McLean v. Hayden Creek Mining & Milling Co.

• Decision Date: 16 January 1914
• Citation: 138 P. 331,25 Idaho 416
• Parties: C. H. MCLEAN, Respondent, v. HAYDEN CREEK MINING & MILLING COMPANY, a Corporation, Appellant
• Court: Idaho Supreme Court

138 P. 331

25 Idaho 416

C. H. MCLEAN, Respondent, v. HAYDEN CREEK MINING & MILLING COMPANY, a Corporation, Appellant

Supreme Court of Idaho

January 16, 1914

CORPORATION-SUPERINTENDENT-COMPENSATION-EVIDENCE-VERDICT OF JURY-SUFFICIENCY OF EVIDENCE.

1. Where the by-laws of a corporation provide that the compensation of the officers of a corporation, including its superintendent, shall be fixed by the trustees or board of directors, and the trustees or board of directors fail to fix such salary, and the superintendent is an officer of the corporation and a member of the board of directors, and he fails or neglects to have the board fix his com- pensation as superintendent, and presents no claim therefor for eight years, and where he is paid at the rate of four dollars per day for all work that he does for the corporation, held that he is not entitled under the evidence in this case to any further compensation.

2. Held, that the evidence is not sufficient to support the verdict.

APPEAL from the District Court of the Eighth Judicial District, in and for Kootenai County. Hon. R. N. Dunn, Judge.

Action to recover compensation as superintendent for conducting the business of a mining corporation. Judgment for plaintiff. Reversed.

Reversed and remanded. Costs awarded to appellant.

E. N Le Veine and Voorhees & Canfield, for Appellant.

Where parties make a contract providing that some person shall fix some term thereof, namely, the compensation, any action upon the contract is premature until it is shown that application had been made and refused for the completion of the contract according to its terms. (Tolmie v. Dean, 1 Wash Ter. 46; Butler v. Tucker, 24 Wend. (N. Y.) 447; Dustan v. McAndrew, 44 N.Y. 72; Palmer v Clark, 106 Mass. 373; Keeble v. Black, 4 Tex. 69; Morrell v. Dixfield, 30 Me. 157; Nofsinger v. Ring, 71 Mo. 149, 36 Am. Rep. 456; O'Reilly v. Kerns, 52 Pa. 214; Chapman v. Ferguson, 152 Mo.App. 84, 132 S.W. 284.)

The respondent was down to 1908 the owner of substantially the entire capital stock of the corporation. He performed the service for which he now claims compensation, without any expectation of profit except that which would come to him as a stockholder, from the success of the corporation; he claimed and was paid wages for his work when he actually worked, and there was money in the corporate treasury, and he never made known or entertained a thought of other remuneration. Upon this state of facts he cannot recover. (McMullen v. Ritchie, 64 F. 253; Pew v. First Nat. Bank, 130 Mass. 391; Cook on Corp., sec. 657; Smith v. Putnam, 61 N.H. 632; Citizens' Nat. Bank v. Elliott, 55 Iowa 104, 39 Am. Rep. 167, 7 N.W. 470; American Central Ry. Co. v. Miles, 52 Ill. 174; Illinois Linen Co. v. Hough, 91 Ill. 630; Grisinger v. Hubbard, 21 Idaho 469, Ann. Cas. 1913E, 87, 122 P. 853; Goldstone v. Rustemeyer, 21 Idaho 703, 123 P. 635.)

The improper and prejudicial remarks of counsel for plaintiff were not counteracted by any instruction from the trial court with reference thereto. (Goldstone v. Rustemeyer, supra; Petajaniemi v. Washington Water Power Co., 22 Idaho 20, 124 P. 783; Powers v. Boise City, 22 Idaho 286, 125 P. 194.)

McFarland & McFarland, for Respondent.

The vote or resolution of a corporation appointing an agent need not be recorded or entered on the minutes, but may be inferred from the acceptance of his services, or the corporation's permitting him to act as such. (Alabama & T. R. R. Co. v. Kidd, 29 Ala. 221; Wood v. Wiley Construction Co., 56 Conn. 87, 13 A. 137.)

Where the directors of a corporation appoint one of their number to act as a ministerial officer of the corporation, he is prima facie entitled to reasonable compensation for his services as such officer. (Bee v. San Francisco etc. R. Co., 46 Cal. 248; First Nat. Bank v. Drake, 29 Kan. 311, 44 Am. Rep. 646; Ten Eyck v. Pontiac etc. R. R. Co., 74 Mich. 226, 16 Am. St. 633, 41 N.W. 905, 3 L. R. A. 378; McDowall v. Sheehan, 59 Hun, 618, 13 N.Y.S. 386.)

"An officer of a corporation can recover on an implied contract for services rendered the corporation, providing such services are outside of the scope of his duties as such officer." (Santa Clara Min. Assn. v. Meredith, 49 Md. 389, 33 Am. Rep. 264; Sargent v. Sargent Granite Co., 3 Misc. 325, 23 N.Y.S. 886; Corinne Mill, Canal & Stock Co. v. Toponce, 152 U.S. 405, 14 S.Ct. 632, 38 L.Ed. 493.)

