Bagley v. Carthage, Watertown & Sacketts Harbor Railroad

Majority

p. 475

George A. Bagley, Respondent, v. Carthage, Watertown and Sacketts Harbor Railroad Company, Appellant.

Headnote

Railroad — compensation of the president for services outside of his duties as president*

A railroad corporation which,, while not actively operating its road because of leases made thereof, still maintains its organization, may, by its board of directors, lawfully agree, by conversations and statements at meetings of the board and by acquiescence therein, although no written resolution to that effect is adopted, to compensate its president for services rendered on behalf of the ' corporation, when such services are found by a jury to have been outside of his official duties as its president and as one of its directors.

Appeal by the defendant, the Carthage, Watertown and Sacketta Harbor Railroad Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Jefferson on the 10th day of June, 1896, upon the verdict of a jury for $5,385.23, and also from an order entered in said clerk’s office denying the defendant’s motion for a new trial made upon the minutes.

The action is brought to recover for services rendered by the plaintiff and moneys disbursed by him for the defendant between October 17, 18S7, and April, 1894. The plaintiff was president of the defendant during that period; the services as alleged and proved were the plaintiff’s services, in important litigations in which the defendant was engaged with other railroad companies, in relieving-the defendant from threatened foreclosure proceedings and in obtaining a loan of $300,000 to relieve the defendant and to take the place of its mortgage bonds that were being foreclosed in those-proceedings, and other services; and the plaintiff claims, and the jury found, that these services were outside of his duties as president and director of the defendant. There was no formal resolution in writing by the defendant’s board of directors employing-the plaintiff to perform those services, but the plaintiff’s proof tended to establish that, at several meetings of the board of directors of the defendant while the plaintiff was present, the subject of his-compensation was discussed, and it was said in substance, with the-acquiescence of the directors, that the plaintiff should be compensated for such services and repaid such disbursements as he had and should incur in the prosecution of the business. The first of these

p. 476

meetings occurred before or at about the time that the services were ■commenced, and the other meetings occurred at intervals during the progress of the business. There was no controversy over the rendition of the services or their value. The -disputed question was as to whether the defendant through its board of directors had ■agreed to compensate the plaintiff for his services, the defendant also ■claiming that what was done by the plaintiff was within his duties as president of the defendant, and that, as the defendant had not provided ■any salary for him as president, he could not recover. The by-laws ■of the defendant' simply prescribed the duties of the president to ■call meetings of the board of directors or require the secretary to do so, and .provided that the president should be ex offieio a member of the executive, the auditing and the finance committees of the board, ■each committee to consist of such members as the board should ■direct. The defendant was organized about 1870, and constructed a railroad from Carthage to Watertown in this State in 1872 and continued it to Sacketts Harbor in 1871. About the time the defendant’s road was completed it was leased in perpetuity to the Utica and Black River Railroad Company, which latter assigned and transferred its lines together with the lease to the Rome, Watertown and Ogdensbufg Railroad Company in April, 1886. The last-named ■company' in March, 1891, transferred its line and the said leased, lines to the Hew York Central and Hudson River Railroad Company. The defendant after its lease maintained its organization and ■officers, but had no active charge of the .operation of its road nor ■did it transact any business except to look after its interest under the leases. The plaintiff had been admitted' to the bar -and had prac-' ticed law to some extent • in his earlier years, but during the time when his claims originated he was engaged in manufacturing business as the head of a manufacturing corporation. The plaintiff was a stockholder and a director in the company of the defendant.

Henry Purcéll, for the appellant.

Rogers & Atwell, for the respondent. -

The defendant revives upon this appeal its contention upon the trial that the plaintiff being a stockholder and a director of the

p. 477

defendant, and there being no agreement, express or implied, to compensate him for services rendered, he cannot recover.

