Stout v. Security Trust & Life Ins.

81 N.Y.S. 708

This text of 81 N.Y.S. 708 (Stout v. Security Trust & Life Ins.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stout v. Security Trust & Life Ins., 81 N.Y.S. 708 (N.Y. Ct. App. 1903).

Opinion

O’BRIEN, J.

The action was brought to recover $20,000 for services rendered by plaintiff to defendant, at its special instance and request, in the management of its business affairs between February 28, 1899, and February 11, 1901. The plaintiff was a director and first vice president of the defendant corporation. At a meeting of the directors on March 4, 1899, the following resolution was passed:

“On motion it was resolved that the first vice president be, and hereby is, appointed general manager of the real estate owned by this company, with full power and authority to make leases, collect rents, to hire, appoint, and discharge rental agents and other necessary employés, to make alterations, and generally to supervise and manage the said real estate and all details pertaining thereto, and to make reports to the company from time to time.”

As to the character of the services rendered by him, the plaintiff testified that they were divided into, two classes: First, such services as had to do with the real estate of the company under the resolution; and, second, services having to do with the other business of the company, and the management of its affairs, not mentioned in the resolution.

The contention upon the trial was whether the services were within the plaintiff’s duties as an officer and director of the company, or were outside of and in addition to them. The insistence of the plaintiff was that they were outside of those duties, and such as entitled him to be paid therefor. It is not claimed that there was a resolution fixing any salary or compensation, or any expression upon the part of the board of directors indicating that they expected or were to pay him for the services. The defense was that the resolution was merely an addition to the by-laws, defining the duties of the first vice president; that the absence therefrom of any statement that compensation was to be given was indicative of the sense of the board that the services were to be performed gratuitously; and that this latter view prevailed with respect to some additional services rendered relative to business of the defendant outside of the duties specified in the resolution. The question presented, therefore, upon this appeal (assuming, in view of the finding of the referee, that, outside of the duties of an officer and director, the plaintiff performed certain services for the defendant), is whether, for any of his services while such director or officer, the plaintiff can recover salary or compensation, in the absence of an express agreement or contract to pay therefor on the part of the corporation. The cases of Mather v. Eureka Mower Co., 118 N. Y. 629, 23 N. E. 993; Smith v. L. I. R. Co., 102 N. Y. 191, 6 N. E. 397; Barril v. Water-Proofing Co., 50 Hun, 257, 2 N. Y. Supp. 758; Gill v. Cab Co., 48 Hun, 524, 1 N. Y. Supp. 202; and Starbuck v. Housatonic R. Co., 83 Hun, 534, 32 N. Y. Supp. 87—support the rule formulated in the first authority cited (Mather v. Eureka Mower Co., supra), that: •

[710]*710“It is well settled that a director of a corporation is not entitled to compensation for services performed by him as such, without the aid of a preexisting provision expressly giving the right to it.”

The rule was thus referred to in Starbuck v. Housatonic R. Co., supra:

“In Kelsey v. Sargent, 40 Hun, 156, we find a quotation from Pierce on ■Railroads which says: ‘The directors are presumed to perform the duties of their trusts gratuitously. They are not entitled to compensation even for services outside of the ordinary duties of their offices, unless it is expressly stipulated before the services are rendered, but an express contract by the board to pay a fixed or reasonable sum is binding.’ ”

In the case of Gill v. Cab Co., supra, the facts were not unlike those appearing in the case at bar. There the plaintiff was a director as. well as vice president of the corporation, and claimed compensation for services rendered outside of his duties as officer and director. In the opinion written by the Presiding Justice of this court, it was said:

“Although the services which are claimed to have been rendered by the plaintiff in this case may have been beyond that which ordinarily belonged to the office of director, and beyond the scope of the duties defined by the bylaws as belonging to the office of second vice president, yet, from the mere fact of the rendition of those services, no presumption of a promise to pay can arise.”

If the law as settled in this state is to control, therefore, it is evident that, upon the facts shown by this record, the plaintiff cannot recover. It is insisted, however, that a different rule has been established by the Supreme Court of the United States, and we are referred to the two cases of Fitzgerald Construction Co. v. Fitzgerald, 137 U. S. 98, 11 Sup. Ct. 36, 34 L. Ed. 608, and Corinne Mill Canal & Stock Co. v. Toponce, 152 U. S. 405, 14 Sup. Ct. 632, 38 L. Ed. 493. In the latter case it was-held that a general manager of a corporation, who is at the same time a director and vice president thereof, may recover of it for his services as general manager, which were clearly outside of his duties as vice president and director, where they were rendered under such circumstances as raise an implied promise to'pay for them on the part of the corporation. And in the authority first cited (Fitzgerald Const. Co. v. Fitzgerald, supra), Chief Justice Fuller quotes with approval what was said in Pew v. First National Bank, 130 Mass. 391, as follows:

“A bank or other corporation may be bound by an implied contract in the same manner as an individual may. But in any case the mere fact that valuable services are rendered for the benefit of a party does not make him 'liable upon an implied promise to pay for them. It often ■ happens that persons render services for others which all parties understand to be gratuitous. * * * In such cases, however valuable the services may be, the law does not raise an implied contract to pay by the party who receives the benefit of them. To render such party liable as a debtor under an implied promise, it must be shown not only that the services were valuable, but also that they were rendered under such circumstances as to raise the fair presumption that the parties intended and understood that they were to be paid for, or at least that the circumstances were such that a reasonable man in the same situation with the person who received and is benefited by them would and ought to understand that compensation was to be paid for them.”

[711]*711The learned referee has found, first, that the plaintiff performed all the services at the request of the defendant; and, second, that all for which compensation is sought were outside the duties of vice president. The record, however, is barren of any specific request on the part of the corporation, other than what is stated in the resolution; and we must assume therefore, if the plaintiff is to succeed, that both the services rendered under the resolution and the additional services were performed under such circumstances as legally •implied a request by the defendant to the plaintiff to render them.

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Related

Corinne Mill, Canal & Stock Co. v. Toponce
152 U.S. 405 (Supreme Court, 1894)
Mather v. Eureka Mower Co.
23 N.E. 993 (New York Court of Appeals, 1890)
Gill v. New York Cab Co.
1 N.Y.S. 202 (New York Supreme Court, 1888)
Barril v. Calendar Insulating & Water-Proofing Co.
2 N.Y.S. 758 (New York Supreme Court, 1888)
Starbuck v. Housatonic Railroad
32 N.Y.S. 87 (New York Supreme Court, 1895)
Pew v. First National Bank
130 Mass. 391 (Massachusetts Supreme Judicial Court, 1881)

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Bluebook (online)
81 N.Y.S. 708, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stout-v-security-trust-life-ins-nyappdiv-1903.