchases and loans". At the time of the institution of this suit, however, the affairs of the corporation, since May, 1934, were in the hands of a conservator, duly appointed, qualified and acting, by order of a Superior Court of California.
In 1932, appellant, W. W. Edwards, president of Oklahoma Southern Life Insurance Company, entered into negotiations with the president of the Great Republic Life Insurance Company, resulting in a merger of the two companies, and, soon thereafter, on October 3, 1932, the contract involved in suit was entered into by Edwards and T. J. McComb, president of the Great Republic Life Insurance Company. The contract, in writing, cites the employment of Edwards, at a salary of $1,000 per month for a period of two years from and after October 1, 1932 "in such capacity as the Great Republic Life Insurance Company may from time to time direct for the period of two (2) years * * *". In pursuance of such agreement, Edwards, immediately after the contract was executed, moved from Oklahoma, where the contract was entered into, to the California offices of the Insurance Company and there entered upon such duties as the Company directed, and received the monthly salary of $1,000, to December 1, 1933, when the executive committee, with the approval of the board of directors (Edwards being a member of the committee, as well as a director), reduced the salary of Edwards to $500 per month. Appellant continued in the service of the company, receiving, under protest, the monthly salary of $500, until May 15, 1934, when, at the instance of the Conservator of the State of California, his employment was terminated. This suit was brought to recover the $500 per month remaining unpaid on the contract, from December 1, 1933, to May 15, 1934; and, $1,000 per month from May 15, 1934, to October 1, 1934, a total of $7,250, with legal interest and costs of suit.
The record discloses that neither the executive committee nor the board of directors of the corporation expressly authorized the execution of the contract involved in this suit; and, there is nothing in the minutes of the proceedings of either of the boards showing that the contract made by the president of the corporation was ever approved or ratified by the executive committee or the board of directors. The contract, in all of its terms, was never presented or called to the attention of either board; and, the most that can be said is, that some five or six members of the board knew of the employment of Edwards by the month and that the salary was being paid to appellant out of funds belonging to the corporation.
However, be that as it may, assuming for the purpose here that the directors did know, or that they even participated in the making of the contract, extending the employment of Edwards over the period of two years, we think such a contract was void, because of the lack of power in the directors and president to make it. The statute of this State (Art. 1323, R.S., Vernon's Ann.Civ.St. art. 1323) expressly provides for the election of directors of a corporation annually, at the annual meeting of the stockholders, and, in the absence of a contrary showing, it must be assumed that the statutes of Oklahoma and California are the same as those of Texas. The bylaws of defendant also have similar provisions. Thus, by means of such annual election, the stockholders of the corporation are clothed with the ultimate power of direction in the administration of its affairs they are the sovereigns of the corporation, and, where the terms of a contract extend over the tenure of the executive officers, thereby taking from the incoming board of directors, officers, and stockholders of the corporation, the power of directing the corporate affairs, denying to them the...
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