Milford chronicle., 1921-05-13
DECISION AGAINST
FISH co. DIRECTORS
CHANCELLOR ORDERS DIRECTORS OF
LEWES FISHERIES co. TO TURN
OVER ALL DIVIDENDS.
GIVE THEIR SERVICE GRATIS
ALL The MONEY THAT Was VOTED TO
THEMSELVES MUST Be RETURNED
WITH INTEREST TO DATE.

n ion in the case of Joseph L. Cahal
v receiver of Lewes Fisheries Compan.
: against William C. LOfiand, James
e Lank, Harland M. Joseph, William
? Tunnell, William H. BOokhamme
5 John R. Baylis, William J. Thompson
Robert Pennington and Lewes o.
e and Chemical Company, pending
: Kent county, which resulted from tn
} sale of the boats and plant of tn
? Lewes Fisheries Company to RobeI
! Pennington in August, 1917.
By the decision the directors will
be- required to pay to the receiver al
of the moneys received by them a
; dividends on the shares of stock is
sued to themselves and in view of tn
, concerted action in connection witt
the issuance of the stocks and pay
ment of salaries, the directors will al
so be required to file an account o
what they have received individually
as dividends upon the shares so takeI
by them, and of all payments made by
them on account of the notes giveI
for stock, and will be required joint
ly and severally to pay to the receiv-
er the moneys found to be due from
them. William E. Tunnel having re-
ceived the sum of $4,000 voted for SER
vices, and the other six directors will
be ordered to pay the same to the re-
ceiver with interest from the date of
receipt.
In respect to the disposal of the
plant and the sale and resale of
steamers of the company, considered
at length, the chancellor concludes by
saying that the stockholders resolu-
tiOn confirming the sale expressly re-
served "all manufactured product now
in the possession of said company, or
to be manufactured before the date of
the cOnsummation of the SALE" which
was upon payment in full Of the pur-
chase price, and when the legal title
to the property passed to the pur-
chased. Therefore Pennington will be
required to account for the product
between August 10 and August %,
1917.
Joseph L. Cahall, the receiver, was
represented by Henry Ridgely and
George M. Fisher of Dover while the
directors were represented by Attor-
neys Reinhardt, Rodney, John NJ
Richardson, Daniel J. Layton and Da-
Wis
No Compensation
The chancellor held that directors
of a company are presumed to serve
without compensation, unless specif-
cally authorized by it's charter or by
laws, and that courts will closely
scrutinize such claims; and that all
of these services were rendered i'm
after incorporation of the
Lewes Fisheries Company, and at a
time when such services were the ma
tural and necessary duties of those
who were managers of the company to
start it off. The issuance Of !
these fifteen shares of stock to each
director was, therefore, declared in
valid and illegal, and the six defend
ant directors who received this stock |
will be required to make reparatiOn |
therefor, as hereinafter stated.
Payments to the directors for SER
vices, or salaries. LOfland, Lank, JOS |
eph, BoOkhammer, Baylis and Thomp-
son were also charged with having
voted to themselves $1,000 for services
rendered the company in each of the
years 1912 to 1917, and it was not de-
lied that they received that amount,
)r received credit therefor on notes
given by them for stock of the COM
1any. Tunnel, who served as director
n 1916 and 1917, also received $1,000
or his services during each of those
,ears. 1t was claimed, however, that
he services rendered by the directors
we're of character outside the usual
luties performed by and ordinarily re-
Iuired of directors of a corporation, /
nd consisted in securing extra labor
vhen needed; assisting in repairing
shoveling or sliding fish; ]
escuing a stranded vessel that had {
one ashore; and endorsing notes of
he company in order to secure funds t
D properly finance it. {
Payments Not Authorized
These payments were not author {
sed by the charter and bylaws of the l
and the stockholders were
OF informed that the directors were '
compensation for their ser
ices. The testimony showed that in
lct some of the stockholders were
lformed by at least one of the direc-
)rs that they were not to receive, or a
ad not received, compensation. The =.
resident, who was also general man =
ger of the company, and treasurer, +
ere authorized to, and did, receive "
llaries. The testimony showed that I
One of the directors performed all 5
the services above stated; that d
)me performed few of these ser Il
ces, and others more; but all of the n
rectors received the same compen- .
tiOn for their services. " "
At the time of the sale William C. IL Il
1fand and James T. Lank were pres ul
ent and secretary and treasurer, re- e.
ectively, of the Lewes Fisheries 81
Dmpany, and they together with Har- e'
nd M. Joseph, William E. Tunnell,
illiam H. Bookhammer, John R. Bay io
and William J. Thompson cOnsti- u
ted the board of directors. oI
ChancellOr'S Decree III III
After reviewing and commenting W W
on some of the authorities cited by w :"
unset at the argument, the chancel- " "
: held: Ne
Here in this present case, where ~ -
of the directors of the company, ~. "
10 were also it's officers, issued AZ AZ
)ck to themselves for their indi- a
lual notes, the issue is declared to a.
We been a violation of the constitu-
H. and as these notes were not US
by the company and the company
,eiVed no money from the makers
'reof, they will be required to make. =
)aration to the corporation, which MI
simply protecting legitimate stock TN
lders from those who seek to profit ga
their own illegal acts. me
both because the direc- ha
S had no right to take promissory be-
.es for shares of stock of the com vic