Jones v. Williams

• Decision Date: 04 May 1897
• Citation: 139 Mo. 1,40 S.W. 353
• Parties: JONES v. WILLIAMS et al.
• Court: Missouri Supreme Court

40 S.W. 353

139 Mo. 1

JONES v. WILLIAMS et al.

Supreme Court of Missouri.

May 4, 1897.

CONTRACTS — CONSTRUCTION — RATIFICATION — VALIDITY — PUBLIC POLICY — AGREEMENTS BY CORPORATION — WHEN ULTRA VIRES — SPECIFIC PERFORMANCE — ESTOPPEL IN PAIS.

1. A contract between J. and P., who was manager, president, and principal stockholder of a corporation publishing a newspaper, did not purport to be a corporate act, or contain any reference to any official relation which either party bore to any corporation. It provided for the sale by P. to J. of 1,667 shares, or one-sixth, of the stock of the publishing company, for $80,000; that it was agreed "and made a part of the consideration for the sale that J." shall be appointed editor and manager of such newspaper for five years at an annual salary of $10,000; that P. would elect J. director and president of the company, and give him management of said paper; and that, if J. within three years failed to perform such "duties and labors," P. should have the right to repurchase the stock at $80,000. Held, that the contract was personal, and not corporate. Per Sherwood and Robinson, JJ., dissenting.

2. At a stockholders' meeting, held soon after the contract was made, and J. had entered on the performance of his duties, he was elected a director, but a by-law was adopted providing that the directors should govern the company, elect all officers and employés, fix their salaries, and dismiss any officer or employé. J. protested against such by-law because it conflicted with his contract with P. At a subsequent meeting of the directors, at which J. was elected president, resolutions were passed which required P. to be recognized as a factor in the paper's work, declared its policy, appointed J. editor and manager "for the current year," subject to the by-laws and the power of the directors, and vested in the president authority to fix salaries and control the paper subject only to the authority of the board. Four stockholders, who owned about 1,400 shares, did not know the terms of the contract between J. and P. until after a suit was brought by J. to enforce alleged rights under it. Held, that such contract was never ratified by the company. Per Sherwood and Robinson, JJ., dissenting.

3. J. accepted the position of editor and manager under such resolutions, and wrote a director that under them he was ready to go on with his work as president, editor, and manager. Held, that he was estopped from making any claim against the company based on the contract with P. Per Sherwood and Robinson, JJ., dissenting.

4. A stockholder owning a majority of the stock of a corporation cannot bind it in equity by his contract any more than he can at law. Per Sherwood and Robinson, JJ., dissenting.

5. A contract between the president of a corporation which published a newspaper and one whom such president appointed editor and manager was understood by the latter to give him "absolute" control, while the former understood that it did not. Held, that the contract could not be specifically enforced, the minds of the parties not having met on a material point. Per Sherwood and Robinson, JJ., dissenting.

6. A contract which provides that a certain person shall have "control and management" of a newspaper published by a corporation does not give him "absolute" control of the corporation; especially under Rev. St. 1889, § 2773, which provides that the property or business of a corporation shall be "controlled and managed" by directors, etc., elected for one year, or not to exceed three years. Per Sherwood and Robinson, JJ., dissenting.

7. Where a contract for the purchase of stock in a corporation from the president provides that as part consideration for purchasing it the purchaser is to be editor and manager and to have control of a newspaper published by it for a definite time at a fixed salary, and that his appointment and salary shall cease if he engages in other business, or the revenues do not amount to a stated sum, in which case the stock may be bought back, it is so wanting in mutuality that it cannot be specifically enforced by such purchaser. Per Sherwood and Robinson, JJ., dissenting.

8. A contract whereby one is employed as editor and manager of a newspaper published by a corporation, and given absolute control, is so unconscionable that a court of equity will not specifically enforce it against the corporation. Per Sherwood and Robinson, JJ., dissenting.

9. A contract for personal services cannot be specifically enforced; and it is immaterial that coupled with it is one for the purchase of an interest in the business in which the services are rendered, or other property; especially after the contract of purchase has been fully performed. Per Sherwood and Robinson, JJ., dissenting.

