Court Opinion

ID: 3593507
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:41:30.396812+00
Date Added: 2024-06-11T07:42:51.841779
License: Public Domain

The plaintiff was president of the United States Mortgage and Trust Company from 1894 to March 30, 1905. He was also chairman of the board of directors and of the executive committee. He was paid a salary in 1894 of $10,000 and it was increased from time to time until commencing with January 1, 1903, it was fixed at $30,000 a year. This action is brought to recover in addition to his regular salary an additional amount of salary equal to 5% of the net profits of the trust company from January 1, 1902, to March 30, 1905.
The executive committee of the defendant had power and authority to fix the compensation or salary of the officers thereof. Individual members of the committee had no authority as such and the assent of a majority of the committee as individuals and independently does not amount to an assent or an affirmative action on the part of the executive committee. The best evidence of the action of the executive committee is the resolution of such committee entered upon its minutes, but I admit that if the committee acted as such without recording its action in its minutes the fact that its action is not *Page 289 
shown in writing by a formal resolution, although it would be unusual and open to controversy, would not prevent its action being binding and enforceable.
Where minutes of a committee are kept and resolutions are placed upon the minutes relating to the matter under discussion or in controversy the resolutions will be presumed to represent its action and any different, other or modified action would have to be shown not only clearly but also as taken independently or in explanation of an ambiguous statement of the action of the committee as shown by the formal written resolutions.
Ordinarily evidence to show that the resolutions of a committee or board do not express the true action of such committee or board would be as dangerous as evidence to prove that a contract does not express the true agreement between the parties. Action on the part of the committee independent of the resolutions like an agreement between parties independent of a written contract could of course be shown and would be binding notwithstanding the writing. The resolutions of the executive committee in this case do not sustain the plaintiff's claim.
The plaintiff asserts that in June, 1899, the defendant promised him an additional amount of salary based upon a percentage of the net profits of the business and that the contract was partly oral and partly written. The record shows that plaintiff desired to obtain a thousand shares of the stock of the trust company that he might have a greater interest in the profits of the corporation. He had a conversation with one of the directors who was a member of the executive committee in regard to his wishes in that behalf and subsequently with another member of the board of directors and executive committee, in which last conversation the member of the executive committee proposed to him that in lieu of his purchase of one thousand shares of the stock of the company he be given a commission on the net proceeds of the business. Prior to that time the salary of the plaintiff had been *Page 290 
increased by resolution from $15,000 to $25,000 a year and he had been given an additional sum as an honorarium. The resolution is dated March 8, 1899, and is as follows: "Resolved, that the salary of the president be increased to twenty-five thousand dollars ($25,000) per annum to take effect as of March 1, 1899, and resolved, that in view of the extraordinary extra services performed by the president in behalf of this company in relation to the Royal Baking Powder Company and matters in relation to an enterprise in Washington, D.C., partially completed and now pending, an honorarium of $10,000 be voted to him as a slight recognition of work well and faithfully performed."
Following the conversation with said member of the executive committee (McCurdy) and on the same day a meeting of the executive committee was held and there was some conversation before the committee in which Mr. McCurdy stated, as testified to by the plaintiff, "That he had had this conversation with me (plaintiff) that I wanted the stock; that he couldn't give it to me and that instead of that he would recommend the treatment of the matter under the English system and give Mr. Young five per cent." He produced two resolutions which he had prepared, and after some discussion one of such resolutions was modified and passed as follows: "Resolved, that the executive committee recommend to the board that they be authorized to award to the president in compensation for his services and in addition to his regular salary a participation in the net profits of the company during the pleasure of the board."
