Fox v. Arctic Placer Min. & Mill. Co.

• Decision Date: 01 June 1920
• Citation: 128 N.E. 154,229 N.Y. 124
• Court: New York Court of Appeals Court of Appeals
• Parties: FOX v. ARCTIC PLACER MIN. & MILL. CO.

229 N.Y. 124

128 N.E. 154

FOX

v.ARCTIC PLACER MIN. & MILL. CO.

Court of Appeals of New York.

June 1, 1920.

Action by David Fox against the Arctic Placer Mining & Milling Company. From a judgment of the Appellate Division (185 App. Div. 761,173 N. Y. Supp. 708), which affirmed, by a divided court, a judgment dismissing the complaint, plaintiff appeals.

Reversed, and new trial ordered.

Andrews, Collin, and McLaughlin, JJ., dissenting.

Appeal from Supreme Court, Appellate Division, First Department.

Joseph A. Warren, of New York City, for appellant.

Noah A. Stancliffe, of New York City, for respondent.

ELKUS, J.

The plaintiff, a mining engineer, seeks to recover the reasonable value of his personal services, claimed to have been rendered to the defendant betweeen the 1st day of November, 1913, and the 1st day of April, 1915, at its special request therefor.

The defendant is a mining corporation, and was engaged in the business of mining in Alaska, having an office in New York City. During the times referred to, plaintiff was vice president and a director of the defendant, and owned 1,000 shares of its capital stock of the par value of $5,000, for which he paid $50.

In 1908, under the defendant's employment, the plaintiff went to Alaska and took charge of the company's work there. This was done in pursuance of a letter written by the defendant to the plaintiff, and for which the plaintiff was paid at the rate of $500 a month and expenses. The following year similar work was performed by the plaintiff, for which he received identical pay. In 1910, although there appears to have been no express employment, the plaintiff again went to Alaska at the defendant's retainer, and engaged in its work there, for which he was paid a substantial sum and expenses. The same course exactly was followed in 1911. In 1912 the plaintiff remained in New York, and, without express employment, was consulted by the defendant, advised with its officers, and received $1,500 as compensation therefor. In 1913, at the request of defendant's officers, plaintiff went to Alaska, and did some work there, representing the defendant, for which he was compensated and his expenses paid. This work had to do with negotiating an option for drilling and dredging lease of the company's property.

On October 25, 1913, the president of the defendant referred to the plaintiff a telegram, requiring advice from the superintendent of the defendant, and thereafter, between the dates heretofore mentioned, the plaintiff advised and consulted with various officers of the defendant, rendering some services of a technical engineering nature with reference to the proposition for a lease of the defendant's property, the preparation of maps and plans, for the purpose of effecting a sale of the property to another mining corporation, and performed services different and other than those usually performed by an official of a corporation, and the services thus rendered form the basis of the claim in suit.

It appears that at times when the plaintiff left the state of New York he made an express contract for his services but it appears that at other times he rendered services without making any express contract therefor, and received substantial compensation for the same.

After the presentation of these facts, the trial justice dismissed the complaint. The plaintiff contends that there was an issue for the jury, because his services were different and outside of the duties of his office, either as vice president or director, and that the circumstances of his previous employment and payment therefor were such as to warrant the finding of an intention on his part to charge and receive pay for his services, and expectation and agreement on the part of the defendant to pay therefor.

There is no formal agreement or contract of employment either alleged or proven. There is no resolution of the board of directors authorizing the plaintiff's employment or agreeing to remunerate him for his services. The by-laws of the defendant were neither offered nor admitted in evidence, so there is nothing to show what duties were imposed upon the plaintiff as vice president or director. The only evidence with reference to this is the uncontradicted testimony of the plaintiff that he was elected vice president so that he might execute a lease on the defendant's behalf. The plaintiff received no compensation, either as vice president or director.

[1] It is well-settled rule that directors and officers of a corporation serve without compensation for performing the usual and ordinary duties of their offices, unless an express provision is made therefor either by statute, charter, by-laws, or agreement. The question to be considered here, therefore, is whether the services rendered were outside the official duties of the plaintiff, and, if this be true, the rule is qualified.

