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The following from the words of the court in the case of Miner v. Belle Isle Ice Co., 93 Mich. 110, 53 N. W. 222, 17 L. R. A. 412, are directly applicable to the facts as found by the court in this case:
“The present case is clearly within the exception referred to by Campbell, J. Defendant Lorman must be held to have made these contracts with himself. He directed, influenced, and controlled the board. They had no personal interest in the affairs of the company, and exercised, not their own judgment and discretion, but Lorman's will. All the authorities agree that it is essential that the majority of the quorum of a board of directors shall be disinterested in respect to the matters voted upon. I Beach, Corp. 276; Smith v. Association, 78 Cal. 289, 20 Pac. 677 [12 Am. St. Rep. 53]. Where a town board of three are authorized to make a grant to a railroad, and two of them, one being director of the railroad, make the grant, the court will set it aside. San Diego v. Railroad Co., 44 Cal. 106; Bill v. Telegraph Co. [C. C.] 16 Fed. 14. A salary voted to the president by a quorum of three directors, two being absent, and the president being one of the three, is not enforceable. Copeland v. Manufacturing Co., 47 Hun [N. Y.] 235. Where the chief stockholder, who is president, induces the directors, his dummies, to vote a large salary to him, the corporation may defeat the officer's action at law to recover it. Davis v. Railroad Co. [C. C.] 22 Fed. 883."
We also quote with approval the following from the syllabus to the opinion in the case of Church v. Church Cementico Co., 75 Minn. 85, 77 N. W. 548: “A stockholder in a corporation, and acting as its president, may enter into a salary contract for his services with it; but he cannot use his position, when making such contract, to his own advantage, or to the disadvantage of the corporation; nor can he bind it to pay him a greater salary than his services are reasonably worth; and a contract of this kind between such president and the acting secretary and treasurer of the corporation will be scrutinized with great care."
To the same effect is the following from the case of McNulta v. Corn Belt Bank, 164 Ill. 427, 45 N. E. 954, 56 Am. St. Rep. 203: “The law is that, where a salary or compensation is voted to a director, the vote is illegal, if it is carried only by including the vote of the director who receives the pay or salary. 2 Cook, Stock, Stockh. &. Corp. Law, $ 657. Where the chief stockholder, who is president, induces the directors to vote a large salary to him, the corporation may defeat the officer's action at law to recover it. Id.; also Miner v. Ice Co., 93 Mich. 97, 53 N. W. 218 (17 L. R. A. 412). Directors cannot vote a salary, much less a large bonus or compensation in addition to a salary, to one of their number, as president, when he takes part in the proceeding, or his vote is essential to the adoption of the resolution. Wickersham v. Crittenden, 93 Cal. 17, 28 Pac. 788, and cases cited; Gridley v. Railway Co., 71 Ill. 200."
We also cite Graves v. Mono Lake Hydraulic Mining Co., 81 Cal. 303, 22 Pac. 665; Curtin v. Salmon River Hydraulic Gold Mining & Ditch Co., 130 Cal. 345, 62 Pac. 552, 80 Am. St. Rep. 132; Smith v. Los. Angeles I. & L. Co-Op. Association, 78 Cal. 289, 20 Pac. 677, 12 Am. St. Rep. 53; Strouse v. Sylvester, 66 Pac. 660.
The judgment and order appealed from are affirmed.
POLLEY, J., having been of counsel, takes, no part in this decision.
METROPOLITAN CASUALTY INSURANCE COMPANY OF NEW YORK, Appellant, v. BASFORD, Insurance
(139 N. W. 795.) 1. Insurance—State Control-Foreign Insurance Company—"Em
ployer's Liability” Insurance—"Accident and Casualty' In
Laws 1911, Chap. 176, purporting in its title to amend certain acts “pertaining to the capital stock for * employer's liability, * * * accident and casualty insurance companies," although seeming to recognize a distinction between two classes of insurance, yet as matter of fact and law employer's liability insurance is but a branch of accident and casualty insurance; and held, that appellant, a foreign insurance company, being authorized by its charter to do an accident and casualty insurance business, and not expressly forbidden that of employer's liability, the state commissioner of insurance may assume that it
is authorized to engage in the latter class of business. 2. Foreign Statute Constructive Notice.
The state commissioner of insurance will not, nor will the people of this state take notice of the laws of another state.
Foreign Insurance Company-Certificate to do “Business'
Under Laws 1905, Chap. 73, Sec. 2, prohibiting transaction of any business in this state by insurance corporations of certain kinds or issuance of certificate of employer's liability insurance until it has deposited a guaranty fund with the State Treasurer, as amended by Laws 1907, Chap. 110, Laws 1909, Chap. 243, and Laws 1911, Chap. 176, construed as protecting the people against the doing of certain kinds of business without proper safeguards, the word “business” refers only to such business as one of the corporations designated in said act could conduct, if it complied with the conditions thereof; therefore, held, that no matter how broad may be the charter powers of a corporation, it may get a certificate to do one certain class of business by compliance with the law so far as it aims at
doing of that particular business. “Accident and Casualty Insurance"-"Plate Glass Insurance"
Amendment of Statute,
“Accident and casualty insurance,” under Laws 1911, Chap. 176, amending Laws 1905, Chap. 73, embraces "plate glass insurance,” so that, if there are valid amendments bringing accident and casualty insurance companies within this law, a plate glass insurer must comply with its provisions in order to
receive a state insurance commissioner's certificate. Constitutional Law-$tatute-Presumption of Constitutionality
Every legislative act is presumed constitutional and should be sustained by courts, unless the conflict between it and the Constitution is so palpable as to leave no room for reasonable
doubt. Constitutional Law Construction-Mandatory Provisions-Scope
of Title—Judicial Enlargement.
