executive officers of a corporation to compensation for their services. It has been held in Illinois and in Pennsylvania, that a treasurer can not, in the absence of any contract agreement, recover a salary from the corporation for services rendered to it. In Iowa an officer of a corporation can recover payment only where there is a special contract therefor, and it is there held that no contract to pay for his services can be implied as against the corporation. So, in a lower court in New York it was said that one is not necessarily entitled to a salary from the fact that he was chosen secretary of a corporation, and rendered services as such, especially where the facts rebut the presumption of a promise of payment. The New York case, however, was reversed in the court of last resort, where the ground was taken that if the secretary were neither a director nor a stockholder, an agreement to compensate him for his services would be presumed from the fact of his appointment.' And this is probably the general rule in respect of executive officers other than the president or vicepresident of the company. So the board of directors of a railroad company can, by resolution at one of their meetings, fix the salaries and order payment of the officers of the company, who commenced to work for the success of the enterprise at a time when the company had no funds, with a common understanding and agreement that, if they succeeded in building any portion of the road sufficient to produce a revenue, a fair compensation should be paid them out of the revenue so produced; such compensation and payment being fixed and ordered paid, long after the services were performed." 1 Holder v. Lafayette &c. Ry. Co. 71 Ill. 106; s. c. 22 Am. Rep. 89; Kilpatrick v. Penrose Ferry Bridge Co., 49 Pa. St. 118; s. c. 88 Am. Dec. 497. 2 Citizens' Bank v. Elliott, (1881) 55 Iowa, 104; s. c. 39 Am. Rep. 167. 3 Smith v. Long Island R. Co., 32 Hun, 38. Smith v. Long Island R. Co., (1885) 102 N. Y. 190. 5 First National Bank v. Drake, 29 Kan. 311; s. c. 44 Am. Rep. 646; Edwards v. Fargo &c. Ry. Co., (Dak. 1887) 33 N. W. Rep. 100; Cincinnati &c. R. Co. v. Clarkson, 7 Ind. 595; Smith v. Long Island R. Co., (1885) 102 N. Y. 190; Hall v. Vermont &c. R. Co., 28 Vt. 404; Law v. Connecticut &c. R. Co., 45 N. H. 370; Bee v. San Francisco &c. R. Co., 46 Cal. 218; Bill v. Darenth Valley Ry. Co., 26 L. J. Ex. 81; s. c. 1 Hurl. & N. 305. 6 St. Louis, F. S. & W. R. Co. v. Tiernan, (1887) 37 Kan. 606, distinguishing Bank v. Drake, 29 Kan. 311. But where persons organize a corporation, elect themselves officers, §201. The same subject continued - Compensation of promoters.- Officers of a corporation can not fix their own salaries. Nor can they bind the company by what is in effect a gratuitous and unnecessary payment, especially where their action amounts to fraud. A fraudulent appropriation and proceed to business, in the course of which they contract debts, the corporators are not entitled to retain amounts drawn by them from corporate assets under the name of "salary" to themselves as officers, it not appearing that the corporation made any profits out of which to pay salaries, and nothing having been paid in on the capital stock. Burns v. Beck, (1889) 83 Ga. 471. 1 Kelsey v. Sargent, (1885) 40 Hun, 150. So where an officer whose duties do not require any special knowledge, ability, or attention presides at a meeting of the trustees in which a resolution voting him a salary is passed, though he testifies that he did not vote, and it is not recorded that he did, no dissent appearing, the resolution is invalid. Here where the only testimony that the services were of any value being that of the officer himself, he can not be held to be entitled to the salary on the quantum meruit. Ashley v. Kinnan, (1888) 18 N. Y. St. Rep. 791. And to the same effect is Smith v. Woodville Consolidated Mining Co., 66 Cal. 398, holding that evidence of a resolution of the board of directors that the salary of an officer was during the preceding year fixed at a certain amount, does not show a contract for a salary prior to that time. But it was held that the act of the managing officer of a railway company in ordering the payment in part of a claim by one of its officers for salary for services rendered is an admission of liability as against the company. St. Louis, F. S. & W. R. Co. v. Tiernan, (1887) 37 Kan. 606. And, in the same case, which was an action against a railway company on a note given in return for services rendered, it was held no defense thereto that in the execution of the note all the requirements of the bylaws had not been strictly complied with, as recovery ought not to be defeated by matter of inert form and not of substance. 