Virginian-pilot. (Norfolk, Va.) 1898-1911, 1899-09-09
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Supreme Court Of Appeals, West
Virginia. s:sss
April 20 1899. Is ~
IN WEST. NIRGINIA$ "A PRESIDENT
OR DIRECTOR OF r A PRIVATE
81 JOINT STO IllCoRPORATION CAN
CLAIM NO CONVERSATION TOR
SERYIsES, AS SUCH, UNLESS ALI
Is LOWED BY THE STOCKHOLM
& ERS. AN ALLOWANCE FOR SUCH
4 SERVICES. AS SUCH, UNLESS Al
+f DIRECTORS is. ULTRA WIRES
s AND VOID WITHOUT PRIOR AU-3
THoRITY FROM THE STOCK.
HOLDERS.
This was a suit in equity to recover
from the defendant, who was admins
traitor Of the former president Of the
company, VIM. woodward, five bonds
administrator claimed as belonging
to him under certain resolutions of the
Board of Directors of said plaintiff
company; which gave them to his intes-
tate in payment for his services as
president Of the company. There was
a decree for defendants and pladntiff
appealed.
The Court says:
Upon demurrer very important Ques-
ton arises-not only important for this
operation and administration of corpo-
rations. AS stated in Crumlish's
Admir- V. Improvement Co., IS w. Va.
4o3, the general rule everywhere de-
nies compensation to the president of
private corporation, unless 1t be au-
thorized by the proper authority Of the
corporation. and the law raises no i'm
piled promise TO pay compensation to
directors OF president, in the absence
OF provision in bylaw ors order; they
such, to COMPENSATION. That position
is sustained by the authorities there
cited, and also by many others.
Thomp Corp. section 1852, says: HE
is not entitled TO any compensation for
performing the ordinary duties Of his
office, unless the governing statute, or
some bylaw, regulation, resolution, or
contract. to which his own vote was
not essential, has given 1t to him. AS
the law does not imply an agreement
TO pay for such services, in order for,
him to recover compensation for them
lie must at least show an antecedent
valid agreement to pay for them" Ever
where bylaws provide that officers of
a private corporation shall receive such
compensation as shall be determined
a an annual meeting Of the stock
holders, or at any special meeting
called for that purpose, and none are
ever so liked. an officer will not be en-
titled to recover for services in the
absence OF an agreement to pay him.
Such Is the general law, but our Code
(chepter IS, section 53) says: There
shall be no compensation for services
rendered by the president or any direc-
tors, unless 1T be allowed by the stock
holders" The directors, have no power
| without the preceding authority of the
stockholders granted to the directors.
| The only mode by which president or
director of Joint stock corporation can
get salary or pay is through the stock
holders. Important policy and Iegisla-
tive purpose dictated that statute. 1t
is a very prudent and safe one. The
temptation to president and directors
| to vote themselves compensation TO the
great prejudice of the great mass OF
stockholders, who are all the real own
ers of its assets, and the directors but
| their agents, us very strong, and the
statute ought to be rigitliy enforced.
| do not say that. after service rendered
! The stockholders could not unanimously
vote pay TO such officers; blu. | do saw
That, without preceding authority frora
The stockholders. there is no shadow of
power IN the directors to do SO.
II The directors In this cnse allowed
COMPENSATION for past services, when
those services did not call for compen-
sa ton under the law when rendered.
and, The directors having no authority
to charge the assets with debt when
there was no debt, their actions would
be ultra wires. Directors can only bind
The company by lawful Acts Ihex.
cannot bind the company for antecedcnt
causes, constituting no ground of ac-
ton. As stated in the quotation above
from Thompson on Corporations. to
give compensation there must be an
| tecedcnt authority. There must be a
bylaw or resolution fixing the allow
ance before service rendered. And
without such previous authorization the
action of the Board of Directors allow
ing COMPENSATION imparts no validity to
the claim. Where such unlawful appro-
priation is made. it may be repudlated
by the corporation. or its receiver and
the sum wrongly expended as compen-
sation for pasttservce of an officer may
be recovered back. There was no prIor
ton or bylaw OF stockholders. or
even of the directors, If the latter were
competent, as 1t would not be, to iusti-
fy the said action of the directors.
In the sIcrk'- ONCE.
A deed was recorded yesterday in