Const., Art. 3, Sec. 21, providing that no law shall embrace more than one subject, which shall be expressed in its title, is mandatory; and when the courts determine that the legislature has disregarded this provision, their plain duty is to declare the act of no effect. Nor can courts, by construction, enlarge
the scope of the title. Statutes—Titles and Subjects—Constitutional Provisions.
Under said Art. 3, Sec. 21, Constitution, Laws 1905, Chap. 73, entitled “An act concerning the powers of surety, title guaranty, employer's liability and burglary insurance and fidelity corporations, to provide for the examination, management and control of the same," by using such definite restrictive terms, excluded the right to legislate as to any class of insurance companies not named therein, including accident and casualty companies.
8. Titles—Constitutional Provisions—Amendment-Matters Germane
to Original Act.
An amendatory act may enlarge scope of the original act, so that the subject-matter of the amendment may materially differ from that of the original act, provided that the subject-matter of the amendment be germane to and be included within the title of the original act; but Laws 1909, Chap. 243, wherein it embraces, in Sec. 1, the subject of “accident and casualty companies," was unconstitutional, since such words could not have been included in the original act under its title, and there was no attempt in the amendatory act to so enlarge upon the title of the original act as to permit of extending thereof to such companies, and such additional subject-matter was not germane to and never became a part of or a valid extension of the original act. Smith, J., and Polley, J., concurring specially.
(Opinion filed February 10, 1913.) Appeal from Circuit Court, Hughes County Hon. John F. HUGHES, Judge.
Application for writ of mandamus on the relation of the Methopolitan Casualty Insurance Company of New York, against O. S. Basford, Commissioner of Insurance of the State of South Dakota. From a judgment refusing a peremptory writ and dismissing the proceedings, relator appeals. Reversed and remanded.
Gaffy, Stephens & Fuller, for Appellant.
If Chapter 73, Laws of 1905, and its amendments was unconstitutional so far as it attempted to impose restrictions upon the plaintiff company, the record shows that they had complied with all other laws and were entitled to enforce the issuance of a permit to do business in this state as a right.
Paragraph 21 of Article 3, Constitution of the state of South Dakota, reads as follows:
"No law shall embrace more than one subject, which shall be expressed in its title."
It is our contention that the chapters aforesaid embrace a subject not expressed in the title of the original act or any of the amendatory acts. The original act, Chapter 73, Laws of 1905, had the following title: "An act entitled: An Act Concerning the Powers of Surety, Title Guarantee, Employers' Liability and Burglary Insurance and Fidelity Corporations, to provide for the Examination, Management and Control of the Same.” There is nothing in the title of Chapter 73, Laws 1905, which could by any in
ference or stretch of the imagination refer to an insurance corporation engaged in writing insurance against casualty to plate glass or anything else, or writing insurance against personal injury, sickness or disablement or any insurance appertaining thereto; nor is there anything in the body of the act that in any way refers to such class of insurance companies. The act is confined strictly to requirements of surety, title grantee, employers' liability, burglary insurance and fidelity corporations, so that so far as that act is concerned, it did not in its title or in its body attempt to legislate concerning accident or casualty insurance companies.
In 1909 the Legislature passed Chapter 243, Laws of 1909, under the following title: “An Act Entitled: An Act to Amend Chapter 73 of the Session Laws of 1905, as Amended by Chapter 110 of the Session Laws of 1907, Relating to Surety, Title Guarantee, Employers' Liability, Burglary Insurance, Fidelity Corporations, and Relating to Deposit of Securities with the State Treasurer.” An examination of this caption under the rules of law made by the courts as evidenced by their decisions would have disclosed that this act was an act to amend Chapter 73, Laws of 1905, and Chapter 110, 1907, which acts purported only to affect surety, title guarantee, employers' liability, burglary insurance and fidelity corporations; so that from that portion of the title stating that it was amendatory to certain acts, no corporation engaged in the business of writing insurance against casualty to plate glass, or any other class of property, could have been apprised that anything in the act of 1909 would affect it; but to make this more specific, they purported in the caption of the act of 1909 to set forth classes of corporations that the act might affect, and they again specified surety, title guarantee, employers' liability, burglary insurance and fidelity corporations. The amendatory act could contain no legislation except that germane to the legislation contained in the original act. Miller v. Herford, 9 N. W. 477; State v. Pierce, 6 N. W. 763; Trumble v. Trumble, 55 N. W. 869; Fish v. Stockdale, 69 N. W. 92; State v. Tibbetts, 71 N. W. 990; People v. Gadway, 28 N. W. 101; State v. Smith, 28 N. W. 241.
But in the case at bar, the Legislature, not content with the use of a caption which did not cover the full subject of the act, attached the misleading statement that it was proposed in the act to legislate only concerning certain classes of corporations, by infer