Patterson v. Brooks, 3 Div. 444

• Decision Date: 05 March 1970
• Docket Number: 3 Div. 444
• Citation: 232 So.2d 598,285 Ala. 349
• Parties: Merle H. PATTERSON, as Executrix, etc. v. John BROOKS et al.
• Court: Alabama Supreme Court

Page 598

232 So.2d 598

285 Ala. 349

Merle H. PATTERSON, as Executrix, etc. v. John BROOKS et al.

3 Div. 444.

Supreme Court of Alabama.

March 5, 1970.

Alfred W. Goldthwaite, Montgomery, for appellant.

Fred S. Ball, Montgomery, for appellees.

MERRILL, Justice.

This appeal is from a decree approving a bonus of $7,100.00 payable to the executrix of the estate of a deceased employee. We affirm.

The testator, Richard H. Patterson, had worked for Ray-Brooks Machinery Co., Inc., a corporation, the stock of which is owned by John Brooks, Jr., the President of the Company, his mother, and one outside stockholder who owns three shares. For several years prior to his death, Patterson was Sales Manager for the Company. He died on January 29, 1969, and the fiscal year of the company ended on February 28, 1969. For that fiscal year, the company lost over $90,000.00. In the three preceding years, the profits of the company had been: 1966--over $113,000.00; 1967--over $32,000.00, and 1968--over $51,000.00. For those same years, Patterson had received a bonus as follows: 1966--$13,600.00; 1967--$10,800.00, and 1968--$14,200.00. The bonus for the fiscal year in which he died, 1969, was $7,100.00. Although the bonus of various officers and employees was not paid until May of each year, this suit, alleging that the bonus due Patterson was in jeopardy, was filed on April 22, 1969.

After a hearing before the court, the following decree was entered September 29, 1969:

'The court having previously sustained the demurrer of the respondents, John Brooks and Mrs. Louise Brooks, leaving only the respondent, Ray-Brooks Machinery Company, Inc., a corporation, and the cause coming on to be heard by the court and the parties and their counsel being present, and the evidence being heard orally by the court, and the issue being whether said corporation is indebted to the complainant for an additional amount due as a bonus for services rendered by the testator during the corporation's fiscal year, ending February 28, 1969, at the time of the testator's death on January 29, 1969, the court finds as follows:

'At the time of his death, the testator was employed by said corporation as its sales manager with an annual salary of $10,810.00 per year payable in monthly installments with the understanding that at the end of the fiscal year the company president, John Brooks, would discuss with the testator and obtain his views as to a bonus and he would then decide what additional amount would be paid as a bonus. The bonus would be additional compensation and serve as an incentive for future effort. This was to be done on or about May 1, after the close of the fiscal year on February 28th. There was no advance agreement to pay a sum certain or an amount to be based on a percentage of sales or percentage of profits or computed in any other mathematical way. The amount was to be entirely within the discretion of the company president. After the close of the 1969 fiscal year in this case the company president fixed the amount of the testator's bonus at $7100.00 and placed a check for that amount, less proper deductions, in the hands of the company attorney for surrender to complainant and in its answer the respondent stated in paragraph 6 that said amount was in its attorney's hands ready for delivery to complainant's attorney. Said check was offered in evidence on the trial of this matter. The bonus plus the amount of monthly salary of $9900.00 paid would make a total of $17,000.00 compensation for the testator for the eleven months service rendered prior to his death.

'The Alabama Supreme Court in Smith v. Dunlap, 269 Ala. 97, (111 So.2d 1), held that where the amount of a bonus is within the discretion of a corporation officer, unless there is evidence of bad faith, a court will not attempt to substitute its judgment for that of the corporation officer in determining the amount of the bonus. The court finds no evidence of bad faith in this case.

'IT IS ACCORDINGLY ORDERED, ADJUDGED AND DECREED THAT the said $7100.00 check less deductions leaving a net amount of $4625.00, payable to the Estate of R. H. Patterson, which was offered in evidence,...