Court Opinion

ID: 6434426
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:11:12.752646+00
Date Added: 2024-06-11T15:52:19.719420
License: Public Domain

Crosby, J.
This is a bill in equity filed in the Superior Court, and is before this court on the plaintiff’s exceptions. The presiding judge filed a memorandum which is made a part of the exceptions, and ordered the bill dismissed with costs.,
The defendant corporation was organized in 1907 to succeed another corporation known as the Puritan Brewing Company. The plaintiff was the treasurer and a director of the Puritan Brewing Company and he became the treasurer and a director of the defendant corporation at the time of its organization, and remained so until February 12,1908, when be resigned as treasurer; on May 20,1908, *291he was re-elected and thereafter, on the same day, a vote was passed by the directors that he be engaged as supervisor and paid a salary at the rate of $10,000 a year. He seeks to recover $50,000 for such salary which he claims to be due from May 20, 1908, to May 20,1913, less $1,000 credited on account on June 21,1913.
On June 26, 1913, the plaintiff resigned as treasurer and thereafter ceased to take any active part in the business of the defendant. Before this time and when the salary vote was passed, there existed a prolonged and acrimonious controversy among the stockholders, in which the plaintiff participated, over the control of the corporation; and an important issue at the trial was, whether the vote was passed to enable the defendant to pay the plaintiff for services rendered or was designed merely to give him a standing in the controversy in which he was engaged with certain of the stockholders, and with the understanding and agreement between him and the directors that the salary so voted was merely a matter of form and that the vote was not to be valid and binding upon the parties. The plaintiff denied that there was any such agreement and contended and offered evidence that it was a genuine vote and was adopted to compensate him for important and valuable services to be rendered by him to the defendant.
On the other hand, it is the contention of the defendant that it was understood by the directors and the plaintiff that the salary ' so voted should not be paid, and certain of the directors, including one Doherty (a director who was present at the meeting of the board held on May 20, 1908, when the vote was passed), testified to that effect. Doherty testified that before the meeting the “plaintiff called the witness into the business office and handed him a slip of paper with the vote on it and said, ‘I want the company to express their confidence in me, because if I have to go into court with these blackguards I want to show them that the company is willing to pay me ten thousand dollars ($10,000) a year, but I will never take a cent of it, because the company is in such financial condition they could n’t pay me anyhow, and I simply want it put on there for court purposes only.’ The witness told the plaintiff that if the plaintiff would repeat that to the board, the witness would offer the vote. The plaintiff did so and the vote was passed without discussion. All had absolute confidence in the plaintiff. The witness first learned that the plaintiff was *292going to collect on the salary about six (6) or eight (8) months after plaintiff left in 1913. The plaintiff never made a claim for money on account of salary to the knowledge of the witness between 1908 and 1913.”
There was evidence that there was no need for the appointment of a supervisor and that the services rendered by the plaintiff were no greater than as treasurer of the corporation he would ■ properly be expected to perform; also, that the plaintiff controlled certain trade which purchased the defendant’s products and which he had on previous occasions taken away from the defendant.
In the memorandum filed by the presiding judge he made among other findings of fact the following: “I am of opinion that the directors had no right or power to pass such a vote under the bylaws in the absence of authority from the stockholders, and so rule. I am satisfied from the evidence of the meagre discussion that was had at the meeting and before the same, about the intended action, that the motive of the vote was to induce McCormick to bring back to the defendant company the trade he controlled as a consumer which he had previously diverted. As I find that other stockholders and directors had dealings with the company of a similar character as consumers, and as this vote was secret in character and concealed from many of the stockholders and directors, I find the vote was fraudulent in its intention so far as it was in effect a premium to be given to McCormick for his future purchases of the product of the defendant. Witnesses equal in character and apparently worthy of belief contradict the evidence as to the intention of the vote as testified to by the plaintiff. I believe their testimony in view of the subsequent conduct of the plaintiff. I find he made no claim for payment of such salary for several years; that because of the action of the auditor, as a matter of proper bookkeeping, it was first referred to in a report of the treasurer in 1912 and was then indefinite as to the salary of the treasurer unpaid, giving no definite amount." When it was found and understood by the directors and stockholders that such claim was made, it was repudiated. I find as a fact that during the five years the plaintiff apparently performed no greater services than any treasurer would be expected to perform.”
The plaintiff concedes that there was evidence which warranted *293a finding that the vote to pay the plaintiff a salary "was never intended to be valid and binding upon the parties,' and that the directors intended it as a mere form for use against a few dissatisfied stockholders who had brought a bill in equity against the defendant and the plaintiff seeking to compel the plaintiff to pay the defendant money, hereinafter called the ICenney suit.” He concedes that if such a finding had been made by the judge, his exceptions would be immaterial. But he strenuously contends that no such finding was made. That the other findings, including the finding that the vote was secret in character and concealed from many of the stockholders and directors and fraudulent “ so far as it was in effect a premium to be given to McCormick for his future purchases of the product of the defendant,” were not warranted by the evidence; and he argues, that "this finding includes by necessary inference a finding that the directors intended the vote to be binding and the salary paid, because if not paid, it could not be a premium to the plaintiff for his future purchases.”
We cannot agree with this reasoning, and are of opinion that it is based upon a misconception of the findings recited in the memorandum. The judge finds that the motive of the vote was to induce the plaintiff to bring back to the defendant company the. trade which he had previously diverted. In other words, the directors passed the vote to induce the plaintiff to bring trade to the defendant. Whatever motive actuated the directors in passing the vote, the question remains whether any salary was intended to be paid under it. Upon this question the court has expressly found that he believed the witnesses for the defendant, some of whom testified in substance that it was not thereby intended that any salary should be paid under it, but that it was expressly agreed between the plaintiff and the directors that it was adopted as a mere form without any validity or binding force. Plainly this finding is decisive and must be held to finally determine the rights of the parties.
We are of the opinion that, under the by-laws, it was within the power of the directors, if they acted in good faith, to appoint a supervisor and fix his salary without the approval of the stockholders and that the ruling of the judge to the contrary was error, Fillebrown v. Hayward, 190 Mass. 472; but in view of the finding *294that the vote was not intended to be effective, the ruling is immaterial. For the same reason the finding that the vote “was secret in character and concealed from many of the stockholders and directors, . . . was fraudulent in its intention so far as it was in effect a premium to be given to McCormick for his future purchases of the product of the defendant,” and the refusal to give the rulings requested, have become immaterial. The exception to the exclusion of evidence offered to show that the credit of- the defendant was affected after the plaintiff ceased active management of the business, also is immaterial in view of the finding above referred to.
• It follows that the exceptions must be overruled and a decree is to be entered in the Superior Court dismissing the bill with costs.

Ordered accordingly.