Case Name: The Commonwealth Insurance Company vs. Larra Crane
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1843-03
Citations: 6 Met. 64
Docket Number: 
Parties: The Commonwealth Insurance Company vs. Larra Crane
Judges: 
Reporter: Massachusetts Reports
Volume: 47
Pages: 64–68

Head Matter:
The Commonwealth Insurance Company vs. Larra Crane
Where an incorporated insurance company passed a vote, fixing the salary of its president at a certain sum per annum, and another president was subsequently elected, who claimed the salary fixed by that vote, it was held that his claim did not stand on the footing of a written agreement. Held also, that if the subsequent election of a president amounted to primá facie evidence of an agreement to pay him such salary, yet that the presumption might be rebutted by proof that such was not the intention and understanding of the parties 5 and that, for the purpose of rebutting such presumption, evidence was admissible, from the company’s records, showing that when he was elected president, the active business of the company had been brought to a close, and that the services of the oresident, for which the salary was originally voted, had almost entirely terminated, and that the purpose of electing a president was to keep up a corporate organization, in order to bring the business to a close. Held further, that the admissions of the president, that he was not to receive any compensation, were competent evidence to show, that when he was elected, it was understood by the parties that he was not to receive the salary fixed by the vote.
Assumpsit on a promissory note for $2500, made by the defendant to the plaintiffs, dated October 19th 1838, and payable on demand, with interest from the 25th of June 1837. The defendant filed in set-off a claim for his services, as president of said Insurance Company, from January 25th 1838, to April 8th 1839, at $2500 per annum, $460: Salary, as president, for one year from April 9th 1838, to April 9th 1839, $2500: Commissions on $20,000, for receiving and paying money for the plaintiffs, $ 400 : Total, $ 3360.
At the trial, before Dewey, J. the defendant did not deny his liability on the note, and the only matter, submitted to the jury, was the amount claimed in set-off. The defendant proved that he was duly chosen president of the company, in January 1838, to fill a vacancy in that office, caused by the death of John K. Simpson, and again in April 1838, for the year then ensuing; and that he served in the capacity of president during the term for which he claimed a salary. He also proved, that on the 8th of June 1835, the following vote was passed by the directors of said company, viz. “ that the salary of the president be fixed at twenty five hundred dollars per annum, and that Mr. Simpson’s salary, as president, shall commence from the date of his election.” The defendant also proved, that when he was chosen president, he owned only two shares ir. the stock of the company, of the par value of $200, and never afterwards owned any more; and that while he was president, he presided at two meetings of the stockholders, and three meetings of the directors; and he contended that the proof thus given by him, fixing the salary of the president, was conclusive as to the amount he was to be allowed for'his services as president of said company.
The judge ruled, that the vote of June 8th 1835 was to be taken as prima facie evidence of the rate of compensation to be allowed to the defendant for his services as president. The plaintiffs offered to prove, and the judge further ruled that they might prove, that the active business of the company was brought to a close before the time of the election of the defendant as president; (January 25th 1838;) that the duties of the office of president had, at that time, essentially changed; that, it had become a merely nominal office, the duties having ceased, or having been transferred to others; and that when the defendant was elected president, it was known by him that the office was only nominal, and that it was declared by him' that he was not to receive any salary as president: And the jury were instructed, that it was competent for them, from these facts, if proved to their satisfaction, to infer that the plaintiffs did not promise to pay the defendant an annual salary of $2500, as president.
Evidence was offered by the plaintiffs, tending to prove the foregoing facts. Among other evidence, was the testimony of John Stevens, the secretary of said insurance company, that the defendant had admitted to him, in conversation, during the time he held the office of president, as aforesaid, that he was not to receive any salary as president. The plaintiffs’ records .were also introduced, showing the condition of the company, when the defendant was chosen president, and that his duties, as such, were mostly nominal only.
The jury rejected the defendant’s claim for his salary, and found a verdict for the plaintiffs. Judgment to be rendered on the verdict, if the aforesaid rulings and instructions were correct; otherwise, a new tria to be granted.
Sew all & Goodrich, for the defendant.
