Turners, Inc. v. Klaus
| Decision Date | 16 November 1960 |
| Docket Number | No. 13648,13648 |
| Citation | 341 S.W.2d 182 |
| Parties | TURNERS, INC., Appellant, v. Otto KLAUS, Appellee. |
| Court | Texas Court of Appeals |
Clinton G. Brown, Jr., San Antonio, for appellant.
Jack F. Ridgeway, San Antonio, for appellee.
This is a suit for the recovery of unpaid salary. Otto Klaus, plaintiff, sued Turners, Inc., and recovered judgment for $6,900 for unpaid salary as manager, and for $3,000 attorney's fees. Turners, Inc., urges that its by-laws, under which Klaus claims, included a limitation upon the power of Klaus, while manager of Turners, Inc., that 'he shall not incur any debts without the prior approval of the board of directors,' which approval was never obtained. It urges also that it was entitled to a judgment on the verdict.
Klaus served Turners, Inc., a social club, as its manager for twenty-two years. Under the corporate by-laws the manager was employed by the general membership at a salary of $75 per week. 1 During 1953, over Klaus' objection, the Club borrowed $12,000 from Hermann Sons to make improvements. The Club had difficulty making payments on the loan and also paying the current salaries, so Klaus dropped himself from the payroll and drew only a car allowance. Klaus stated that he deferred paying himself the salary provided by the by-laws. From July 14, 1953, until the Club's loan was repaid in June, 1958, Klaus drew no salary but performed all his duties. In September, 1958, he was discharged, and he filed this suit for back salary in the sum of $15,375. The defendant pleaded the two-year statute of limitations, which explains the judgment for the lesser amount.
Klaus sought recovery on both a theory of quantum meruit and express contract. On the quantum meruit theory, the jury found that the reasonable value of Klaus' services was $75 per week, but also found against him by finding that during the period for which he did not draw his salary he did not intend that the Club would pay him the salary after the Hermann Sons' note was paid. A contract implied in fact arises when 'the acts of the parties are such as to indicate * * * a mutual intention to contract, as where one accepts the tendered service of another under circumstances justifying the inference that such other expected to be paid for such services.' Marr-Piper Co. v. Bullis, Tex.Com.App. 1 S.W.2d 572; Kuhlmann's Estate v. Poss, Tex.Civ.App., 220 S.W. 564; Southwestern Portland Cement Co. v. Latta & Happer, Tex.Civ.App., 193 S.W. 1115, 1125; 13 Tex.Jur.2d, Contracts, Sec. 5. The evidence in support of the finding is that the unpaid salary never appeared on the books and Klaus as manager knew that fact. An annual audit was made by independent auditors, but the annual reports never showed any accrued or unpaid salary owing Klaus. Klaus at no time entered any objection to the reports made to the Club. The verdict therefore defeats a recovery based on quantum meruit.
Klaus also relied upon an express contract by reason of the salary provisions contained in the by-laws themselves. By-laws may constitute an express contract to pay a salary. Brown v. Galveston Wharf Co., 92 Tex. 520, 50 S.W. 126; Green v. Felton, 42 Ind.App. 675, 84 N.E. 166; Carter v. Louisville Ry. Co., Ky., 36 S.W.2d 836; accord, Mooney v. Willys-Overland Motors, Inc., 3 Cir., 204 F.2d 888, 39 A.L.R.2d 566. The by-laws authorized the manager's salary by providing that he 'shall be paid the sum of $75 per week for his services.' The by-laws also limited his powers by providing that 'he shall not incur any debts without the prior approval of the board of directors * * *.' There is no dispute over the legal principle that by-laws may limit the manager's powers. Art. 2.42, Business Corporation Act, V.A.T.S. There is a dispute over the meaning of the term 'incur any debts,' and we must determine that from the context of the phrase. 'Incur' means 'bring on', 'occasion', or 'cause'. Schwab v. Schlumberger Well Surveying Corp., 145 Tex. 379, 198 S.W.2d 79, 168 A.L.R. 1074; Ashe v. Youngst, 68 Tex. 123, 125, 3 S.W. 454, 455; Maryland Casualty Company v. Thomas, Tex.Civ.App., 289 S.W.2d 652, 655; 20-A Words and Phrases, Incur, p. 454.
The question, therefore, is whether the debt was already incurred but merely unpaid, or whether it was the non-payment which incurred the debt. In our opinion, the former interpretation is the true meaning. The by-laws authorized employment of a manager to work a week for $75. Klaus, in working for a week, earned $75 which defendant then owed. This much was...
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