Court Opinion

ID: 3579970
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:31:13.422924+00
Date Added: 2024-06-11T13:53:05.547041
License: Public Domain

Upon motion of the defendants the complaint has been dismissed on the ground that it fails to state facts sufficient to constitute a cause of action. The complaint alleges that the defendants made a contract with the plaintiff, that they breached the contract and that "by reason of" such breach the plaintiff suffered damages. The questions which we must consider upon this appeal are whether it appears upon the face of the complaint that the alleged contract was for an unlawful purpose and, therefore, unenforceable, and whether the contract was of such nature that the general rule that damages may be presumed to result from a breach of contract does not apply.
The allegations of the complaint, so far as relevant to those questions, are that the plaintiff succeeded in interesting the defendants "who were prominent and well-known business men" in a plan for the rehabilitation of Reo Motor Car Company. All the parties agreed that the plan suggested by the plaintiff was "the best way to bring about the rehabilitation of said corporation and to place it in a position where it could operate at a profit to the stockholders." They further agreed that the plaintiff "was a proper and competent party to become President and General Manager of said corporation in accordance with the said plan." "In order to carry out the foregoing objects * * * the defendants * * * entered into an agreement among themselves and with the plaintiff, in consideration of the mutual promises and agreements, to organize a committee of stockholders of the Reo Motor Car Company, for the purpose, insofar as within their power lay, of bringing about an increase in the authorized number of directors in the Reo Motor Car Company, and *Page 127 
the election of directors for the purpose of effecting the rehabilitation of the Reo Motor Car Company by the consideration of the plan substantially as outlined by said parties; and it was further agreed by and between the plaintiff and said parties that each of them would and should endeavor in a legal and proper manner to effect such increase of directors and the adoption of said plan, and thereupon such committee was organized."
The complaint further alleges that the parties agreed among themselves and with the plaintiff that it would be for the best interest of said corporation to have said corporation enter into a compact whereby the plaintiff should act as president and general manager of the corporation for three years at a salary of $9,000 per year; that the board of directors should authorize the issuance of calls or options for three years on 200,000 shares of unissued stock of said corporation at five dollars per share, to be used for the purpose of obtaining the services of competent and qualified employees, and that the plaintiff should receive calls on 38,000 shares of such stock for his services to the corporation and as additional consideration for his agreement to act as president and general manager. The plaintiff also alleges in his complaint that as a result of the efforts of the committee and of the plaintiff, the board of directors was increased from five members to nine members, and at the annual meeting of the stockholders a board of directors was elected which "was satisfactory to the committee and to said parties." The defendants, however, "failed to cause said plan to be submitted to said board of directors and failed to advocate its adoption by said board," and, it is alleged, "by reason thereof said plan was never considered or adopted by said board and the plaintiff was never offered any contract with said corporation for his services as President and General Manager, or in any other capacity."
We must assume the truth of the allegations of the complaint that the plan was calculated to advance the best interests of the corporation. The board of directors would have been justified in accepting such a plan, with such *Page 128 
modifications in the terms of any contract made with the plaintiff in order to secure his services as president and general manager, as might perhaps be required by the law of the State. Co-operation by stockholders, directors or "prominent and well-known business men," perhaps without any direct interest in the corporation, to promote a plan which all believe would best serve the corporation and its stockholders, is certainly not prohibited by law, or against any public policy. The question remains, however, whether the defendants could lawfully bind themselves under penalty of damages to continue to co-operate until the plan was actually adopted. If the complaint had alleged that the plan contemplated that the defendants should be elected or re-elected as directors, the vice of an agreement made by them before election to advocate and attempt to cause the adoption of a particular plan of future action by the corporation and to elect a particular man as president would be apparent. Directors may not, in advance, fetter a discretion which they are bound to exercise for the benefit of the corporation. It is said, however, that here the complaint does not allege, and that we may not assume, that the defendants were either directors or stockholders. That may be true, but it does allege, as I have pointed out, that the defendants were "prominent and well-known business men" and that the plan was never considered or adopted by the board because the defendants did not advocate it. The alleged wrong to the plaintiff is that the defendants failed to promote the adoption of the plan by the use of influence or power which was sufficient and which the parties contemplated would be sufficient to secure its adoption. Otherwise the plaintiff would not have suffered any damages by reason of the failure of the defendants to carry out their alleged promise. The problem which we must determine is whether men with such influence or control making such a promise, are subject to damages for failure to carry it out.
No question of whether the defendants' alleged failure to carry out their alleged promise was due to a desire to *Page 129 
obtain profit through the adoption of a different plan by the corporation, should be permitted to obscure the question of whether the promise is binding and enforceable under our law. Change of heart or of opinion, even though based on sound reasons, will not excuse the failure to perform a binding promise, nor will selfish or even corrupt motives create liability for failure to carry out a promise which is not binding. If the allegations of the complaint are sufficient to constitute a cause of action, then proof that the defendants in good faith came to the conclusion that the plan which they agreed to promote was not calculated to promote the interests of the corporation as well as the plan which they subsequently advocated, would constitute no defense. I cannot escape the conclusion that it is contrary to public policy to permit a man seeking to become president and general manager of a corporation to obtain from others, be they directors, stockholders or "prominent and well-known business men," who can influence or direct action by the corporate board of directors, a binding promise to advocate his employment for a previously agreed upon compensation. A disappointed seeker of corporate office should not be allowed to recover damages resulting from loss of the compensation or profits which he would have received if the men who had promised to promote his candidacy and who had influence sufficient to induce the board of directors to elect him had not thereafter chosen to present and advocate a different plan for corporate action.
The judgment of the Appellate Division should be affirmed.
RIPPEY, CONWAY and DESMOND, JJ., concur with FINCH, J.; LEHMAN, Ch. J., dissents in opinion in which LOUGHRAN and LEWIS, JJ., concur.
Judgment accordingly. *Page 130