[2] The basis of a recovery for personal services must, of course, be a contract, and this must either be proven or implied. If the contract be not expressed, it may be implied from the mere rendition and acceptance of the service. Then the presumption is created that such services were to be compensated, because no one is expected to labor without hire. Barney v. Fuller, 133 N. Y. 605, 30 N. E. 1007.

[3] If, on the contrary, it be the natural thing because of the relationship of the parties that services be performed without expectation of pay, then there is no such presumption. In the latter class falls a director or officer of a corporation who performs the ordinary and usual services for such corporation such as any layman can perform without special knowledge or skill. Unless the corporation specifically agrees to pay for such services, it is not required to do so.

In the instant case, therefore, there ordinarily would be no presumption that special compensation was intended or expected, even if the services were rendered at the request of the corporation or of its officers, so far as the services do not differ from those required from any one assuming the position, because it would be contrary to public policy to permit such a presumption, but, granting the presumption, a promise to pay may be proven in the same manner as any other fact may be established. That is, an agreement may be inferred from other evidence, from a course of practice, or where the services are outside the usual duties of one holding the office which the plaintiff held. The complaint alleges that special services as consulting engineer were rendered. Such an agreement may be evidenced by proof or circumstances which tend to show that the services were rendered with the expectation and agreement on both sides that they would be compensated for. Bagley v. Carthage, W. & S. H. R. R. Co., 165 N. Y. 179, 58 N. E. 895;Bogart v. New York & Long Island R. R. Co., 118 App. Div. 50,102 N. Y. Supp. 1093, affirmed on opinion 191 N. Y. 550, 85 N. E. 1106;Gaul v. Kiel & Arthe Co., 199 N. Y. 472, 92 N. E. 1069;Young v. U. S. Mortgage & Trust Co., 214 N. Y. 279, 108 N. E. 418;Barril v. Calendar Insulating & Waterproofing Co., 50 Hun, 257, 2 N. Y. Supp. 758; Talcott v. Olcott Mfg. Co., 11 Weekly Digest, 141; Corinne Mill, Canal & Stock Co. v. Toponce, 152 U. S. 405, 14 Sup. Ct. 632, 38 L. Ed. 493.

In Bagley v. Carthage, W. & S. H. R. R. Co., 165 N. Y. 179, 182,58 N. E. 895, the plaintiff was a director and president of the defendant. There was no express resolution of employment by the board of directors. The trial judge, however, submitted to the jury whether the plaintiff rendered any service outside of his duties as director and president of the corporation, and whether there was an agreement on the part of the directors to employ him to perform such services. The jury having answered these questions in the affirmative, this court affirmed the judgment saying:

‘Neither is it essential to the plaintiff's right of recovery that he should have been employed under a formal resolution of the board. It is sufficient if, from the nature of the employment, the importance of the subject-matter and the action of the directors of the corporation, the inference is authorized of the employment as alleged.’

The evidence in the instance case discloses that the only duty which the vice president of the corporation had was to act in the absence of the president. The services which the plaintiff rendered were not performed as vice president. They were services which called for special qualifications which the plaintiff possessed as a mining engineer and an expert in mining matters. As a director, the plaintiff could not act as an individual. His work as a director, unless there be some by-law or provision to the contrary which does not appear here, is performed as a member of the board of directors. The board of directors did not request the plaintiff to do the work which he did. It was largely done at the special instance and request of the president, the executive officer of the corporation, as appears by his letter of November 11, 1913, and the reply thereto. Young v. U. S. Mortgage & Trust Co., 214 N. Y. 279, 108 N. E. 418.

The work done included the drawing of maps, plans, making photographs of the ditch system of the defendant's property, the preparation of a long and technical letter, describing the nature of the company's property and the manner in which it could be worked to the best advantage in order to further the contemplated sale or lease of the property. Such engineering and technical services are not usually performed by a director as such. Corinne Mill, Canal & Stock Co. v. Toponce, 152 U. S. 405, 14 Sup. Ct. 632, 38 L. Ed. 493.

A jury might be warranted in finding that such services were entirely outside of a director's work, and they might well include in this the drafting of a lease of the defendant's property, which required a special knowledge and was part of the services which the plaintiff rendered. Whatever inferences may be drawn in ...