2 Kelsey v. Sargent, (1885) 40 Hun, 150. As where plaintiff owned less than half the stock in a corporation, and the three defendants owned the residue. For many years plaintiff was one of the three trustees constituting the board, but the defendants, who were all of one family, were elected the trustees, and they elected themselves respectively president, secretary and treasurer. One of the defendants sought to buy plaintiff's stock, but he declined to sell, whereupon said defendant threatened to raise the salaries of the officers, which was done. In the next year another refusal to sell was followed by another raise of salaries, so that instead of $1,800 each per year - the salaries which had been paid for many years officers were to receive respectively $50,000, $30,000, and $6,000, and a further increase was threatened, with the statement that the power of the trustees to increase the salaries was unlimited. Another company was controlled by the corporation, and the same officers were the of funds for compensation by an officer who agreed to discharge his duties without compensation can not be ratified by implication. It has been held that an officer who receives a salary as such may recover for other services beyond the duties of his office. But directors can not bind the corporation to pay for services rendered at their instance beyond the ordinary business of the company. It has been held that a company is bound by no implied promise to compensate its promoters for their services in furthering its organization. But, on the other hand, where after the charter, and before the organization, of a corporation, services are rendered which are necessary to compete that organization, and, after it has been perchosen, and they voted themselves ing the by-laws of the corporation to salaries respectively of $7,500, $6,000, show that such services pertained to and $1,000, though previously the the duties of the secretary. And that officers of that company had served Dak. Civil Code, § 404, authorizing a without pay. The business was very corporation, in the absence of special profitable. The salaries voted were provision, to provide in its by-laws shown to have been greater than the "the compensation and duties of its services were worth. And it was officers," creates no presumption decided that the trustees' action was that the duties are prescribed when fraudulent, and equity would re- the by-laws are silent as to compenstrain the payment of more than sation, but rather a presumption the real value of the officers' serv- that they are equally silent as to the duties. Edwards v. Fargo & S. Ry. Co., (Dak. 1887) 32 N. W. Rep. 100. 3 Eakins v. American White Bronze ices. Ziegler v. Hoagland, (1889) 52 Hun, 385; s. c. 6 Ry. & Corp. Law J. 823. 1 Fort Scott Bank v. Drake, 29 Kan. Co., (1889) 95 Mich. 568; s. c. 6 Ry. & 311; s. c. 44 Am. Rep. 646. Corp. Law J. 31, citing Kalamazoo Novelty Manuf. Co. v. McAlister, 86 Mich. 327. 2 Where a corporation has construed the duties of its secretary to include a field of arduous work, not strictly within the ordinary interpretation of the functions of that office, the secretary can recover a reasonable compensation for the performance of such duties, and will not be held to distinguish between ordinary and extraordinary services. Edwards v. Fargo & S. Ry. Co., (Dak. 1887) 32 N. W. Rep. 100. In the same case, however, it was held that it is competent for plaintiff to testify that he rendered specific services "as secretary," without produc 4 Bell's Gap R. Co. v. Christy, 79 Pa. St. 54; 21 Am. Rep. 39; New York &c. R. Co. v. Ketchum, (1858) 27 Conn. 171; Rockford, Rock Island & St. L. R. Co. v. Sage, (1873) 65 Ill. 828; s. c. 16 Am. Rep. 587. It is soon enough for corporate bodies to enter into contracts, incumbering their property, when they are duly organized according to their charters and have their chosen and impartial directors to conduct their business, New York &c. R. Co. v. Ketchum, 27 Conn. 171. fected, the corporation elects to take the benefit of such services, knowing that they were rendered with the understanding that compensation was to be made, it will be held liable to pay for the services upon the ground that it must take the burden with the benefit; and a suit at law will lie to recover such compensation.1 1 Low v. Connecticut & Passumpsic Rivers R. Co., (1864) 45 N. H. 869, following Hall v. Vermont & Massachusetts R. Co., 28 Vt. 401. CHAPTER XI. GENERAL EXECUTIVE OFFICERS. § 202. Of the president - In general. § 210. Authority of general manager 203. The president's power to conto engage legal and medical services. tract for the company. 204. Necessarily incidental powers of the president. 205. The president's powers in respect of negotiable paper. 206. Bank presidents. 207. Railway presidents. 208. Compensation of the president. 209. Of general managers and superintendents. § 202. Of the president-In general. In the absence of legislative enactment or provision made in the by-laws, corporations usually act through their president or those representing him. He being the legal head of the body, when an act pertaining to the business of the company is performed by him, the presumption will be indulged that the act is legally done, and is binding upon the body. But where under its charter a corporation can only act through its board of directors, its president can not, without the authority of the board, enter into contracts in its behalf, except as to matters of simple administration, which, of necessity, should be managed by 1 Smith v. Smith, (1872) 62 Ill. 493, 496. "The powers which are presumed to have been conferred on the president, but which may be shown not to have been so conferred, are those which are necessary to the doing of those things without the ordinary course of his duties which it would seem he should do, and which, therefore, the law presumes him authorized to do until the contrary appears. The powers which are exercised only by virtue of spe cial authority granted by the directors, are such as are not only without the ordinary course of his duties, but are within the legislative and judicial province of the directors." 21 Cent. L. J. 144, citing Bank of East Tennessee v. Hooke, 1 Coldw. 156; Rhodes v. Webb, 24 Minn. 292; Bank of Com. v. Bank of Buffalo, 6 Paige, 497; Percy v. Millandon, 8 La. 568; Bank of Healdsburg v. Bailhall, 65 Cal. 327. |