Powers v. Rutland R. Co.
| Decision Date | 02 December 1914 |
| Citation | 92 A. 463,88 Vt. 376 |
| Parties | H. HENRY POWERS v. RUTLAND RAILROAD COMPANY |
| Court | Vermont Supreme Court |
November Term, 1912.
ASSUMPSIT. Plea, the general issue with notice, and two pleas of accord and satisfaction. Trial by jury at the June Term 1910, Lamoille County, Butler, J., presiding. At the close of the evidence each party moved for a directed verdict. Verdict directed for the plaintiff for the amount of his claim, and judgment thereon. The defendant excepted. The opinion fully states the case. This case has been once before in the Supreme Court, see 83 Vt. 415. When the case came up the second time it was argued at the October Term, 1910, and after the announcement referred to in the opinion, made at the May Term, 1912, plaintiff asked, and was granted, a further hearing, which was had at the November Term, 1912.
Judgment reversed and judgment for defendant.
E W. Lawrence, Alexander Dunnett, and R. W. Hurlburd for the defendant.
Present: MUNSON, WATSON, AND HASELTON, JJ., AND MILES AND STANTON, SUP. JJ.
There has been a former hearing of this case, with an announcement of the views of the Judges who then sat. The briefs submitted at that hearing are before the Court as now constituted, with an additional brief from the plaintiff. This brief is framed largely as a reply to the views then expressed by the majority.
The suit is brought to recover a balance of $ 19,333.33, which the plaintiff claims to be due for his services as general counsel of the defendant; and this is conceded to be the sum due if the plaintiff is entitled to recover. Each party moved for a verdict at the close of the evidence, and the plaintiff had a directed verdict for the amount of his claim. The exceptions state that the defendant claimed there was no question to be submitted to the jury.
The plaintiff's claim is based upon a writing executed by W. Seward Webb as president of the defendant company, which purports to appoint him general counsel of the company for five years at a salary of $ 10,000 and expenses. The defendant claims that under the statutes of this State and the by-laws of the company the president had no authority to make this appointment.
It is provided by P. S. 4262 that "no officer of a private corporation shall receive a salary unless the same is voted and the amount thereof fixed by the board of directors"; and that "an officer who appropriates to his own use any of the funds of such corporation, not voted by the directors, shall be deemed guilty of embezzlement." No. 187, Acts of 1902, an act in amendment of defendant's charter, which was approved October 22nd and took effect from its passage, provides that the board of directors shall be elected at an annual meeting of the company to hold office for the term of one year and until their successors are elected, and that such board shall choose from their number a president and one or more vice-presidents to hold office for a like term, and "shall appoint a clerk, treasurer, and all other needed officers to hold office during the pleasure of such board." A by-law of the defendant, adopted in October, 1902, provides that "the business of the company shall be conducted by the following named officers", and includes in the list named a general counsel. The list as embodied in the by-law parenthetically designates the president as elected by the board, the clerk and treasurer as appointed by the board, and the other officers named, including the general counsel, as appointed by the president.
The plaintiff claims that the general counsel is not an officer of the corporation within the meaning of P. S. 4262, and therefore not an officer whose salary must be authorized and fixed by a vote of the directors; and that he is not in the class of officers referred to in the charter amendment above recited, who are to be appointed by the board to hold office during its pleasure. The defendant contends that the general counsel is an officer of the corporation within the meaning of P. S. 4262, and also within the meaning of the charter amendment above recited; and that in so far as the by-law undertakes to confer upon the president the power to appoint the general counsel and other officers it is in conflict with the charter and void.
The duties and authority of the general counsel are prescribed by a by-law. Under the supervision and subject to the approval of the president, he has general charge and control of the legal business and litigation of the company, and may retain or appoint associate counsel or legal representatives. He is to keep himself informed of the character and progress of legal proceedings and of all claims by and against the company or in which it is interested, and keep in his office a record of all actions in which the company is a party or is interested. No suit is to be instituted or settled otherwise than by his direction and subject to the approval of the president. He has charge of the settlement of claims for damages, and is assisted therein by an assistant claim agent, who is subject to his direction. He is to prepare opinions on any subject referred to him by the president, and supervise the preparation of all contracts and other documents to be executed by the company.
The points of difference which determine whether one is an officer or a mere employee have been considered mainly in cases involving the rights and liabilities of public servants. See note, 72 Am. Dec. 179. Most of the cases involving the status of the representatives of private corporations are cases where the statute required that service be made upon, or that some specific thing be done by, an officer of the corporation; and it has usually been held that a general agent or general manager is not such an officer. Note, 5 Ann. Cas. 223; Farmers' L. & T. Co. v. Warring, 20 Wis. 290; Wheeler etc. Mfg. Co. v. Lawson, 57 Wis. 400, 15 N.W. 398; Meton v. Isham Wagon Co., 4 N.Y.S. 215. This view was taken in Vardeman v. Penn. Mutual L. Ins. Co., 125 Ga. 117, 54 S.E. 66, 5 Ann. Cas. 221, where an insurance policy required that any waiver of its conditions be signed by an officer of the company, and the waiver had been signed by a general agent. In disposing of this case the court referred to one of its previous decisions, where it was held that the term "general manager" as applied to one representing a corporation, and especially a railroad corporation, imported an agent of very extensive authority,--and said it was not ruled that even the term "general manager" would import that the person holding that position was necessarily an officer of the company.
The list in which the general counsel appears, as contained in the by-law, begins with the general manager and includes such officials as the purchasing agent, superintendent of motive power, and general freight agent. This classification bears strongly against the theory of the defendant. It is obvious that the superintendent of motive power, for instance, is not within the ordinary legal conception of a corporate officer. His office has no relation to a corporate organization, and his duties are wholly those of an employee. The nature of an official's position has sometimes been tested by referring to the doctrine of mandamus. It seems clear that an exclusion of the plaintiff from his office, whatever the form given it, would have been in essence a breach of contract, and that his remedy would have been a suit for damages, and not mandamus for a reinstatement. We think the plaintiff was not an officer of the defendant company in the usual and proper sense of the term.
But the defendant contends that the general counsel should be held to be an officer of the corporation within the meaning of P. S. 4262, whatever the technical construction of the term may be. It is said that the purpose of this section is to protect the stockholders and creditors of a corporation by regulating the salaries of its officers, and that the word "officer" should be so construed as to effectuate the purpose of the Legislature. It is argued that the by-law above referred to expressly designates the general counsel as one of the officers who shall conduct the defendant's business, and that any construction of the statute which would exclude the general counsel from its operation would limit its effect to the president and treasurer and thus strip it of all its force. We think, however, that the distinction made between an officer of the corporation and an employee must prevail in the construction of this provision. In the absence of controlling phraseology, the statute may well be held to apply to the officers who have the management and control of the corporation and its funds through the exercise of corporate functions and not to persons whose position and duties are merely those of an employee.
But it is said that the plaintiff was a director for some time when serving as general counsel, and as such was unquestionably an officer of the corporation; and that the statute is broad enough to prevent his receiving the money of the corporation for his services in any capacity while a director without the payment having been authorized by a vote of the board. But the law recognizes the right of an officer of a corporation to contract with the corporation in his individual capacity, and his right to receive compensation for his services in that capacity without a vote of the directors must depend upon the nature of the relation established by his undertaking.
It is argued further that the charter of the defendant as amended by the act of 1902 provides that the board of directors "shall appoint a clerk, treasurer, and all other needed officers." and that the general counsel is manifestly an officer of the corporation within...
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