On the same day a meeting of the board of directors was held and at such meeting of the board of directors a resolution was passed as follows: "The recommendation of the executive committee at their meeting held this day regarding the award to the president for additional compensation for his services over and above his regular salary was approved and adopted." These meetings were held on June 22, 1899. *Page 291 
On the 18th day of January, 1900, the executive committee passed a further resolution as follows: "Resolved, that pursuant to the provisions of the resolution of the executive committee passed June 22, 1899, and approved by action of the board of directors on the same day providing for the payment of an `honorarium' to the president consisting of a percentage of the net earnings of the company the executive committee hereby authorizes the payment to the president of 5% of the net earnings of the company as determined for the six months ending December 31, 1899."
The words "of an honorarium" and the word "consisting" were written into the resolution subsequent to the same being offered. Pursuant to that resolution on January 19, the defendant paid to the plaintiff $19,270.
At a meeting of the stockholders held March 8, 1900, a resolution was passed as follows: "Resolved, that the acts of the directors of this company and of their executive committee as reported and stated in their minutes of meetings held since the last annual meeting of its stockholders March 9, 1899, be and they are hereby ratified and confirmed."
On December 26, 1901, another resolution was passed by the executive committee as follows: "Resolved, that pursuant to the provisions of the resolution of the executive committee passed June 22, 1899, and approved by action of the board of directors on the same day providing for the payment of an honorarium to the president consisting of the percentage of the net earnings of the company the executive committee hereby authorizes the payment of 5% on the net earnings of the company as determined since such payment was last made."
Pursuant to that resolution there was paid to the plaintiff on December 31, 1901, $56,721.30. Nothing further was done by the parties relating to the matter of the payment to the plaintiff of a percentage of the net profits until the plaintiff's demand for the same at the time of *Page 292 
or after he ceased to be president of the company, and this action is brought, as stated, for $127,014.67, being 5% of the net profits of the trust company for three years and three months from January 1st, 1902. The only question in this case is whether, upon the facts as stated, the action can be sustained.
It is not claimed that the resolutions quoted establish a contract by which the plaintiff is entitled to recover against the defendant. Upon the resolutions alone the plaintiff failed to establish a cause of action. When the resolutions of June 22, 1899, were passed they clearly had reference to future action of the executive committee. They were not at least in form in ratification of a contract already agreed upon by the plaintiff and an individual member of the committee or otherwise. When it was said in the presence of the executive committee by Mr. McCurdy, one of its members, that they had decided to make a stated increase in the plaintiff's salary to induce him to continue in the service of the corporation, the action taken by the committee was expressed by the resolution which has been quoted, and when a payment was directed to the plaintiff it was so directed as an honorarium, the same as the payment of $10,000 made pursuant to the resolution of March 8, 1899. There is, therefore, it seems to me, no evidence whatever to warrant a jury in finding that the defendant through its executive committee entered into a contract binding upon the defendant to pay the plaintiff 5% of its net profits until such time as the executive committee saw fit to put an end to such an agreement. If, as appears, it was the intention of the committee to obtain authority to add to the plaintiff's salary from time to time an amount based upon a percentage of its net profits it may be assumed that it accomplished its purpose, but they did not subsequently act upon it except in the payment of a percentage of the profits for six months, and then again for one year, and in each case it deliberately confined the payment *Page 293 
to an honorarium, and thereby, as it seems to me, intentionally refrained from ratifying a past contract with an individual member of the committee or of making a new contract binding upon the defendant.
After all the resolutions quoted were passed, and on or about January 1, 1903, the plaintiff's salary was by resolution increased from $25,000 to $30,000 a year, and no reference was made therein to any further or additional salary. The large item constituting the alleged additional salary of the plaintiff was never at any time entered in the defendant's books, nor included in its reports, even those made in its behalf by the plaintiff. Each payment of additional salary was an honorarium and not a recognition of an obligation.
The judgment should be affirmed, with costs.
WILLARD BARTLETT, Ch. J., COLLIN, HOGAN and CARDOZO, JJ., concur with MILLER, J.; CHASE, J., reads dissenting opinion, and SEABURY, J., concurs.
Judgment reversed, etc.