Court Opinion

ID: 6232426
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:24:59.416921+00
Date Added: 2024-06-11T08:57:55.038350
License: Public Domain

The opinion of the court was delivered, by
Woodward, C. J.
Mr. Serrill was elected president and Mr. Kilpatrick treasurer of the bridge company in June 1859, and served in their respective offices until February 1864. The evidence proved a faithful performance by these officers of their respective duties, and that their services were reasonably worth from $350 to $500 per annum, but no express contract for compensation was proved. After the company had sold its bridge to the city, at a loss to the stockholders, these actions were brought, and the question, the same in each case, was, whether the plaintiff could recover on a quantum meruit.
The salary or compensation .of corporate officers is usually fixed by a by-law or by a resolution either of the directors or stockholders, but where no salary has been fixed none can be recovered. Corporate offices are usually filled by the chief promoters of the corporation, whose interest in the stock or in other incidental advantages is supposed to be a motive for executing the duties of the office without compensation, and this presumption prevails until overcome by an express prearrangement of salary. Hence we held in the Loan Association .v. Stonemetz, 5 Casey 534, as a general principle, that a director of a corporation elected to serve without compensation could not recover in an action against the company for services rendered iri that capacity, though a subsequent resolution of the board agreeing to pay him for the past services was shown.
So in Dunston v. The Imperial Gas Company, 3 B. & Ald. 135, a resolution formally adopted allowing directors a certain compensation for attending on courts, &c., was held insufficient to give a director a right to recover for such serviees.
And the rule is just as applicable to presidents and treasurers or other officers as to directors. In The Commonwealth Insurance Company v. Crane, 6 Metcalf 64, the company had passed a vote fixing the salary of its president at a certain sum per annum, but when another president was subsequently elected, and he claimed the same salary, it was held that his claim did not stand on the footing of a written agreement, and that circumstances might be shown to raise the implication that he expected to serve without compensation.
It is well that the rule of law is so. Corporate officers have ample opportunities to adjust and fix their compensation before *122they render their services, and no great mischief is likely to result from compelling them to do so. But if, on the other hand, actions are to be maintained by corporate officers for services, •which, however faithful and valuable, were not rendered on the foot of an express contract, there would be no limitation to corporate liabilities, and stockholders would be devoured by officers.
It was argued that the case of Bradford v. Kimberly, 3 Johns. Ch. Cas. 431, contains the principles on which these actions ought to have been Sustained, but we do not think so. Several joint owners of a vessel and cargo appointed one of their number to receive and sell the cargo and distribute the proceeds, and it. was held that he was entitled, under such special agency, to a commission or compensation for his services, as factor or agent, in the same manner as a stranger would have been. Such was that case; and the doctrine was nothing more than that partners could constitute one of their number the factor or special agent of the whole for a single mercantile transaction. The right of compensation, and the right to retain the goods as security for his compensation, resulted out of the defendant’s character of factor or agent, and the case was decided when one partner was declared capable of' being made, by special appointment, the factor of the rest. But corporations are not partnerships, and corporate officers are not factors. In a word, the mercantile law is not corporation law. Corporations stand upon their charters, and although their officers are in a certain sense agents of the stockholders, they are also trustees whose rights and powers are regulated by law. That they may not consume that which they are appointed to preserve, their compensation must be expressly appointed before it can be recovered by action at law.
The judgment in each of the above cases is affirmed.