Officers and directors of a corporation can collect a reasonable amount for their services when they are appointed to act as manager, superintendent, or in any other capacity. (Bassett v. Fairchild, 6 Cal. Unrep. 458, 61 P. 791; Ruby Chief Min. & Mill Co. v. Prentice, 25 Colo. 4, 52 P. 210; Kenner v. Whitelock, 152 Ind. 635, 53 N.E. 232; Brown v. Creston Ice Co., 113 Iowa 615, 85 N.W. 750; Louisville Building Assn. v. Hegan, 20 Ky. Law Rep. 1629, 49 S.W. 796; Taussig v. St. Louis etc. R. Co., 166 Mo. 28, 89 Am. St. 674, 65 S.W. 969; Bagley v. Carthage etc. R. Co., 165 N.Y. 179, 58 N.E. 895; Baines v. Coos Bay Co., 41 Ore. 135, 68 P. 397; Gumaer v. Cripple Creek etc. Min. Co., 40 Colo. 1, 122 Am. St. 1024, 90 P. 81, 13 Ann. Cas. 781; Wagner v. Edison Electric Illuminating Co., 141 Mo.App. 51, 121 S.W. 329.)

"Where the board of directors are empowered to appoint an official, and the by-laws provide that they shall fix a reasonable compensation for that official, and they do appoint the official but fail to fix a reasonable compensation for his services, in the absence of a salary fixed by the board of directors the law raises an assumpsit on the part of the company to pay a reasonable compensation." (Grundy v. Pine Hill Coal Co., 10 Ky. Law Rep. 833, 9 S.W. 414; Missouri River R. Co. v. Richards, 8 Kan. 101; Rogers v. Hastings etc. Ry. Co., 22 Minn. 25; Stewart v. St. Louis etc. R. Co., 41 F. 736; Bassett v. Fairchild, 132 Cal. 637, 64 P. 1082, 52 L. R. A. 611.)

SULLIVAN, J. Stewart, J., concurs. AILSHIE, C. J., Dissenting in Part and Concurring in Part.

OPINION

SULLIVAN, J.

The plaintiff, who is respondent here, brought this action against the appellant corporation to recover the sum of $ 14,371 upon two separate causes of action. The first cause of action was to recover $ 11,900 alleged to be due respondent for services performed for the appellant, at its special instance and request, as superintendent and general manager of its mines, for a period of eight years, from October 1, 1904, to October 1, 1912; and it is alleged that said services were worth $ 150 per month and that no part thereof had been paid except the sum of $ 2,500. The second cause of action was for various sums of money alleged to have been paid out by the respondent on behalf of the appellant corporation. On the trial the second cause of action was withdrawn from the jury by the court.

The cause was tried and verdict was found and judgment thereon entered in favor of respondent for $ 3,500 on said first cause of action. This appeal is from the judgment and an order denying a new trial. Numerous errors are assigned, twenty-two in number.

It appears from the record that the respondent in 1904 was the owner of a one-third interest in four certain mining claims, known as the "Spokane," "M. & M.," "Mammoth" and "Homestake," situated in Kootenai county, Idaho, and had an option for the purchase of the other two-thirds interest in said mining claims, at the price of $ 8,000. On October 4, 1904, the respondent and one Fitzsimmons, residing in the state of Idaho, and three other persons living in the state of Iowa, formed the defendant corporation, and the respondent conveyed to it his one-third interest in said mining claims, and the other incorporators agreed to finance the corporation. The amount of capital stock of said corporation was $ 1,000,000 divided into 1,000,000 shares of the par value of one dollar each. McLean, the respondent, as appears from the articles of incorporation, subscribed for 500,000 of said shares, and the other four incorporators for 50,000 shares each. Said articles of incorporation provided for the election of officers of said corporation to consist of a president, vice-president and secretary, treasurer and superintendent. The ninth section of the by-laws provides as follows:

"The compensation of all officers of the company, including superintendent, shall be fixed by the trustees, and they shall hold their office during the pleasure of the board. The compensation of all other employees shall be fixed by the superintendent, unless otherwise ordered by the board of trustees."

At the first meeting of the board of trustees, one E. L. Fitzsimmons, a resident of the state of Iowa, was elected president; the respondent, McLean, vice-president; F. J. Bray, residing in Iowa, secretary; and G. L. Fitzsimmons, residing at Rathdrum, Idaho, treasurer. The respondent continued as vice-president of said corporation until 1906, when he was elected president of the corporation. At all times after the organization of the corporation, and down to the year 1906, the president and secretary of the corporation resided in the state of Iowa and were absent from Idaho, and the respondent McLean was in active and actual control of the corporation's property and business in Idaho. He continued to be president of the corporation until about July 15, 1911, when he became, and now is, vice-president of said corporation.

In the year 1908 the respondent brought an action against said Fitzsimmons, Bray and other stockholders for the cancelation of stock held by them in said corporation, and procured a decree of cancelation which canceled all of the stock held by them. The persons who held said stock, or a part of them were directors of said corporation, and it does not appear in the record whether after the cancelation of...