Court Opinion

ID: 6577519
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:35:35.485706+00
Date Added: 2024-06-11T15:57:09.308917
License: Public Domain

Pierpoint, J.
It is objected by the defendants that the records of the annual meeting of the corporation, held in 1858, do not show that such meeting was called according to the requirements of the by-laws of the company ; nor that a majority of the stock was represented at the meeting, and that parol evidence was not admissible to supply such deficiency in the record.
Without stopping to inquire-as to the soundness of this objection, as a general proposition, we think that under the circumstances of this case, it is not competent for the defendants to avail themselves of this objection. A meeting of the stockholders of the corporation was held at the time and place specified in the by-laws, for the election of the officers thereof, on the 6th day of January, 1858. .At such meeting, the officers, as required by the by-laws, were appointed, consisting of a board of five directors and a secretary. The rneeting was adjourned to the next day, when a president, treasurer, and two auditors were appointed. It appears that these several officers entered upon the duties of their respective offices, and continued to discharge those duties, and to conduct, and carry on the business of the corporation for over two years, and until after the account in controversy had accrued- and the plaintiff had resigned his office as treasurer of the corporation. No objection appears to have been made by any stockholder to any of their proceedings, or to the action of •those officers, but the whole appears to have been acquiesced in by all the parties interested, as being entirely satisfactory, and the question now does not .arise in regard to any unfaithfulness on the part of the plaintiff in the discharge of his duties as treasurer, but as to the amount of compensation he is entitled to, for such services,
We think it is now too late for the corporation to set up an apparent inequality in the appointment of their officers, to defeat theip recovering a just compensation for the services-rendered in *25the business of the corporation, and of which they have had the benefit. I say an apparent defect, because there is nothing in the case to show that the requirements of the by-laws were not strictly 'complied with in fact, — the records show nothing one way or the other on the subject.
Regarding the officers of the corporation, and the auditors, for the purposes of this case, as officers in fact and properly appointed, an important question arises as to the effect that was given by the county court to the action of the. auditors in allowing the account of the plaintiff as treasurer, the balance of which is sought to be recovered,
The court below decided that the action of the auditors allowing the plaintiff’s account was conclusive upon the defendants, and directed a verdict for the plaintiff.
We are clearly of the opinion that the action of the auditors alone, allowing the account, cannot be regarded as conclusive upon either party. The by-laws require that all the accounts of the treasurer and all money accounts of the company, shall be audited by a committee appointed by the board of directors for that purpose. In view of this provision, at the meeting in January, 1858, above referred to, J. F. Burroughs and S. M. Waite, the plaintiff, were appointed such committee. Passing for the present all questions as to the authority by which they were-appointed, and the policy, or propriety of appointing a man to act upon the auditing of his own account, or the effect of his action in the premises, it is quite apparent to us tha¿fc the-action, of sucli committee would not be conclusive upon the parties. The nature and purpose of their appointment, clearly indicates, that this committee were to return their doings to the board of ■' directors, to be by them acted upon, accepted and adopted, before the company would in any respect be concluded thereby. The directors are the appropriate body to pass finally upon all such matters, as are involved in the treasurer’s account. The doings of the treasurer, are to a great extent under the direction and qpntrol of the directors and are necessarily based principally upon their action, in directing the business operations of the company. *26And especially should this be so, when, as in this case, both the auditors are directly interested in the account to be acted upon. Waite, the plaintiff, being both treasurerand auditor, his action on the subject would be amere farce, and wholly inoperative. Burroughs, the other auditor, is interested to the amount of his salary, and thus far certainly his action could be no better.
But it is said the case shows, that the report of the auditors upon this account, was at a meeting of the board of directors holden on the 16th of June, 1860, accepted and allowed as audited, and then became conclusive upon the company, so that the court was justified in directing a verdict. Now what does the case show as to the action of the directors in the matter on said 16th of June? It appears from the record that prior to this time, I-Ioppin, one^ of the directors and the presideñt, had vacated his position, and Binney of Providence, B. I., at this meeting, was appointed a director and president in his place. -Who o'f the directors was present at this meeting of the board of directors, the record does not show, but they ordered the account of the treasurer to be sent to the president, thus showing conclusively that Binney was not present. The remainder of the board consiste'! of David Heaton, John Hunt, S. F. Burroughs and S. M. Waite the plaintiff, so that there could not have been a majority of the board, to act upon the acceptance of the report without including either Burroughs or Waite, and their action as directors, in- the matter, would seem subject to the same objection that existed to their action as auditors.
But suppose the action of the board of directors to have been regular, we think it would not then be absolutely conclusive upon the company. It might be impeached, by showing misconduct and fraud, or mistake on the part of the directors.
The county court by their rulings virtually excluded all inquiry into the subject. What an inquiry would have resulted in if the defendants had been permitted to pursue it, of course we cannot know, but there is sufficient appearing upon the record to raise a doubt as to the action of the board of directors being of sitch a character as to be binding upon the company. At all *27events we think the defendants should have been permitted to inquire into the action of the auditors" and the directors, so far its to determine whether there had been a •Iona fide allowance of the plaintiffs account as presented, and this perhaps might involve an inquiry to some extent into the character of the account itself. If upon such an examination it should be found that the account of the plaintiff had been honestly allowed by a competent board of directors, such allowance would be conclusive on the defendants.
It is insisted that neither the auditors, nor the directors, are the proper persons to fix the salary that shall be received by the treasurer or any other officer of the company. However that may be, here there has been no attempt to determine the amount of the salary that shall be received by the treasurer of the company or any other officer. The plaintiff’s claim is for compensation for his services actually performed, and he stands in that respect on the same ground as any other person, who has performed service for the company, and claims his pay therefor, and the auditors are the proper persons to act upon the question as to the amount. •
Judgment reversed and case remanded,