We think that the trial court properly submitted the question to the jury as to whether there was a contract between the plaintiff and the defendant that the plaintiff should be compensated for the services for which he recovered upon the trial. What evidence was given upon this subject by the plaintiff was not contradicted by the defendant, but the defendant claimed that it was not sufficient in law to justify a submission to the jury, and an exception was taken to the court’s so doing. The fact that the plaintiff rendered such valuable service to the defendant, spending a large portion of his time for several ■ years and incurring considerable expense to the knowledge of the defendant in matters outside of his duties as director or president of the company, is important to be considered in determining this question. Had those services been rendered to a private individual a contract would' have been implied that the person having the benefit of those services, rendered -with his knowledge and approval, should make reasonable compensation for such services. It is not necessary to determine in this case whether this rule would apply to the defendant as a corporation, because there was sufficient proof to go to the jury upon this question whether the conversation and statements in the board of directors at its several meetings, with the acquiescence of the members of the board, did not constitute a contract on the part of the defendant to pay the plaintiff for his services. There was no question about his right to recover for his disbursements, which were conceded upon the trial to have been $385.23.; and in view of all the evidence as to the duties of the plaintiff as president and director, and. the • character of the services which he rendered and the inferences derived therefrom, we think it was a question for the jury to determine whether the services claimed by the plaintiff were outside of his duties as director and president, and that the verdict concludes the defendant upon that question.

In Jackson v. New York Central Railroad Company (2 T. & C. 653; affd., 58 N. Y. 623 ), upon the opinion of Boardmakt, ■ J., in the court below, it was held that a director of a railroad company, who had acted as legal counsel in an action to which-the company was a party, was entitled to compensation when so employed

p. 478

by the company, and that it was, not indispensible that his employment should be by formal resolution of the board of directors, but might be inferred from the nature of the employment, the importance of the subject-matter and other acts of the board recognizing an indebtedness.

To the same effect is Outterson v. Fonda Lake Paper Co. ( 20 N. Y. Supp. 980 ). In that case the plaintiff claimed a salary as treasurer of the defendant corporation, and he proved a verbal agreement by the trustees at the meeting at which he was appointed treasurer that he should have a salary, but there was no written resolution made or entered, and it was held that' the verbal agreement was sufficient, and Judge Merwin says (at p. 983): “If the services were outside of his official duties and he was actually employed by the corporation, or the circumstances were such as to authorize the inference of an actual employment by the corporation, the fact that plaintiff was an officer would not prevent his 'recovery of compensation.” (Citing cases.)

The principle laid down in these cases is sustained by Angelí & Ames on Corporations, sections 318 and 284. The last section quotes Judge Story as saying: “A board (board of directors) may accept a contract or approve á security by vote or by a tacit and implied assent. The vote or assent may be more difficult of proof by parol evidence than if it were reduced to writing, but surely this is not a sufficient reason for declaring that the vote or assent is inoperative.”

The cases cited by the learned counsel for the appellant upon this subject only go to the extent of holding that an officer of the company is not entitled to a salary in performing the duties of his position unless the corporation by proper ■ action fixes that salary, nor is he entitled to recover for services outside of his duties as an officer, except upon some proof of a contract to compensate him. Among the cases cited by him is The Farmers’ Loan & Trust Company, etc., v. The Housatonic R. R. Co. ( 152 N. Y. 251 ). Judge O’Brien says in that case (at p. 254): “ The plaintiff being not only the president, but a director as well, could not recover upon a quantum meruit or any implied contract. He was bound to show that the directors had assented to his right to compensation or had authorized the payment in some form.” (Citing cases.)

' Humerous exceptions were taken at the trial to which our atten

p. 479

tion is directed and which we have examined. We find them without merit, and deem it necessary to notice but one or two of them.

The court permitted the witness Fairchild, a member of a New York banking house through which the plaintiff had negotiated the $300,000 loan to the defendant, to testify to the time spent hy the plaintiff and the value of his services in negotiating the loan. There was no doubt' as to the competency of this witness to testify upon this subject, and we think that the evidence was properly received, and such evidence was expressly sanctioned in Jackson v. New York Central Railroad Company (supra).

We have already commented upon the exception to the submission to the jury of the question as to whether the plaintiff had given evidence tending to prove an employment outside of his duties as- an officer of the defendant.

We find no reversible error in the proceedings below, and the . judgment arid order appealed from should be affirmed, with costs.

All concurred.

Judgment and order affirmed, with costs.

Cases cited

Gambling v. Haight 58 N. Y. 623 N.Y. 1874-06-09 p. 477
Farmers' Loan & Trust Co. v. Housatonic Railroad 152 N. Y. 251 N.Y. 1897-03-16 p. 478