Flight Equipment & Engineering Corp. v. Shelton

• Decision Date: 13 June 1958
• Citation: 103 So.2d 615
• Court: Florida Supreme Court
• Parties: FLIGHT EQUIPMENT & ENGINEERING CORPORATION, a Florida corporation, Appellant, v. Ralph V. SHELTON, Appellee.

Page 615

103 So.2d 615

FLIGHT EQUIPMENT & ENGINEERING CORPORATION, a Florida corporation, Appellant, v. Ralph V. SHELTON, Appellee.

Supreme Court of Florida.

June 13, 1958.

Dixon, DeJarnette, Bradford & Williams and James A. Dixon, Jr., Miami, for appellant.

Arthur A. Carlson and Ralph F. Miles, Hialeah, for appellee.

O'CONNELL, Justice.

Appellant, Flight Equipment & Engineering Corporation, was defendant and counterclaimant in the court below. Appellee, Ralph V. Shelton, was plaintiff and counterdefendant. Flight Equipment & Engineering Corporation will be referred to in this opinion as defendant and Ralph Shelton will be referred to as plaintiff.

Plaintiff served the defendant in an executive capacity from September 2, 1950 until his resignation on July 16, 1953. Subsequent to his resignation he filed a complaint in the court below against the defendant claiming certain sums of money to be due him for salary, expenses and benefits accruing to him during his term of office. Defendant filed a counterclaim seeking recovery from plaintiff of various sums of money as enumerated and discussed subsequently.

The parties waived trial by jury. The lower court, after hearing the testimony and considering the exhibits, awarded plaintiff a judgment in the amount of $1,142.50 and allowed the defendant as a set-off upon its counterclaim the sum of $351.44, an amount representing the cost of certain airplane tickets paid for by the defendant and used by the plaintiff. The defendant thereupon instituted this appeal, asserting that the court erred in denying recovery for the sums requested in its counterclaim.

The following facts will be helpful to the reader in understanding this case.

The defendant corporation was organized in 1947 with the object of manufacturing aircraft seats. In 1949 additional capital was needed for expansion. To meet this need a large loan was obtained from C. N. Shelton & Co., a partnership composed of C. N. Shelton, brother of plaintiff, and five Chinese residents of Shanghai, China. C. N. Shelton had a power of attorney to act for his Chinese partners. C. N. Shelton & Co. is hereinafter referred to as the partnership.

On December 9, 1950 the loan from the partnership to the defendant was satisfied in exchange for 52% of the capital stock of the defendant corporation. By October 11, 1951 the partnership had acquired all of such stock.

Shortly before the partnership became the owner of 52% of the stock of the defendant, the plaintiff, on September 2, 1950, was hired as Vice President of the defendant corporation. On this date the partnership owned no stock in the defendant corporation. C. N. Shelton, brother of the plaintiff, then owned 50% of the capital stock of the defendant corporation. Plaintiff owned no interest in either the corporation or the partnership. On December 11, 1950 plaintiff became the Assistant Executive Vice President and General Manager of the defendant corporation.

On August 22, 1951 plaintiff was elected President of the defendant corporation and held such office until he resigned therefrom on July 16, 1953.

On or before May 20, 1953, L. K. K'ung became the sole stockholder of the defendant by purchase from the partnership.

On May 27, 1953, creditors of the defendant with claims totalling approximately $5,000 filed a petition in the Federal District Court seeking to have the defendant declared bankrupt and to have a receiver appointed. A hearing on this petition was set for June 2. On May 29th the plaintiff, as President of the defendant corporation, voluntarily consented to the appointment of a receiver.

On July 16, 1953 the plaintiff, on request of the sole stockholder, resigned.

On July 28, 1953 the Federal District Court found that the defendant corporation was not bankrupt, discharged the receiver and dismissed the bankruptcy proceedings.

On August 25, 1953 plaintiff filed this suit.

The defendant does not appeal from that part of the final judgment which awarded the sum of $1,142.50 to the plaintiff on his complaint, but only appeals from the denial to defendant of monies claimed under its counterclaim. We will therefore concern ourselves only with the counterclaim.

In its counterclaim the defendant sought recovery from plaintiff of various monies which plaintiff without authority had caused to be paid either to himself or his wife or to others for his benefit. These claims are easily divided into six different items.

