Hinkley v. Sagemiller

• Citation: 210 N.W. 839,191 Wis. 512
• Parties: HINKLEY ET AL. v. SAGEMILLER.
• Decision Date: 09 November 1926
• Court: United States State Supreme Court of Wisconsin

191 Wis. 512

210 N.W. 839

HINKLEY ET AL.

v.SAGEMILLER.^a1

Supreme Court of Wisconsin.

Nov. 9, 1926.

Appeal from Circuit Court, Milwaukee County; Otto H. Breidenbach, Judge.

Proceeding by George M. Hinkley and others for the removal of Henry B. Sagemiller from corporate office, and for accounting. From the judgment of ouster, which allowed defendant's claim for additional compensation, and from an order striking out certain items of cost allowed by clerk, plaintiffs appeal. Reversed, and cause remanded, with directions.––[By Editorial Staff.]

Removal of corporate officer and accounting between the corporation and the deposed officer. The plaintiffs George M. Hinkley, George C. Hinkley, and A. J. Rehberger, and the defendant Henry B. Sagemiller some time prior to the 18th day of March, 1925, discussed the feasibility of organizing an oil company to carry on an oil business in West Allis, Wis. It appears from the findings of fact that the corporation was organized on the 18th day of March, 1925, and the stock was equally divided among the four individuals named. George M. Hinkley was a director, stockholder, and president of the corporation. On March 23, 1925, the defendantwas elected a director, secretary, and made general manager of the business of the corporation to serve until further notice. The defendant's employment dates from the 15th day of March, 1925. Due to misappropriation of its funds and other misconduct on the part of the defendant Sagemiller, President Hinkley attempted to remove Sagemiller from office on the 20th day of November, 1925, and on December 21, 1925, by order of the court duly served, the defendant Sagemiller was restrained from acting further as general manager. The amount of the funds misappropriated was $760.44. The court further found:

“That it was agreed between the plaintiff West Allis Oil Company and the defendant that the defendant should receive for his services as general manager of said company the sum of $200 per month until the gross sales of the company should equal or exceed $5,000 per month; whereupon defendant should receive as salary the sum of $250 per month until the gross sales of the company should equal or exceed $10,000 per month; whereupon the defendant should receive as salary the sum of $300 per month.”

The court further found that the defendant was entitled to receive $300 per month for the months following June, 1925; that the whole amount of salary which the defendant Sagemiller was entitled to draw was $2,500, of which amount he had been paid the sum of $1,940, and that there remained due and owing to him the sum of $560. The court further found that by reason of the gross misconduct of the business and affairs of the plaintiff company the defendant Sagemiller was “an improper person to hold the offices of secretary, or general manager, or director of plaintiff corporation, or any other position of trust therein, or to have the management or control thereof,” and, as conclusions of law, that the West Allis Company should recover from Sagemiller the sum of $700.44, plus $60 on account of two merchandise coupon books, less the sum of $560 due the defendant Sagemiller as salary; that the plaintiff company have judgment against Sagemiller for $200.44; that judgment be entered ousting Sagemiller from the offices of secretary, general manager, and director of the plaintiff company. Judgment was entered accordingly, from which the plaintiff appeals.

Upon taxation of costs, the plaintiff endeavored to tax $8.25 for original proposed findings of fact, $11.88 for copies, and $41.52 witness fees for George C. Hinkley, a stockholder and director of the plaintiff corporation. The clerk allowed such items, and, on motion for retaxation, the items were stricken out. From the order striking out such items, the plaintiff likewise appeals.

Edgar L. Wood and Richard H. Tyrrell, both of Milwaukee, for appellants.

Bendinger, Graebner, Hayes & Hofer, of Milwaukee, for respondent.

ROSENBERRY, J.

The principal contention of the plaintiffs here is that the court erred in allowing the defendant Sagemiller more than $200 per month as salary for services rendered to the plaintiff corporation. The evidence in support of the finding as to the amount of salary which the defendant Sagemiller was to receive is to the effect that, some time prior to the incorporation, the four intending incorporators met and that at such meeting it was agreed that Sagemiller should receive a salary. The testimony of the defendant Rehberger tends to support the finding, while that of George M. Hinkley and George C. Hinkley squarely contradicts it. It further appears without dispute that, although the gross sales of the company for May and June were greater than $5,000 and less than $10,000 and in each of the succeeding months in excess of $10,000, the defendant Sagemiller drew only $200 a month of salary, and, although a general manager and in charge of the business of the company, at no time instructed the bookkeeper to pay or credit him with any amount in excess of $200 per month. It also appears without dispute that no formal action was ever taken after the incorporation of the company. At a meeting of the stockholders for the purpose of organizing the corporation, it appears that there was some discussion as to the salary to be paid to the defendant Sagemiller but neither the amount of the salary nor a sliding scale for the future was mentioned or agreed upon at that meeting. Such talk as there was related to the understanding previously had and the nature of that understanding was neither discussed nor made a matter of record. The by–laws of the corporation provide:

“The compensation of all officers shall be fixed by the board of directors and of all employees not mentioned in these by–laws by the officer or officers so authorized by the board of directors.”

[1] While a finding to the effect that there was no sliding scale agreed upon at the meeting held a week or 10 days prior to the incorporation of the company would be in accord with our view of the weight of the evidence, it cannot be said that the finding of the trial court is so clearly against the clear preponderance and great weight of the evidence that it should be set aside. Assuming, therefore, that a week or 10 days before the incorporation the matter of salaries was discussed; that it was agreed the defendant Sagemiller should be paid $200 a month until the sales should equal or exceed $5,000 and $250 until the sales should equal or exceed $10,000 and thereafter $300 per month; that no action was ever taken by the board of directors in respect to the salary of the secretary and general manager; that he was paid down to and including November 21, 1925, at the rate of 200 per month; is the defendant Sagemiller entitled to compensation in excess of $200 per month? This involves the power of promoters and incorporators to bind the future corporation by a contract made by them, for and on its behalf. If the defendant Sagemiller is to recover, he must do so upon express as opposed to implied contract. Lowe v. Ring, 123 Wis. 370, 101 N. W. 698, 3 Ann. Cas. 731.

[2][3][4][5] The general rule is that a corporation until it is organized has no being, franchises, or faculties. Promoters or...