Home Mixture Guano Co. v. Tillman

53 S.E. 1019, 125 Ga. 172, 1906 Ga. LEXIS 85
CourtSupreme Court of Georgia
DecidedMarch 28, 1906
StatusPublished
Cited by4 cases

This text of 53 S.E. 1019 (Home Mixture Guano Co. v. Tillman) is published on Counsel Stack Legal Research, covering Supreme Court of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Home Mixture Guano Co. v. Tillman, 53 S.E. 1019, 125 Ga. 172, 1906 Ga. LEXIS 85 (Ga. 1906).

Opinion

Fish, C. J.

(After stating the foregoing facts.)

1. The special demurrer to the allegation, that at the time of the organization and the first election of the officers of the corporation, it was tacitly understood that fair, reasonable, and adequate salaries should thereafter be paid to the officers, should have been sustained. It is obvious that this was the statement of a mere conclusion of the pleader, and not a statement of facts or circumstances which a' court or jury could grasp and consider, in order to determine whether or not there was an express or an implied contract to pay the plaintiff a salary as president of the corporation. If nothing was said upon the question of salaries or compensation of officers, the plaintiff might have tacitly understood one thing, and the other two stockholders and directors might have tacitly understood another. In order for a judicial tribunal to determine whether there was or was not a given understanding between parties, it is necessary for it to be informed as to what passed between the parties at [179]*179the time of the alleged understanding. What was said and what was done should be alleged by the pleader, and not his mere conclusion as to what was in the minds of the parties at the time, unuttered and undisclosed to each other. For these reasons, independently of the question whether the corporation could be bound by any mere private understanding between its shareholders and directors as to what it would do in the future, the special demurrer in question should have been sustained.

2. The court should have then sustained the general demurrer and dismissed the petition, as it failed to state a cause of action against the defendant corporation. Whatever cause the plaintiff may have had for feeling aggrieved by the conduct of the other two stockholders and directors in voting to themselves salaries as officers of the corporation and refusing to provide a salary for him as its president, his petition clearly showed that he could not, under its allegations, recover of- the corporation, under either an express or an implied contract. The petition expressly negatived the idea that any corporate action had been taken providing for the payment of a salary, or any compensation whatever, to the president for his services. Hence the plaintiff had to rely upon an implied contract, and sought to recover for his services as president upon a quantum meruit. It is well settled in all jurisdictions that the directors of a private corporation are not entitled to salary or other compensation for performing the usual and ordinary duties pertaining to their office, as defined by the charter or by-laws, or by custom, unless there is an express agreement or provision for compensation when the services are performed. “They can not recover on implied contract for what the services were reasonably worth, for the law will not imply a promise on the part of the corporation to pay; and it can make no difference, in the application of this rule, that the services were performed with the expectation of compensation, or with the general understanding among the directors themselves that they should receive compensation. The courts have based this doctrine on the ground that the directors, president, and other managing officers of a corporation are in effect trustees, and the law does not imply any promise to pay trustees for performing their duties as such, or allow them to take compensation out of the funds in their hands, in the absence of an express provision or agreement for compensation.” 3 Clark & [180]*180Marshall on Priv. Corp. §671a, and numerous cases there cited. By the weight of authority, this rule applies to directors serving as president, vice-president, treasurer, etc. Ib.; 21 Am. & Eng. Enc. L. 905-906, and cit. The rule is succinctly stated by Judge Thompson in his work on Corporations, in the following language: “In the absence of some provision in the articles of incorporation, in the by-laws, or in some resolution of the board of directors legally passed, the general rule is that the president and other officers of private corporations are presumed to serve without compensation, and can not maintain an action ¿gainst the corporation to recover compensation for their official services.” 7 Thomp. Corp. §8581. In Ellis v. Ward, 137 Ill. 509, the court not only announced this rule, but went further and held that a private corporation can not legally pay its officers for past services rendered in the performance of their usual duties, unless prior to the rendition of such services a by-law or resolution has been adopted authorizing and fixing com-* pensation therefor; and that, “Where a president of an incorporated company performs services as such, without any bjr-law or resolution providing compensation for his services, and afterwards accepts a salary voted to him for past services, he will be liable to refund the same -in favor of creditors of the company.” In the opinion it was said that this doctrine was well settled by that court, and a number of its decisions were cited. The general rule which we have been discussing is not applicable where a director, or managing officer, of a private corporation renders extra services, which are clearly outside of the usual and ordinary duties of his office; but he may recover the reasonable value of such services as upon a quantum meruit, where they were performed under such circumstances as to raise an implied promise on the part of the corporation to pay for them; especially if it was understood by the other officers of the corporation that he was to perform these services and to be paid for them by the corporation. 3 Clark & Marshall on Priv. Corp. §671c. The plaintiff was not obliged to serve the corporation as its president after the majority of its directors had declined to adopt a by-law or pass a resolution providing a salary for the incumbent of that office, and he was not entitled to compensation for services which he' had then already rendered the corporation as its president.

Even if the allegations of the petition, as amended, in reference [181]*181to the assistance which the plaintiff rendered the corporation in the successful conduct and management of its financial affairs, by the use of his personal influence with financial institutions in its behalf and the pledging of his own credit for its benefit, etc., can be considered as presenting a case of services rendered the cor-, poration, outside of his regular official duties, of such a character and under such circumstances as to raise an implied promise on the part of the corporation to compensate him for them, he did not. sue for the value of these services. His suit was for “a fair, reasonable, and adequate sum of money in payment of salary as president of the defendant company from the 19th day of June, 1900, to the 14th day of July, 1904.” And he alleged “that such part of the salary as accrued between June 19th, 1900, and May 8th, 1902, -became due and payable on the said last-named day, being the time at which the salaries of the other officers of said company. were fixed, and such parts of such salary as accrued after May 8th,.

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Cite This Page — Counsel Stack

Bluebook (online)
53 S.E. 1019, 125 Ga. 172, 1906 Ga. LEXIS 85, Counsel Stack Legal Research, https://law.counselstack.com/opinion/home-mixture-guano-co-v-tillman-ga-1906.