One of these was the claim that plaintiff, after his resignation as President of defendant corporation, had charged airplane tickets to the defendant. During the course of the proceedings in the trial court the parties stipulated as to the amount involved and in the final judgment the trial judge found the stipulated amount, $351.44, to be due to defendant from the plaintiff. We are not therefore concerned with this item in this opinion.

The next item, which we will refer to as item No. 1, concerns a bonus or bonuses paid to plaintiff. At plaintiff's direction checks of defendant totalling $10,000 were issued, some to plaintiff and some to his wife. These checks were issued between the dates September 25, 1951 and October 19, 1951. In addition plaintiff caused the defendant corporation to cancel debts owed by him to it in amount of $2,986.01, making a total of $12,986.01 charged to plaintiff as bonus. The plaintiff admits receipt of these sums, or the benefit thereof.

The minute book containing the minutes of the various meetings of the stockholders and board of directors of the defendant corporation show that at a special meeting of the directors held on September 2, 1950 the plaintiff was elected as Vice President and Director of the corporation, his salary as Vice President being set at $7,200.00 'per annum.'

The minutes further reflect that at a stockholders' meeting held on December 11, 1950, the by-laws of the corporation were amended so as to abolish the office of Vice President and create the offices of Executive Vice President and General Manager, and Assistant Vice President and General Manager. The first of these new offices was given the power to employ, discharge and fix the compensation of all agents and employees of the corporation 'other than the duly appointed officers.' At a meeting of the Directors held on the same date C. N. Shelton was elected to the post of Executive Vice President and General Manager and Ralph V. Shelton as Assistant Vice President and General Manager.

At a meeting of the Directors held on January 2, 1951 the Directors voted that the salary of the President and Executive Vice President be increased to $200 'per week' provided that the auditor's report and other data available at the time of the increase justified such being done, the increase to be authorized at such time as R. V. Shelton might direct.

At the annual meeting of the Board of Directors held on August 22, 1951 the Directors adopted a resolution which recited that prior to the association of plaintiff with the defendant on September 2, 1950 C. N. Shelton, purporting to represent a majority of the capital stock, had entered into a verbal agreement with plaintiff whereby plaintiff would receive a salary of $1,100 per month plus a bonus of 25% of the corporate profits, before taxes, such salary and bonus to be paid when the corporation was financially able to do so. The resolution set plaintiff's salary at $1,100 per month, retroactive to July 1, 1951, and granted him the above-mentioned bonus, same to be awarded quarterly. However, the payments of the aforementioned salary and bonus were 'expressly made subject to the prior approval of the Wage Stabilization Board or such other governmental board or organization as shall be interested provided, however, that the said bonus may be paid on or about the due date if it be determined that the Government does not have jurisdiction.'

At a special meeting of the Board of Directors held on February 7, 1952 C. N. Shelton, who presided at the meeting, announced that the Salary Stabilization Board had authorized an increase in salary to $1,500 per month for the plaintiff as President of the corporation. He suggested that the raise be made retroactive to July 1, 1951 but that in view of the financial condition of the corporation that the plaintiff's salary be reduced to $1,100 per month, effective February 8, 1952. He further stated that plaintiff had drawn a bonus of $10,000 for the first quarter of the current fiscal year and recommended that the bonus be approved. A resolution incorporating these recommendations was adopted. In the minutes, which are typewritten, there is inserted in longhand writing a provision signed by plaintiff to the effect that the $10,000 bonus is accepted by him as consideration for foregoing all further claims for a bonus.

Contrary to the statements of C. N. Shelton made at and reflected in the minutes of the directors' meeting held on February 7, 1952, the evidence reveals that on September 7, 1951, a few days prior to the issuance of the first bonus check to himself, the plaintiff applied to the Miami Field Office of the Wage Stabilization Board for approval of the proposed bonus and increase in salary and on October 22, 1951 the Miami Field Office of the said board rejected the application for approval of bonus and increase in salary.

Thereafter the plaintiff engaged a Washington, D. C. attorney to present the matter of his application for approval of the bonus to the authorities in that City. However, the record is clear that no formal application was ever presented and no approval of the bonus or increase in salary was ever received.

Without detailing the history of the Wage Stabilization Board or the Salary Stabilization Board, it is sufficient to say that the first named board, on January 25, 1951, froze all wages and salaries as of that date. Thereafter, the Salary Stabilization Board was created on May 10, 1951, 16 Fed.Reg. p. 4356, and given...