Court Opinion

ID: 5192412
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:38:18.239671+00
Date Added: 2024-06-11T08:26:57.079422
License: Public Domain

McLennan, J.:
For the purposes of this review we must regard as established all the allegations of fact contained in the complaint. The principal reason urged by appellant for the reversal of the interlocutory judgment overruling the demurrer is that the contract is void, as being against public policy.
*38We think the contract set forth in the complaint is valid. Neither party to the contract was an officer or director of the bank. The defendants were stockholders only, presumably were interested in the welfare and success of the bank, and, so far as appears, in good faith desired to promote the best interests of the corporation in which they were thus interested, and to that end they wished to procure the services of the plaintiff, a man of large experience, as cashier, for the period of five years, and by the contract in question, not as directors or officers of the bank, but as individuals, undertook to secure such services.
To the end, as we must assume, that the plaintiff should also have a pecuniary interest in the success and welfare of the bank, the defendants required him, as a condition of his employment, to become a stockholder and to purchase fifty shares of the capital stock, they agreeing that at any time the plaintiff should cease to be cashier they, the defendants, would purchase from him such stock, at his option, and pay at least $135 per share therefor. The plaintiff agreed that while he remained cashier he would use his influence to promote the best interests of the bank and to retain in office its then existing board of directors, which, for aught that appears, was for the best interests of the bank. He did not agree to assist in electing the defendants directors, or help to secure to them any other office, nor did he agree to vote his fifty shares of stock in any particular manner or for any particular purpose.
This state of facts clearly distinguishes the case at bar from the class of cases relied upon by defendants’ counsel. In the case of Fennessy v. Ross (90 Hun, 298; 5 App. Div. 342) the plaintiff, who was a stockholder in three corporations, entered into a contract by which the defendant agreed to purchase stock of the plaintiff, and the plaintiff agreed that the defendant should have the management of the three corporations and equal representation with the plaintiff in the board of directors, and an annual salary fixed by the contract. In that case, also, the contract was entirely executory. It was held that such a contract was not enforcible.
The same distinction exists between the case at bar and the case of Guernsey v. Cook (120 Mass. 501).
So far as we have been able to discover, it has not yet been held by any court that two stockholders of a corporation may not legiti*39mately agree between themselves to use their influence jointly to secure the election of a certain board of directors of such corporation, even if one of such stockholders happens to be its cashier, provided only that the proposed agreement is entered into in good faith and for the purpose of promoting the best interests of the corporation, and in fact does promote its best interests. (Barnes v. Brown, 80 N. Y. 527.) But, in addition to the contract having been fully performed by the plaintiff, and the defendants having had the benefit of such performance for a period of four years, they ought not now to be allowed to urge its invalidity.
In the case of National Wall Paper Co. v. Hobbs (90 Hun, 288) the court said : “ It is urged, however, upon the part of the defendant, that the contract which was entered into by his firm and himself with the plaintiff was void because it was part of a corrupt and wicked conspiracy against the law and public policy of this State in that it was a combination of manufacturers for the purpose of putting up the price of goods and down the price of wages. In view of the fact that the defendant retained the price which was paid for his corrupt and wicked agreement, it is difficult to see how he can claim that he should be absolved from its obligations or how he can claim, being a party to the instrument and having received that which he considered an adequate consideration for the restraint which was put upon his volition, that such restraint should be removed and he be permitted to enjoy the fruits of what he claims to be his unlawful agreement. We do not think that the defendant is in a position to attack this contract, certainly not with its fruits in his pocket.”
One who accepts and retains the benefits of a contract cannot allege, as a defense to an action upon it, that it is void as against public policy. (Noble v. McGurk, 16 Misc. Rep. 461; Newman v. Nellis, 97 N. Y. 285 ; Ryan v. Dox, 34 id. 307.)
The conclusion is reached that the interlocutory judgment overruling the demurrer should be affirmed, with costs, with leave to the defendants to answer within twenty days after entry and service of a copy of this order.
Spring, J., concurred in second ground stated in opinion; His-cook, J., concurred in result; Davy, J., dissented in an opinion in which Williams, J., concurred.