Merrill v. United Box Board & Paper Co.

Headnote

Merrill v. United Box Board & Paper Co, 164 App. Div. 906 , affirmed.

Appeal from a judgment of the Appellate Division of the Supreme Court in the third judicial department, entered July 13, 1914, affirming a judgment in favor of defendant entered upon a decision of the court on trial at Special Term. Defendant’s executive committee authorized the executive officers of the company to contract with the plaintiff, a director of the corporation, for his services as manager of one of its large mills, for a term of five years at a salary of $6,000 per year. Plaintiff

had formerly been the president and executive officer of this mill before it was purchased by the defendant, serving at a similar salary. The salary contract was ratified by the full board of directors about two months after it had been executed and after the plaintiff had entered on his duties. The plaintiff continued to perform services under the contract for a period of three years and four months and was paid for three years and one month up to February 1, 1907. In the month of February, 1907, a new board of directors came into the defendant company, repudiated the contract, and on April 30, 1917, discharged the plaintiff and refused to pay the balance of his salary. Plaintiff sued to recover the salary due and unpaid to the time of his discharge and by stipulation his rights to payment under the contract were litigated as if his whole contract term had expired. The defendant defended on the theory that because the plaintiff was a director of the company, the contract was void. It also set up a counterclaim to recover all salary paid to the plaintiff before commencement of this action, and also set up a second counterclaim for $5,000 and interest which it claimed against him upon an alleged bond account between them.