Martino v. Commerce Fire Insurance

Headnote

By-lam of corporation—may be disregarded by board of directors.— Contract'of employment by corporation.

Appeal from a judgment in favor, of the plaintiff, entered on the ■ verdict of a jury, and from an order denying defendant’s motion for a new trial, on the minutes.

The action was brought to recover the balance of salary claimed by the plaintiff to be due to him from the defendant.

On or' about January 1,1878, plaintiff was employed by defendant for the year at a salary of $1,500. On June 3, 1878, the defendant having determined to go into liquidation, a resolution was passed at a regular meeting of its board of directors, instructing the officers to notify the employees that their services would not be required after June 30, 1878.

In pursuance of that resolution, the plaintiff was dismissed on September 12, 1878, and this action was brought to recover the proportion of his salary from that day, to January 1, 1878, with interest.

The defendant claims that the plaintiff’s removal was justified under one of its by-laws, and the act authorizing the making thereof, of which by-law the following is a copy: 1 ‘ The President shall hold his office during the term for which he shall be elected, unless .removed by cause; and other officers, clerks and

messengers during the pleasure of the board;” that under this by-law it was not in the power of the board of directors or of the president and secretary of the committee to make an employment of the plaintiff, which was not terminable at the pleasure of the board. Defendant moved to dismiss the complaint upon the 'plaintiff’s evidence, on this ground, which motion was denied, and defendant excepted.

It, appeared that the board delegated power in. regard to the employment of officers or clerks, to an advisory committee, and it was under the advice of that committee that a reduction of salaries and re-engagement of employees for. the ensuing year, took place about January 1, 1878. The proposition contained in these minutes of such committee, was communicated to, and accepted by the plaintiff, after taking some time for deliberation.

The court at General Term, said: “ The plaintiff was dealing directly with the defendant’s board, and the question of authority of the defendant’s secretary and president has no relevancy in the case, so far as the January interview was concerned, when the contract in suit was consummated. After all, the by-law in question was a mere rule of conduct, imposed on itself, by the defendant, for its own benefit and convenience, and could be set aside at any time, as it clearly was within the power of the board to disregard, its own rules.

“There is nothing in the by-law which forbids the defendant from entering into a special contract with, the plaintiff, whereby the clerks should hold their positions ‘ during the pleasure of the board.’ ”