New Capital for Small Businesses, Inc. v. Saunders

• Decision Date: 06 May 1963
• Court: California Court of Appeals Court of Appeals
• Parties: NEW CAPITAL FOR SMALL BUSINESSES, INC., a California Corporation, Plaintiff and Respondent, v. Cyril SAUNDERS, Defendant and Appellant. Civ. 20908.

Page 563

30 Cal.Rptr. 563

215 Cal.App.2d 728

NEW CAPITAL FOR SMALL BUSINESSES, INC., a California Corporation, Plaintiff and Respondent, v. Cyril SAUNDERS, Defendant and Appellant.

Civ. 20908.

District Court of Appeal, First District, Division 3, California.

May 6, 1963.

Cyril Saunders, in pro. per.

Shirley, Saroyan, Cartwright & Peterson, Robert E. Cartwright, San Francisco, for respondent.

SALSMAN, Justice.

This is an appeal by Cyril Saunders from a judgment awarding respondent $14,000 plus interest and costs, on a common count for money had and received.

Appellant, an attorney at law, organized the respondent corporation February 9, 1960, and was its counsel. At time of organization there were three directors. On February 13, 1960, the board of directors was increased from three to seven. Appellant was one of the seven first directors, and remained a director at all times involved in the present controversy. The respondent corporation secured a permit from the Commissioner of Corporations for the sale of its stock, and on or about March 16, 1960 appellant made application to the Commissioner of Corporations for authority to act as agent of the respondent corporation in the sale of its stock. The commissioner's certificate of authority to act as respondent's agent issued to appellant on April 7, 1960. In the application appellant did not reveal the fact that he was a director of respondent. It was appellant's claim at trial that on March 5, 1960 he had been authorized by a resolution of the board of directors of respondent to make such an application, and that it was agreed by the board of directors he was to receive a 10% commission on stock sales. He produced a copy of the minutes of the claimed meeting of the board, dated March 5, 1960. Two directors, however, testified no such meeting ever took place; that appellant was not authorized to act as agent in the sale of stock, nor was there any understanding or agreement he was to receive a commission on stock sold. The trial court found the claimed meeting of the board did not take place and that appellant was not authorized by the respondent corporation to act as its agent or to be paid a commission on the sale of its stock. Respondent's stock was quickly sold, most of it through the efforts of persons other than appellant. On May 13, 1960 and July 12, 1960 appellant had issued to himself checks totalling $14,000 which he claimed as commissions on the sale of stock. The checks required two signatures, one of which was that of appellant, and the other that of respondent's treasurer. The trial court found that these funds were taken and removed from respondent's treasury without the knowledge, consent, approval or subsequent ratification of its board of directors, and thereupon rendered its judgment in respondent's favor.

Appellant's first contention on appeal is that the trial court's judgment is 'an abuse of discretion' and has 'effected an injustice' upon him. We understand this to be a challenge to the judgment on the ground that it is not supported by substantial evidence. In his brief appellant seeks to argue the effect of the evidence, foregetting that the conflicting evidence has been resolved against him. It is elementary that in our own review we must resolve all conflicts in favor of respondent, and indulge in every reasonable inference to support the judgment if possible. (Crawford v. Southern Pacific Co., 3 Cal.2d 427, 429, 45 P.2d 183.) In the trial court, appellant contended, as he does on this appeal, that he was not a director of respondent; that he was authorized by respondent's board of directors and the Commissioner of Corporations to act as respondent's agent in the sale of its stock; that respondent's board of directors agreed to pay him a 10% commission; that he sold the stock, took the money which he claims was his commission, and that he was legally entitled to what he took. The findings of the trial court, however, were against appellant. These findings are supported by evidence that the meeting of directors, at which appellant claims he was authorized to sell respondent's stock and receive a 10% commission, was a special meeting of the directors; that at least two of the directors then comprising the board did not receive notice of any meeting and did not attend any such meeting; that appellant told several directors and prospective shareholders he was to receive a fee of $3,000 for organizing the corporation and that this was to be his only compensation; that the board of directors had never determined what amount of stock, if any, had been sold by appellant; that the day after the board was increased from 7 members to 15 members and a general manager appointed, appellant took $8,000 from the treasury and did...