Taussig v. St. Louis & K. Ry. Co.

• Decision Date: 17 December 1901
• Citation: 65 S.W. 969,166 Mo. 28
• Court: Missouri Supreme Court
• Parties: TAUSSIG v. ST. LOUIS & K. RY. CO.

65 S.W. 969

166 Mo. 28

TAUSSIG v. ST. LOUIS & K. RY. CO.

Supreme Court of Missouri, Division No. 1.

December 17, 1901.

CORPORATIONS—DIRECTORS—EXTRA SERVICES —COMPENSATION—SECURING INCORPORATION.

1. Where a director and officer of a corporation, at the request of the directors and managing officers, performs services as an attorney which are entirely outside his official duties, and which are not intended or expected to be performed gratuitously, he may recover the reasonable value therefor.

2. Where an attorney, at the request of the incorporators, prepares the articles and performs services in procuring the incorporation, and there is no understanding that the services are gratuitous, he may recover reasonable compensation from the corporation therefor.

Appeal from St. Louis circuit court; Franklin Ferris, Judge.

Action by George W. Taussig against the St. Louis & Kirkwood Railway Company. From an order refusing to set aside a nonsuit, plaintiff appeals. Reversed.

Bishop & Cobbs, Albert E. Hausman, and Geo. W. Taussig, for appellant. A. N. Edwards, Dawson & Garvin, and Leonard Wilcox, for respondent.

BRACE, P. J.

The plaintiff is an attorney at law, and this action is to recover the sum of $4,500 and interest, for professional services rendered the defendant from September 1, 1893, until June, 1896. The defendant was incorporated about the 12th of September, 1893. The plaintiff was one of its incorporators. On its organization he became its secretary and treasurer, and one of its directors, and so continued to be during the period of the rendition of the services thereafter charged for. At the close of the plaintiff's evidence the court gave an instruction that upon the law and evidence the plaintiff could not recover. Thereupon he took a nonsuit, with leave, and, his motion to set the same aside having been overruled, he appeals.

It clearly appeared from the evidence that the services were rendered, that they were professional services, that they were of the value charged therefor, that they were performed at the instance of the general manager and directors, and the benefits thereof accepted by the corporation; and, from the record, that a recovery was denied him on the ground that his employment was not evidenced by any formal recorded action of the board of directors fixing compensation for such services. The crucial question in the case is whether a promise to pay the reasonable value of such services may be implied in his favor, he being a director of the corporation at the time.

1. It is well-settled law in this state that the acts of a corporation may be proved in the same manner as the acts of individuals, and that a promise to pay the reasonable value of services rendered and accepted may be implied against corporations as against individuals in the same circumstances. Hotel Co. v. Newman, 30 Mo. 118; Bank v. Gilstrap, 45 Mo. 419; Preston v. Lead Co., 51 Mo. 43; Kiley v. Forsee, 57 Mo. 390; Southgate v. Railroad Co., 61 Mo. 89; Bank v. Fricke, 75 Mo. 178, 42 Am. Rep. 397; Maupin v. Mining Co., 78 Mo. 24; Holmes v. Board, 81 Mo. 137; Washington Sav. Bank v. Butchers' & Drovers' Bank, 107 Mo. 133, 17 S. W. 644, 28 Am. St. Rep. 405.

2. It is also well-settled law that when a lawyer has rendered valuable services to another person, the benefits of which have been accepted by him, a promise to pay the reasonable value of such services will be presumed against such other person, unless the circumstances show that the services were intended to be gratuitous. 3 Am. & Eng. Enc. Law (2d Ed.) 437. And this court has held that a jury knows more about the value of such services than anybody else. Cosgrove v. Leonard, 134 Mo. 419, 33 S. W. 777, 35 S. W. 1137.

