Court Opinion

ID: 7109495
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:24:46.135417+00
Date Added: 2024-06-11T16:13:41.432518
License: Public Domain

Given, O. J.
I. The facts found by the referee are not disputed, and, in so far as they relate to the item in controversy, are substantially as follows: In 1883 the. defendant company was incorporated with a capital stock of 1,000 shares of $25 each, 924'of which were issued; John *616Iiall owning 10 and his wife, Ella, 422, of said, shares. The business of the corporation was cutting, storing, and selling ice at Crestón, and maintaining a pleasure ground, and was conducted for a time sucessfully by a president, vice president, secretary, treasurer, and superintendent, with John Hall as general manager at a fixed salary of $500 a year. After the services of a general manager were dispensed with, the business was unprofitable. About the first of the year 1892 dissension had grown up among the stockholders, and no attempt was made to carry on the business successfully. No one taking any interest in the business, Mr. Hall, as a stockholder and representing the stock of his wife, went actively to work to push the business of the corporation, devoting his time thereto, and doing a large and profitable business; the sales of ice amounting to $4,987, and the collections to about $4,050. The directors and stockholders accepted the results of his extraordinary labor, and applied the proceeds to the payment of debts of the corporation and to the declaring of a dividend, knowing all this time that John Hall expected and claimed compensation for his services. During 1893 Hall met with less success, the sales only amounting to between $600 and $700, of which about $582.40 was collected. The company’s ice house burned late in 1893, and thereafter no business was done, except as necessary to protect the property of the company. Mr. Hall rendered a correct account of all his proceedings. The referee says: “I am much relieved in the matter of passing upon the amounts claimed to have been expended for the care of teams, hunting and caring for elk, etc., by the concessions made by counsel for the receiver, who say that all these amounts have been paid, concede that they were proper, and contest only the two items of account, one for $400 personal compensation for work done in 1892, and the other for $200 for personal compensation for work done in 1893.” The referee reported as his conclusions of law as follows: “I conclude, under the well-settled principles of the law, that *617claimant can recover nothing for the performance of such duties as pertained to the offices he held in the corporation, to-wit, that of director and vice president, in the absence of a contract with the board of directors; but upon the state of facts found by me this question does not arise, for the labor performed by claimant was outside of the duties usually pertaining to such office. I take the case of Bank v. Elliott, 55 Iowa, 104, approved in 61 Iowa, 681, — Carruthers v. Mineral Springs Co., to be the rule, at least in Iowa, that, when suit is brought on the quantum meruit by a person against a corporation for work done and accepted, even though the claimant be an-officer of the corporation, he may recover, if the labor performed be outside the labor or performance of duties necessarily entailed upon that office.” He recommended that the claim of Hall in the sum of $406.97 be allowed, with costs.
II. Appellant’s counsel state their contention as follows: “We now insist the general manager of a corporation, nor any other person, cannot receive compensation for services performed, unless he was employed by a board of directors of such corporation, and the compensation agreed on prior to the performance of any services. To our mind, this matter has been passed on by the supreme court of our state as well as others.” Bank v. Elliott, 55 Iowa, 104, is cited, and we think it fairly conclusive on-the question then under consideration.' It will be observed that this claim is not based upon contract, but upon a quantum meruit. Elliott was vice president of the plaintiff bank, and sought to show an agreement between the directors that he should receive a yearly salary of $2,000. He also sought to sho-w another agreement, under which he claimed the right to recover. He sought to recover for the performance of the ordinary duties of'vice president. This court said: “First, We understand the rule to be, when an officer of a corporation performs the usual and ordinary duties of his office as defined by the charter or by-laws, he cannot recover compensation therefor unless it has been so especially agreed. *618He cannot, in sucli case, recover what the services are rea.sonably worth” — citing cases. “Second. It was immaterial what was said as to salaries before the corporation was organized. The corporation, not being in existence, could not be bound by what was said or agreed upon. The fact that the .services were performed after the corporation was organized -can make no difference, unless there was an agreement by the corporation to pay therefor. The mere performance of service is not sufficient” — citing additional authorities. If plaintiff’s claim rested upon alleged contract, what we have quoted would be conclusive against the claim, but, as we have said, it is upon the quantum meruit. The court further says in the case as follows: “Third. It may be conceded that for extraordinary services such as do not ■pertain to the office, there may be a recovery although it has not been so specially agreed. It would, therefore, follow that proof of the character of the services should have been admitted if there had been such allegation in the pleading filed by the defendant. But the only stated ground of recovery was that the services were performed by the ■defendant as vice-president. It ivas not alleged that they did not pertain to the office, or that they Avere extraordinary. The only fair construction of ‘the pleading is that the defendant sought to recover compensation for performing the duties of vice-president of the defendant. 'The proposed evidence ivas therefore properly rejected, and the jury rightfully directed to find for the plaintiff.” Mr. Hall had ceased to be general manager, and the services performed were extraordinary, and were not incumbent upon him as an officer or stockholder. He performed them Avith the knoAvledge of the officers and stockholders, and to their advantage and that of the company. The rules pertáining to usual and ■ordinary. services do not apply. “Where seiwices are performed by a person for a corporation, and the directors are •aAvare that such services are being done, and the directors receive the benefit, the corporation is liable upon implied ■assumpsit.”. Hooker v. Bank, 30 N. Y. 83. “Where a coi’r *619poration has virtually ceased to exist, any of its officers may make proper arrangements and do proper things to carry on •the business.” Murray v. Vanderbilt, 39 Barb. 140; Bartlett v. River Corp., 151 Mass. 433 (24 N. E. Rep. 780). There was no error in approving the report, and the judgment is therefore .^firmed.