Court Opinion

ID: 8188713
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:11:33.731267+00
Date Added: 2024-06-11T16:40:31.433799
License: Public Domain

Tbe respondent moved for a rehearing.
Tbe following opinion was filed February 19, 1907:
Kerwin, J.
Tbe former opinion of tbe court is attacked by tbe learned counsel for respondent in a very able and elaborate argument upon motion for rebearing. It is tbe duty of a court of last resort to bear witb patience and deliberately consider argument presented for tbe purpose of convincing it that its former decision was wrong and should be corrected. It is quite apparent that professional zeal has led counsel for respondent astray in many of tbe points urged witb so much confidence in tbe argument for rehearing. We shall not attempt to discuss in detail tbe numerous points made upon tbe argument. We do not disagree witb counsel that this court should not ignore tbe rule that the findings of tbe court below should not be disturbed unless against tbe clear preponderance of tbe evidence. Tbe error of counsel on this point consists, in tbe main, in treating conclusions of law, or such in effect, found in tbe trial court’s decision, as conclusions of fact, and also in failing to apply tbe rule that conclusions of fact reached by wrong application of legal principles do not fall within tbe rule which' counsel claims was overlooked by this court in its decision.
When tbe trial court finds tbe facts of tbe case and follows such findings witb conclusions contrary to what is legitimately deducible from such facts, to tbe effect that tbe transaction was fraudulent, harmful, and void, and this court, in effect, reverses such conclusion, it cannot be said that tbe rule invoked has any application. This proposition is well illustrated by counsel’s treatment of tbe note transaction. Tbe trial court found this transaction fraudulent, in that it was corruptly done by Anna M. Bergerthal and her husband to *627the advantage of Anna M. Bergenthal and the injury of the William Bergenthal Company. We could not reach the conclusion arrived at by the court below upon this transaction, for the obvious reason that the undisputed facts show that no ¡such conclusion could follow. The note from first to last was treated as the indebtedness of Anna M. Bergenthal, and was paid by her, principal and interest, without any damage to the William Bergenthal Company. 'We do not mean to justify the use of the credit of the company by Anna M. Bergenthal •on private account, or irregularity in the manner of keeping the account with the corporation. But it does not appear that such conduct did in any way injure the corporation, nor that •the parties thereby attempted to injure the corporation. We regarded the proposition SO' plain upon the undisputed facts that we considered the mere statement of it in the former opinion sufficient, and therefore did not go into a detailed statement of the account. But counsel in their brief on motion for rehearing go into an elaborate discussion of the matter, endeavoring to show that the corporation in fact lost by the transaction. This argument is based upon a palpably erroneous statement of the account between Anna M. Bergen-thal and the corporation. The error occurred by taking the account as kept on the books of the corporation, in which interest on the note, as the same was paid from time to time to the bank, was charged to Anna M. Bergenthal, with interest on each item from the date of payment to the 1st day of the succeeding January, and, without eliminating those matters, changing the book showing of her indebtedness at the beginning of the period which counsel take for illustration by charging up the noté to her, and then charging interest thereon from the time the note was given to the end of the period, thus debiting Anna M. Bergenthal with double interest. In that way a loss to the corporation for the year 1891 of .$833.34 is easily shown. Correcting the error thus manifestly made by charging Anna M. Bergenthal with the appar*628ent loss shown by the erroneous statement, and crediting her back Avitb the interest charged in her account on account of the note, we have this result:

Anna M. Bergenfhal, Dr.

To tbe loss claimed . $833 34

Cr.