3. But it is also well-settled law that the directors of a corporation cannot recover compensation for their services when rendered in the line of their duty as such, whether eo nomine as directors, officers, members of committees, or otherwise, unless compensation for such services is provided for in its charter or authorized by a by-law or resolution of the board of directors before the services are rendered. 17 Am. & Eng. Enc. Law (1st Ed.) p. 119, § 6, and cases cited in note 3; Martindale v. Wilson-Cass Co., 134 Pa. 348, 19 Atl. 680, 19 Am. St. Rep. 706; Association v. Stonemetz, 29 Pa. 534; Hodges v. Railroad Co., 29 Vt. 220; Railroad Co. v. Sage, 65 Ill. 328, 16 Am. Rep. 587; Tayl. Priv. Corp. (4th Ed.) § 646; 1 Mor. Priv. Corp. (2d Ed.) § 508; Beach v. Stouffer, 84 Mo. App. 395; Remmers v. Seky, 70 Mo. App. 364; Rose v. Carbonating Co., 60 Mo. App. 28; Pfeiffer v. Brake Co., 44 Mo. App. 59; Besch v. Manufacturing Co., 36 Mo. App. 333; Bennett v. Roofing Co., 19 Mo. App. 349. Generally, in these cases, the director was seeking to recover salary or compensation for services as a director, manager, officer, committeeman, or for other like services nearly or remotely incident to his duties as a director, when no compensation had been provided therefor by formal action of the board, and under this rule a recovery was denied. In some of these and other like cases dicta may be found broad enough to support the ruling of the trial court in this case, and in some, perhaps, the judgment on the facts may be said to give it support. But for authoritative precedents for a correct ruling on the facts of this case we will have to look elsewhere.

4. Here the plaintiff, an attorney at law, who is a director of the defendant corporation, as also its secretary and treasurer, is suing for the value of services, not within the scope of or incident to the duties of any of those official positions or relations, but for special personal services, strictly in the line of his profession, and entirely outside of the line or scope of any of his official duties. And the question is, what is the rule in such case? The rule applicable to such a case, to be deduced from the modern and best-considered cases, is, we think, that a party, although a director or other officer of a corporation, may recover the reasonable value of necessary services rendered to a corporation entirely outside of the line and scope of his duties as such director or officer, performed at the instance of its officers, whose powers are of a general character, upon an implied promise to pay for such services, when they were rendered under such circumstances as to raise a fair presumption that the parties intended and understood they were to be paid for, or ought to have so intended and understood. Construction Co. v. Fitzgerald, 137 U. S. 98, 11 Sup. Ct. 36, 34 L. Ed. 608; Pew v. Bank, 130 Mass. 391; Bassett v. Fairchild, 132 Cal. 637, 64 Pac. 1082, 52 L. R. A. 611; National Loan Investment Co. v. Rockland Co., 36 C. C. A. 370, 94 Fed. 335; Brown v. Silver Mines, 17 Colo. 421, 30 Pac. 66, 16 L. R. A. 426; Turnpike Co. v. Stratton, 120 Ind. 292, 22 N. E. 247; Association v. Meredith, 49 Md. 389, 33 Am. Rep. 264; Rogers v. Railway Co., 22 Minn. 25; Shackelford v. Railroad Co., 37 Miss. 202; Chandler v. Bank, 13 N. J. Law, 255; Cheeney v. Railway Co., 68 Ill. 570, 18 Am. Rep. 584; Bank v. Elliott, 55 Iowa, 104, 7 N. W. 470, 39 Am. Rep. 167. In these cases the whole question is thoroughly discussed and many authorities cited. The rule, and its applicability to the case in hand, is made manifest by the following quotations from a few of them: In Construction Co. v. Fitzgerald, 137 U. S. 111, 112, 11 Sup. Ct. 40, 41, 34 L. Ed. 613, 614, Chief Justice Fuller says: "The evidence tended to establish that Fitzgerald acted as treasurer for some months in 1886, and that, while so acting, he went to expense and trouble in the procuring of money for the company, and in the discharge of duties outside of those assigned to the treasurer as such, as defined in section 6 of the by-laws, already quoted, and that, as manager and superintendent, he procured right of way, superintended the doing of the work, the hiring of the men, the subletting of the contracts, etc., which were matters not at all pertaining to his office as director. The character of all these services placed them outside of official duties proper. The general rule is well stated by Mr. Justice Morton (since chief justice of Massachusetts) in Pew v. Bank, 130 Mass. 391, 395: `A bank or other corporation may be bound by an implied contract in the same manner as an individual may. But in any case the mere fact that valuable services are rendered for the benefit of a party does not make him liable upon an implied promise to pay for them. It often happens that persons render services for others which all parties understand to be gratuitous. Thus directors of banks and of many other corporations usually receive no compensation. In such cases, however valuable the services may be, the...