Wilbur v. Stoepel
| Decision Date | 10 October 1890 |
| Citation | 82 Mich. 344,46 N.W. 724 |
| Court | Michigan Supreme Court |
| Parties | WILBUR v. STOEPEL et al. |
Error to circuit court, Wayne county.
Charles K. Latham, (F. A. Baker, of counsel,) for appellant Stoepel. Edward W Pendleton, for appellant Watson. Parker & Burton, for appellee.
This suit was brought upon the following written agreement The first declaration filed in the case set forth the above agreement in h�c verba, and alleged that the defendants were large stockholders in the Stoepel Lumber Company; that they were desirous of selling 400 shares of its capital stock to plaintiff, and that he should become manager of the business; that he agreed to become a member of the corporation, and manager of its business, and that thereupon the above written contract was executed. The contract was not made with the company, but with two of its stockholders. One Henry R. Stoepel was also a large stockholder. This declaration did not allege any contract with him verbal or written, nor any consent on his part to the agreement sued on, nor did his name appear in the declaration. Issue was duly joined, and the case came to trial. Upon that trial there was no evidence of consent on the part of Henry R. Stoepel to the agreement, and the court held that the contract was void as against public policy, and thereupon the plaintiff withdrew a juror. Plaintiff then filed an amended declaration, in which he alleged that the two, Stoepel and Watson, on the 26th of March, 1884, owned a saw-mill and the land on which it was situated, and that he owned a stock of goods; that they proposed to him to organize a corporation with a capital stock of $50,000, the above property to be turned over to the corporation, and plaintiff to pay in a certain amount in money, that they proposed to make him manager, with a salary of $1,500; to give him $10,000 worth of the capital stock, and to agree in writing that if at the end of two years he should desire to withdraw from the company they would purchase his stock at $8,000; that the formal organization was completed; that, before he had transferred his stock of goods to the corporation, Herman Stoepel refused and declined to join in making the written agreement, and that thereupon the defendants by themselves, and without said Herman, made said written agreement. The declaration is entirely silent as to any assent to the agreement, except the alleged verbal promise to make such an agreement which it is alleged he refused to carry out. Issue was joined, and, upon the second trial, verdict and judgment were rendered for the plaintiff.
1. This alleged agreement between the defendants, who owned a majority of the stock, and the plaintiff, is contrary to public policy, and void as against those not consenting to it. The defendants were directors, and, in the management of the corporate affairs, cannot but be unduly influenced by such an agreement. Their natural desire and inclination would be to continue the plaintiff as manager, although it were against the interest of the other stockholders, and would be against their own as stockholders, but for the agreement which might render them liable for the payment of a large sum if they failed to retain him. Nor is such a contract made valid by the good faith of the parties to it. Its effect upon stockholders who are not parties to it, or do not consent to it, is the same in the one case as in the other. The law therefore wisely condemns and prohibits all such contracts. The supreme court of the United States has so decided in a recent case, under facts very similar to the case at bar. West v. Camden, 10 S.Ct. 838, and authorities there cited. The pivotal question in the case therefore, was whether Herman R. Stoepel consented to the agreement. The learned circuit judge charged the jury that the agreement upon its face was void, but that there was evidence in the case that Herman did consent to it, and if he did the plaintiff was entitled to recover. The learned counsel for plaintiff seem to admit in their brief that there was no such evidence, but insist that defendant cannot complain, because his counsel admitted there was, by asking the court to instruct the jury that plaintiff could not recover unless they found that Herman consented to the agreement. We do not think this warranted the judge in charging that there was evidence, if such was not the fact. The establishment of such a rule would require greater care and caution on the part of counsel in the trial of causes than can well be exercised, and would often result in the defeat of justice. Litigants cannot be deprived of their right to except to instructions by the court unless they have expressly requested them. Requests by implication are not known. A careful examination of the evidence is therefore necessary in order to determine whether this instruction was correct. The allegation in the declaration that Herman R. Stoepel made a verbal promise to make such an agreement is not sustained by the proof. On the contrary, by plaintiff's own evidence, he expressly refused from the beginning to make any such agreement. The agreement sued on was signed by defendants April 14th, although dated April 1st, as the latter was the date from which the operations of the corporation were to commence. Herman was not then present, and if any consent was given by him, which was binding upon him, it was given before April 14th. This depends upon two conversations testified to by plaintiff, one in February, and the other on March 26th, when the articles of association were signed. He testified that defendants read and offered to him a proposition to buy back his stock, should he withdraw at the end of two years, or should the company decide to dispense with his services. This proposition was unsigned. When first read, defendants and plaintiff alone were present. That it was read again when Herman was present, and he said: When the articles of association were signed, plaintiff says that the question of this contract was brought up again, and there was some talk about it, and Herman said, as before, that "he had not enough in it so that he cared...
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