Interest charged August 3, 1901 . $334 94
Interest on same to January 1, 1902. 8 26'
Interest charged October 31, 1901. 251 22
Interest on same to January 1, 1902. 2 50
Interest for balance of the year charged in the account the succeeding year. 251 22
Balance credit .•. 14 80
$848 14 $848 14
It is unnecessary to pursue the investigation of the note transaction further. It is needless to say that a continuation of the accounting to the end would show the same result as above indicated, namely, no loss to the corporation. The plain fact is that the corporation loaned its credit to Anna M. Bergenthal. She paid -the note in two instalments and the in-teresPas it fell due, and the amounts were paid by the corporation and charged to her at the respective dates when-paid.
The claim made, that in the opinion it is said that Anna M. Bergenthal received credit for $15,500 March 2, 1891, when it should have been September 29, 1894, simply calls attention to a clerical error, which is clearly shown to be such by reference to other parts of the opinion. The second paragraph of the opinion refers to the payment of the principal of the note in two instalments, one December 2, 1893, of $1,247.96, and the other on September 29, 1894, the date March 2, 1891, of credit to Anna M. Bergenthal of $15,500, being an error which is apparent on the face of the opinion, which, as counsel says, should be September 29, 1894. So it is very clear that the correction of Anna M. Bergenthal's account so as to charge her with the proceeds of the note, $16,747.96, as of March 2, 1891, and give her. credit for interest paid, *629would work no benefit to the corporation. It is 'also clear that no wrong to the corporation was intended and no fraud involving moral turpitude perpetrated. That no loss occurred to the corporation through the note transaction is susceptible of absolute demonstration.
What was said in the opinion respecting the malt transaction is based on the law that a business transaction between a corporation and one of its officers, whereby the latter sells to or buys from the former, is not absolutely void, or even voidable, under all circumstances. It is not to be classed with the, transaction of an administrator, guardian, or executor who buys property belonging to the trust estate. The authorities cited in the original opinion are ample on this proposition. An officer of a corporation may sell to-the latter so long as he acts openly and does no injury to the corporation and the transaction is within the scope of the corporate business of the corporation. It is true that, when an officer of a corporation transacts business with it in which he has a personal interest, his acts should be carefully scrutinized, and, if it appears that the object of his dealings was for the purpose of gain to himself and loss to the corporation, or the dealing was rendered harmful to the corporation merely because the transaction was with the officer instead of an outside party, the transaction should not be upheld if seasonably questioned. Twin-Lick Oil Co. v. Marbury, 91 U. S. 587. But upon the undisputed evidence no case is made which would warrant a court in upsetting the malt transaction. The policy of purchasing whisky on the same terms and at the same market price was established. The corporation was engaged in the purchase from others, and wl\en the purchase of the Anna M. Bergenthal whisky was made the company was pursuing its established business policy. There was no duplicity in the transaction with Anna M. Bergenthal and m> preference or advantage given her. The corporate business policy of buying whisky at that time was settled. It was not adopted for the purpose of *630buying from Anna M. Bergenthal, but for buying whisky, generally, and, even if it turned out to be bad policy, this alone was not ground for repudiating a purchase made from Anna M. Bergenthal. The contract must stand or fall on the bona fides of it, and not on whether the corporation wins or loses by it because of good or bad business policy on the part of the officers of the corporation. As we said in'the former opinion, whether the note transaction or the malt transaction was of such a character, if attacked seasonably, as would warrant a court in setting it aside, is wholly immaterial here, since the cause of action in each case accrued more than six years before the commencement of this action and was barred, to say nothing of laches in not seasonably moving in the matter, which, we think, alone would be sufficient to defeat the present action. Glenwood Mfg. Co. v. Syme, 109 Wis. 355, 85 N. W. 432. Besides, these transactions were annually ratified by a majority of the stockholders. Counsel for respondent contend in their brief on this motion as in original brief that the statute does not run because the account is a mutual account current. We said in former opinion, and we think rightly, that this case does not come within the statute governing mutual open accounts current. But even if it did it would still be barred, because the Anna M. Bergenthal account was stated annually with the corporation and a balance struck, and the matters respecting the note transaction and malt and whisky transaction were included in the account stated more than six years before the commencement of this action. The authorities cited by appellant’s counsel on original hearing are ample on this point. All the items entering into these disputed matters respecting the note and malt transactions were included in the account stated between Anna M. Bergenthal and the corporation more than six years before the action was commenced, and the account voted on and allowed by all the stockholders, including the plaintiff, as early as 1894, and annually thereafter. Where a balance *631in a mutual account eurrentfbetween parties is stated, the six-year statute of limitations commences to run as to the transactions included in the account up to that time. Spring v. Ex’rs of Gray, 6 Pet. 151; Toland v. Sprague, 12 Pet. 300; Baird v. Crank, 98 Cal. 293, 33 Pac. 63; Breckenridge v. Baltzeall, 1 Ind. 333; Brooke’s Adm'rs v. Shelly, 4 Hen. & M. 266; Schall v. Eisner, 58 Ga. 190; Estes v. Hamilton-B. S. Co. 54 Mo. App. 543; Union Bank v. Knapp, 3 Pick. 96; Belchertown v. Bridgman, 118 Mass. 486; Thompson v. Fisher, 13 Pa. St. 310. All disputed matters respecting the note, malt, and whisky transactions were included in the account as stated between Anna M. Bergenthal and Willimi Bergenthal Company, defendant, more than six years before this action was commenced.
In respect to the salary matter, we said in former opinion that these salaries were annually allowed by the 'stockholders. This statement is attacked. We think this statement is strictly correct. They were included in the report at the annual meetings and allowed. It is elementary law that an officer of a corporation while acting as a director cannot fix his own salary so as to bind the corporation in an action by it or by a nonconsenting stockholder in its name challenging the validity of the salary. But, where the stockholders ratify the salary so fixed, the act becomes binding on the corporation and all stockholders. Here plaintiff agreed to the salary, but under an agreement that he should receive a consideration. He cannot be heard in a court of equity either in his own behalf or that of the corporation to challenge it, at least up to the time of rescission. No rescission appears. On the contrary, the plaintiff insisted up to the time this action was brought, and so far as appears is still insisting, upon the three and one-half per cent, on his interest. Plaintiff wanted the benefit of his contract or the salaries reduced. And the court below found that respondent was entitled to have the salaries reduced or have credit as agreed, and that the court on the coming in of the *632referee’s report would determine wbicb relief be would grant. In face of tbis situation clearly tbe plaintiff bas no standing in a court of equity asking for reduction of tbe salaries of William Bergeníhcd and Arma M. Bergenthal.
We shall not prolong tbis opinion by further discussion. We fully appreciate tbe painstaking care with wbicb tbe learned trial court dealt with tbis case and tbe dignity wbicb should be accorded to' bis decision. We differ with tbe trial court mainly on questions of law and not to any considerable extent on pure matters of fact. We have examined with patience and care tbe argument of counsel for respondent upon tbis motion, but have been unable to bring ourselves to tbe conclusion that a rehearing should be granted.
By the Court. — Tbe motion for a rehearing is denied with $10 costs.
Timlin, J., took no part in the decision of tbis case.