The act incorporating the plaintiffs, (St. 1823, c. 130,) directs that a president shall be chosen, to preside for one year, and that in case of a vacancy in the office, it shall be filled for the remainder of the year The vote of the directors, fixing the salary of the president, applies to the defendant, as well as to the person who was president when it was passed, and extends to the time during which the defendant held the office, after April 1839, though he was not reelected. 2 Kent Com. (3d ed.) 294, 295. That vote was the contract between the plaintiffs and the defendant, and not merely evidence of the contract; and that contract must stand, unless set aside by some official act of the directors, or superseded by a new contract between the parties. Proof of a parol contract, made at the same time when the defendant was chosen president, and when he came, by virtue of his election, under the record contract, cannot be received. Nor can the admissions of the defendant, made to strangers, control the plaintiffs’ record contract. Rev. Sts. c. 37, §4. Bulkeley v. Noble, 2 Pick. 337. 3 Stark. Ev. 995, 996. 1 Phil. Ev. (4th Amer. ed.) 561. Head v. Providence Ins. Co. 2 Cranch, 166, 168. Beatty v. Marine Ins. Co. 2 Johns. 109. Andover, Sfc. Turnpike v. Hay, 7 Mass. 107. Essex Turnpike v. Collins, 8 Mass. 298, 299. Hayden v. Middlesex Turnpike, 10 Mass. 397. Emerson v. Providence Hat Manuf. Co. 12 Mass. 237 Tippets v. Walker, 4 Mass. 595.
C. G. Loring & Washburn, for the plaintiffs.
Admitting that the vote of June 1835, fixing the president’s salary, was a record contract, yet it might be waived by a parol agreement, or a new agreement, by parol, might be made and proved. Mun-roe v. Perkins, 9 Pick. 298. Bichardson v. Hooper, 13 Pick. 446. This doctrine applies as well to corporations as to individuals, and the proof may be derived from circumstances, and presumptions, as well as from direct agreements. Bank of U. States v. Dandridge, 12 Wheat. 69 — 74, and cases there cited. Proprietors of .Canal Bridge v. Gordon, 1 Pick. 297. Narragansett Bank v. Atlantic Silk Co. 3 Met. 287. Beverley v. Lincoln Gas Light & Coke Co. 6 Adolph. & Ellis, 829 Story on Agency, <§>§ 52, 53.
The plaintiffs showed by their records, and not by parol merely, that most of the duties of president had ceased, when the defendant was elected to that office; and they are entitled to the benefit of the whole contents of their records, when the defendant introduces any part of them. Savage v. Birckhead, 20 Pick. 173. Besides; the defendant’s succeeding Simpson, in the office of president, while the vote of June 1835 remained unrescinded, did not constitute a contract, express or implied, that he should receive the salary fixed by that vote. Connor v. Hackley, 2 Met. 613.

Opinion:
Shaw, C. J.
The only question in this case arises upon the defendant's claim for a set-off, for his salary and services, as president of the plaintiff company. This claim is put upon the footing, that the case shows a written contract to pay the defendant a salary of $ 2500, which is conclusive evidence against the company, and that no evidence is admissible to control it. But the court are of opinion, that the claim of the defendant for a fixed salary does not stand on the footing of a written contract. There is no vote of the company stipulating to pay the defendant by name, no written agreement between them; and the rules in regard to written contracts do not apply. But the defendant relies on the vote of June 1835, concerning and fixing the salary of president of the company, and his subsequent election to that office, as evidence of a contract. Suppose, as contended for by the defendant, that that vote was general, and not limited to the case of Mr. Simpson mentioned in it, and that the subsequent election of the defendant to the office of president would raise a presumption of agreement, and amount to prima fade evidence of a contract to pay that salary; still we are of opinion, that it was a presumption of fact, which might be controlled by evidence showing, to the satisfaction of a jury, that it was not so intended and understood by the parties And we are also of opinion, that the votes of the company, showing that they had ceased to act in the business ; that the constant and active services of a president, in the conduct of that business, for which the salary, that was voted, was intended as an adequate compensation, had wholly terminated ; that the business was wound up, or nearly so, and that the avowed purpose of electing a president was, to keep up and maintain a corporate organization, in order to bring the business to a close — and facts of the like kind — were competent evidence to rebut the presumption of an agreement to pay the full salary. So, the declarations of the defendant, from time to time, that he was to receive no compensation, were competent evidence to show that at the time of his election, it was understood by the parties, that the salary voted to the president, when the company was in full operation, was not to be continued to him.
Judgment on the verdict.