Court Opinion

ID: 5212097
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:14:55.330494+00
Date Added: 2024-06-11T08:27:23.239445
License: Public Domain

Ingraham, J.
(dissenting in part):
This action was brought against a foreign- • corporation for the compensation agreed to be paid plaintiff for his -services; as an employee of the corporation for the year 1906: The- complaint alleges that the defendant agreed to pay to the plaintiff six and one-half per cent of the .profits realized by the defendant in its business during the said period -. that the defendant realized large profits, and that six and one-half per cent thereof amounted to upwards of $1,300; that the plaintiff has duly performed each and every term, condition and provision.of liis said agreement With the defendant on his part to be performed, and has faithfully rendered all the services pertaining to his position. The answer denies the allegations of the complaint and sets up a counterclaim for $125.54. The jury found a verdict for the plaintiff for $705.64.
The plaintiff testified to an agreement between himself, the president, secretary and ■ treasurer of the corporation in December, 1905, at which the treasurer of the defendant said to him. that they would propose to make the plaintiff a director for the year 1906, and then said to him, “ Oh, we will give you-six, yes, six and a half per cent of the profits,” and, turning to the president said, “ Won’ t we, Ed % ” and Ed (the-' president) • said, “ Tes,” ■ when the plaintiff said,-“ Since you take that attitude, Í will accept the proposition,” He subsequently testified that this six and one-half per *625cent was to be in addition to Ms salary ; that he continued in the employ of the company during the year and received his salary right along, but no commissions; that he subsequently demanded an account of the profits, which was not delivered. The plaintiff seems to have admitted the amount of these two counterclaims, and the defendant seems to have admitted that the plaintiff was prom-, ised five per cent of the profits. The jury evidently found that the agreement was for six and one-half per cent, and the remaining question was as to what were the net profits to which this percentage should apply. The court, as a matter of law, charged that the plaintiff was entitled to recover either five or six and one-half per cent, as the jury found the contract to be, on the profits as appeared by the statement as admitted by the.defendant of $3,317.56, to which the jury should add 'the amount of $7,000 of salary, making the sum of $10,317.56, and that the plaintiff is entitled to recover either five or six and one-half per cent on that.
There seems to be no substantial dispute but ’ that there was a net profit of $3,317.56, and the plaintiff was entitled to commissions on that amount. But the court directed as matter of law that this amount should be increased to $10,317.56 by adding the sum of $7,000, which had been paid to the president and secretary as salary. The defendant requested the court to charge that in determining the profits of the' business under "the contract, reasonable compensation of the president and secretary of the company, whether by way of commissions or salaries, should be deducted as a part of the cost of the business. This was declined, and the defendant excepted. I think this was error which requires a reversal of the judgment. Both the plaintiff and the other employees and the officers of the company received fixed salaries for their services. It certainly wo'uld not be contended but that the salaries paid to the plaintiff and the other employees were to be charged as expenses of the business before the profits were ascertainable; and I can see no reason why the salaries of the officers should not also be charged as an expense of the business. There was no presumption in favor of the plaintiff that these officers in managing the affairs of the company were to work without compensation. It appeared from the evidence that these salaries were *626actually paid by the corporation and received by its officers as compensation for their services to the corporation. In an action where a stranger is suing a corporation, to justify a finding that salaries were paid to its officers, it is not necessary to prove a resolution of ■the directors fixing the salaries. It is sufficient if the salaries were actually paid by the corporation to the officers., and received by them. The corporation has never made any objection to its officers receiving the salaries,' or claimed . that they were paid without authority. ' If the corporation should dispute the right of its officers to receive compensation for .their services, the burden would then be upon the officers claiming the compensation to prove that the corporation had authorized salaries to be paid. The corporation here makes no objection but insists on its right to pay its officers a reasonable salary as a part of the expenses of the business before the profits of the corporation should be determined ; and to set aside such payments there should be at least some evidence to show that these stims were not paid to the officers as bona.Jide salaries, but for the-purpose of reducing the amount of net profits upon which the plaintiff would be entitled to estimate his commissions. It is not disputed but that the-plaintiff understood -that these officers were executive officers of the company and were devoting their entire time and attention to the business of the corporation. There would be no question but that if the corporation or its stockholders, acting on its behalf, objected to the payment of these salaries, or to its officers receiving salaries, the officers, as against the corporation, would have to prove a valid resolution of the board of directors to authorize them to receive the salary; and to that effect are the cases relied upon by the respondent. But here it is' a corporation that is claiming that it has paid in good faith its officers the salaries to which they are entitled, and there is no presumption, as against the corporation, in favor of a person contracting with it, that these salaries were not authorized by the corporation and, therefore, were not legally paid to its officers. It would seem that the deposition of the defendant was taken before trial, and the plaintiff adopted the' very unusual course of calling one of his attorneys to prove what the defendant’s president said upon that examination as to the profits, instead of reading the examination itself in evidénee. The. deposition of the defendant taken before trial, was made by the *627statute competent evidence to be read by either party on the trial; but there is nothing to show that these declarations of the. defendant’s president, long after the contract was made and after the year of the plaintiff’s, services had expired, were competent as admissions against the corporation. However, this was not objected to by the defendant and there was no dispute but that, crediting the salary of the president and secretary as expenses, there was a net profit of $3,317.56, ánd upon that amount the plaintiff was entitled to commissions. The jury apparently found in favor of the plaintiff as to the percentage to which he was entitled, and the plaintiff ‘was, therefore, entitled to six and one-half per cent on $3,317.56, which amounts to $215.64.
The judgment and order should be reversed and a new trial ordered, with costs to the appellant to abide the event, unless the plaintiff stipulates to reduce the amount of the verdict to $215.64. If the plaintiff so stipulates, the judgment as so reduced and the order appealed from should be affirmed, without costs.
Laüghlin, J., concurred.
Judgment and order reversed and new trial ordered, with costs to appellant to abide event, unless plaintiff stipulates to deduct from the verdict the sum of thirty-five dollars; and if such stipulation be given, then the judgment as so modified and the order appealed from are affirmed, without costs. Settle order on notice.