Court Opinion

ID: 5182556
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:44:04.624006+00
Date Added: 2024-06-11T08:26:37.167906
License: Public Domain

Adams, J.:
The plaintiff rests his right to recover in this action upon the contention that the contract entered into between him and the defendant contemplated that the dividends in which he was to participate as a part of the consideration for the services rendered by him, were to be computed upon the basis of the amount of capital stock which existed at the time the.contract was executed, viz.,, $1,500,000; and that as a consequence of the doubling of the capital stock he wTas deprived of one-half of the interest in the dividends thereafter declared, to which he was entitled under the terms of the contract, as they were understood by the parties when the contract was executed. '
It was conceded upon the trial that, if the plaintiff was' correct in his contention, the amount owing him by the defendant was the sum of $3,200.01; but that, on the other hand, if it was within the Contemplation of these parties* when entering into this contract that the plaintiff’s interests in the profits of the company might be diminished by an increase of the capital stock, he had received all he was entitled to. The single question, therefore, which was sought to be litigated in the action was virtually whether, after entering into the contract with the plaintiff, by the terms of which the latter was to receive by way of compensation for services a certain share of the profits of the corporation, the defendant could, without the plaintiff’s consent, increase its capital stock and thereby deprive him of a certain proportion. of the profits which he would have been entitled to receive had the capital remained: at the same amount as when the contract was entered into.
*545This question was decided adversely to the plaintiff’s contention by the trial court, which at the close of the evidence directed a nonsuit.
It is insisted that, in the disposition thus made of the case, the learned trial court was in error, and that a question of fact as to the intention and understanding of the parties respecting the basis upon which the plaintiff was to participate in the profits of the defendant was presented which should have been submitted to the jury •—• in which contention we are inclined to concur.
It is to be observed that the contract is silent respecting the amount of the capital upon which the plaintiff’s share in the profits is to be determined, no allusion to that subject being made further than that it shall be computed at the rate of three per cent of his salary for every one per cent in. excess of ten per cent of profits divided. It is apparent, therefore, that if a dividend of twenty per cent were to be declared, the plaintiff would be entitled to receive an increase in his salary which would be equivalent to $600 per year ; and it is likewise apparent that if the capital stock were to be doubled, his interest- in the dividend would necessarily be diminished just one-half. For earnings which would justify a dividend of twenty per cent upon $1,500,000 would, of course, warrant a dividend of only ten per cent upon $3,000,000.
It is undoubtedly a fact that the stockholders of the defendant had the right at any time to increase the capital stock of the company if' steps to accomplish that object were taken in conformity to the requirements of the statute. And it is equally certain that such right could not be affected by any contract which its officers might have executed. ¡Nevertheless the question still remains as to the understanding and intent with which the parties entered into this particular contract.
It is not to be denied that if such intent could be fairly ascertained from the language of the contract itself, the question would necessarily resolve itself into one of law for the court to determine-; but, in the absence of such a guide, we think a question of fact arises which must be determined like any other question of fact by the acts of the parties as well as by the circumstances and probar bilities of the case.
*546We conclude, therefore, that the issue is one which should have been submitted to the jury, and that, for the failure of the court so to do, a new trial should be granted.
Judgment reversed and a new trial granted, with costs to abide the event.
Hardin, P. J., and Ward, J., concurred; Oreen and Follett, J J., dissented.