Steeple v. Max Kuner Co.

• Decision Date: 15 July 1922
• Docket Number: 17213.
• Citation: 121 Wash. 47,208 P. 44
• Parties: STEEPLE v. MAX KUNER CO.
• Court: Washington Supreme Court

208 P. 44

121 Wash. 47

STEEPLE v. MAX KUNER CO.

No. 17213.

Supreme Court of Washington

July 15, 1922

Department 2.

Appeal from Superior Court, King County; Joseph B. Sessions, Judge.

Action by W. A. Steeple against the Max Kuner Company. From Judgment for plaintiff, defendant appeals. Affirmed.

Vince H. Faben, of Seattle, for appellant.

McClure & McClure, of Seattle, for respondent.

MACKINTOSH J.

On January 1, 1920, the appellant executed three promissory notes, each in the sum of $2,000, payable one year after date. The respondent was a payee of one of the notes and is now assignee of the other two. This action was brought to recover on these notes, and from a judgment in favor of the respondent this appeal has been prosecuted.

The appellant is a corporation having five stockholders, who are also the trustees. The following extracts from the minutes of the stockholders' meetings give all the facts necessary to be considered in passing upon this appeal. On September 5 1918, the following occurred:

'After a discussion of the affairs of the corporation, it was decided at the end of the year to present a bonus to the employees who, out of a patriotic spirit, have worked overtime, refusing other than regular time for their services. A motion to this effect was moved and carried.'

On December 27, 1918, at a meeting of the stockholders, the minutes show that----

'A ratification was made approving the motion carried in the meeting of the stockholders of September 5th to distribute bonuses at Xmas 1918 to employees who, through a patriotic spirit, have worked overtime refusing to take other than straight time for their services, and after a discussion of the affairs of the company a motion was carried to further distribute bonuses to the amount of fifteen thousand ($15,000) dollars as reward for special services among the following: Max Kuner, A. C. Kuner, P. C. Kauffman, G. E Thompson, W. A. Steeple. The above-mentioned employees having through the same aforesaid spirit of patriotism in their capacities of executive, professional, technical and selling abilities worked regardless of all war hindrances, thus bringing the business to its present successful condition. This bonus is to be on the co-operative plan as an inducement to effort, and it has been the intention of the corporation throughout the year to compensate the officers whose salaries have been wholly inadequate, some of them receiving less than the wages paid employees.'

The bonuses called for by this resolution were paid to the three persons named, who were the sole stockholders and were also the trustees; the respondent being one of them, and his assignors being Kauffman and Thompson referred to. On April 30, 1919, the minutes show that----

'The treasurer presented a four months' summary from January 1st to April 30th. A motion was carried that owing to the uncertain condition of the reconstruction period, in lieu of any raise of salaries, the following employees share a co-operative bonus as per minutes of a special meeting of the stockholders held on December 27, 1918. A further motion was carried to award bonuses to other faithful employees as per a meeting of the stockholders held on September 5, 1918, except that in both cases the word 'patriotism,' now that the war is over, be changed to 'special services."

The employees referred to in the foregoing minutes were Max Kuner, A. C. Kuner, P. C. Kauffman, G. E. Thompson and W. A. Steeple.

On December 30, 1919, the following appears in the minutes of a meeting of the stockholders:

'After taking up the discussion of the adjourned meeting, a resolution carried to distribute a co-operative bonus of ten thousand ($10,000) dollars between the following employees: Max Kuner, A. C. Kuner, P. C. Kauffman, G. E. Thompson and W. A. Steeple, share and share alike, according to a motion carried in a special meeting of the stockholders held on April 30, 1919.'

It was in conformity with this last resolution that the notes in question were executed. One of the defenses to these notes is that they were executed without proper authorization by the board of trustees, and the case of Murray v. MacDougall, 88 Wash. 358, 153 P. 317, is called to our attention. That case merely holds that, in view of the statutory provision, the board of trustees is the only board which can appoint officers and remove them, and that stockholders have no power to interfere in such a matter. See, also, Llewellyn v. Aberdeen Brewing Co., 65 Wash. 319, 118 P. 30, Ann. Cas. 1913B, 667, and Hewson v. Peterman Mfg. Co., 76 Wash. 600, 136 P. 1158, 51 L. R. A. (N. S.) 398, Ann. Cas. 1915D, 346. There is no statute giving the sole power to the board of trustees to execute negotiable paper, and this court has held that an officer of the company who has been in the habit of executing negotiable paper, and whose acts have been ratified by the company, or whose acts have resulted in a benefit which the company has received, may bind the company by such paper. Seal v. Puget Sound Loan & Inv. Co., 5 Wash. 422, 32 P. 214; Tootle v. First National Bank, 6 Wash. 181, 33 P. 345; Duggan v. Pacifie Boom Co., 6 Wash. 593, 34 P. 157, 36 Am. St. Rep. 182; Miller v. Washington S. R. Co., 11 Wash. 414, 39 P. 673; National Bank of Commerce v. Puget Sound Biscuit Co., 61 Wash. 192, 112 P. 265; Fox v. Seattle Contact Copper Co., 98 Wash. 557, 168 P. 185; and Kirwin v. Washington Match Co., 37 Wash. 285, 79 P. 928. But it is not necessary to go to the extent indicated in those cases in order to hold the company liable upon these notes, for, as was said in the case last cited:

'The trustees themselves were stockholders in the corporation and, presumably at least, assented to the ratification by the stockholders.'

Here we have a situation where all of the...