10. The want of power in the court to enforce such contract cannot be supplied by the contract itself. Per Sherwood and Robinson, JJ., dissenting.

11. Under Rev. St. 1889, § 2772, providing that the property and business of a corporation shall be controlled and managed by a board of directors, etc., a contract by a corporation, giving a certain person absolute control and management of its property and business, is ultra vires, and cannot be specifically enforced against the company. Per Sherwood and Robinson, JJ., dissenting.

12. A contract for the sale of stock of a corporation, which provides that the purchaser, in part consideration of the purchase, shall have a certain position for a number of years at a large salary, and, in addition thereto, be director, president, and manager, and have the absolute management and control of the company's business during such period, is against public policy, and void. Per Sherwood and Robinson, JJ., dissenting.

13. A contract void as against public policy cannot be ratified. Per Sherwood and Robinson, JJ., dissenting.

Dissenting opinion. For prior report, see 39 S. W. 486.

SHERWOOD, J.

This proceeding in equity was instituted by plaintiff, Charles H. Jones, against the Pulitzer Publishing Company and Samuel Williams, Florence D. White, and S. S. Carvalho, three of its directors, to enforce by injunction against its breach, and thus obtain specific performance of, a contract entered into by plaintiff on the 6th day of February, 1895, with Joseph Pulitzer. Pulitzer, though named as a defendant, was not served, and did not appear. The contract of which specific performance was thus asked is the following:

"This agreement, made this sixth day of February, in the year one thousand eight hundred and ninety-five, between Joseph Pulitzer, of the city, county, and state of New York, party of the first part, and Charles H. Jones, of the city of St. Louis, state of Missouri, party of the second part, witnesseth, that for and in consideration of the sum of eighty thousand dollars ($80,000) in cash, and the performance by the party of the second part of the conditions hereinafter set forth, the party of the first part agrees to sell and deliver to the party of the second part one thousand six hundred and sixty-seven (1,667) shares of the capital stock of the Pulitzer Publishing Company of St. Louis, Missouri, being one-sixth (1/6) of the total capital stock of said corporation. And whereas, the party of the first part is induced to make this sale and enter into the covenants herein contained on the assurances of the party of the second part of his ability to fulfill the covenant and conditions and avoid the penalties hereinafter set forth: Now, therefore, it is agreed by and between the parties hereto, and made a part of the consideration for the sale of said one thousand six hundred and sixty-seven (1,667) shares of stock, that the party of the second part shall be appointed the editor and manager of the Post-Dispatch, a newspaper published in St. Louis, Mo., by the said Pulitzer Publishing Company, for the term of five (5) years from the date hereof, at an annual salary of ten thousand dollars ($10,000). And the party of the first part agrees to elect the party of the second party director and president of the Pulitzer Publishing Company aforesaid, and to give him control and management of said newspaper the Post-Dispatch during the above-mentioned period of five years; provided, however, that such appointment and salary shall cease and determine if the party of the second part (shall fail to properly perform the duties of editor and manager aforesaid or) shall at any time during said term accept or occupy any public or political office, elective or otherwise, or engage in any other business of any kind or description, it being covenanted by and between the parties hereto that the party of the second part shall devote all the time, ability, and energy he possesses to the growth, prosperity, and success of said St. Louis Post-Dispatch (and conduct the same with strictest integrity and economy). And it is further agreed by and between the parties hereto, as a test of the ability of the party of the second part to properly manage and edit said St. Louis Post-Dispatch, that such appointment and salary shall cease and determine in the event that the gross revenues of the Post-Dispatch from advertising and circulation combined shall, during the year 1895, be less than the gross revenues from the same sources combined were for the year 1894. And it is further agreed by and between the parties hereto, their executors, administrators, and assigns, that in the case of the death of the party of the second part, his resignation, failure of health, or retirement, or inability to perform the duties and labors of editor and manager of the Post-Dispatch at any time within three years from the date of the execution of this contract, the party of the first part shall have the option to repurchase for the sum of eighty thousand dollars ($80,000) the herein-mentioned one thousand six hundred and sixty-seven (1,667) shares of the stock of the Pulitzer Publishing Company, which,...