Hjorth Oil Co. v. Curtis
Hjorth Oil Co. v. Curtis
Opinion of the Court
Frank G. Curtis brought this action against the Hjorth Oil Company, a corporation, to recover the alleged value of his services and expenses in negotiating and making a sale of that company’s leasehold interest in a certain tract of land in Natrona county, this state, upon which the company had drilled a productive oil well, and in procuring from the purchasers an agreement to take the' oil produced by the company upon land owned by it at the market price. Such services and expenses were alleged to be of the reasonable
The petition alleges that the plaintiff is and during the period mentioned therein was an attorney and counsellor at law and engaged in the practice of his profession in the city of Jamestown, New York, and also in the business of a broker and in the sales of stocks, bonds and other properties, and that he was a stockholder of the defendant. Stripped of all other matter of inducement the petition alleges in substance that the plaintiff undertook the sale of the defendant’s interest in the lands aforesaid, and to provide for the sale of oil produced on lands owned by it, at the special instance and request of the defendant, and that the defendant agreed to pay the plaintiff a reasonable sum for his services in addition to his actual expenses in conducting the necessary negotiation for said sale; that pursuant to said agreement the plaintiff made the sale for the sum of seventy-five thousand dollars in cash and 750 shares of the capital stock of a company to be organized by'the purchasers, said shares to include 250 shares of seven per cent, cumulative preferred stock and 500 shares of common stock; that the proposed company was organized, and the stock aforesaid, of the value of $35,000 or more, was about be issued to • defendant pursuant to said sale and the terms thereof; that an agreement was procured from the purchasers to take oil from the defendant at the market price for an indefinite period of time; that plaintiff’s services and expenses in making said sale and contract were reasonably worth the sum of $35,000.
The findings of fact were stated in writing substantially as follows: 1. That defendant is a corporation organized under the laws of New York. 2. That plaintiff is and was since prior to January 1, 1913, engaged in practice as an attorney and counsellor at law and in the business of a broker in the sale of stocks and bonds and other properties. 3. That defendant, prior'to January 1, 1913, became the owner of a certain leasehold estate in an oil placer mining location upon a certain tract of public land situated in Natrona county, in this state, and continued to be the owner thereof until its sale on’April 16, 1913. 4. That subsequent to January 1, 1913, and prior to April 16, 1913, the defendant employed the plaintiff to sell said leasehold interest and agreed to pay him and he agreed to accept a reasonable compensation for his services in negotiating and making such sale. 5. That pursuant to said contract of employment the plaintiff, on April 16, 1913, negotiated and made a sale of said leasehold interest for $75,000 in cash and $50,000 of the common stock and $25,000 of' the preferred stock of a cor^ poration to be organized to own said interest. 6. That thereafter and prior to May 10, 1913, .the sale was accepted, rati
The findings concluded with an order for judgment and a recital that all were excepted to by the defendant. Thereafter the defendant filed a statement of its exceptions to the findings and decision, specifying that it excepted to the 4th and 5th finding of fact, that part of the second finding to the effect that plaintiff had been engaged in the business of a broker, the sixth finding so far as it may imply that defendant ratified or approved any sale or alleged sale by the plaintiff acting in the capacity of a broker for defendant, the conclusion of law and order for judgment. It is shown also by the 'bill of exceptions that a motion for new trial was filed by the defendant stating the following grounds: 1. That the court erred (a) in denying defendant’s motion for non-suit or. for judgment at the end of plaintiff’s evidence In chief, and (b) in denying defendant’s motion for judgment in its favor at the conclusion of all the evidence. 2. That the findings are not sustained by sufficient evidence and are contrary to the evidence. 3. That the evidence is insufficient in law to warrant any finding or judgment in favor of the plaintiff. 4. That the findings are contrary to law.
The case is here on error, with the errors complained of set forth in the petition in error substantially as follows: 1. That the court erred in denying defendant’s motion for non-suit or judgment made at the end of plaintiff’s evidence in chief. 2. That the court erred in denying defendant’s motion for judgment made at the end of all the evidence. 3. That the court erred in its second, fourth and fifth findings
Thus, the question presented is whether upon the evidence and the law applicable thereto the plaintiff was employed and made the sale as alleged and under such circumstances as to entitle him to a reasonable compensation for his services. The evidence is voluminous, comprising several hundred pages of testimony and a large number of exhibits, the latter including, among other papers, the record of the incorporation and the proceedings of many of the meetings of the stockholders and directors of the defendant • company, and numerous letters and telegrams relating to the negotiation for the sale of the property in question and other incidental matters, so that our reference to it must necessarily be confined to stating generally the material facts seeming to be established without substantial conflict, or, where the evidence is conflicting, the character thereof and our conclusion as to its effect in this proceeding to reverse the judgment.
The organization of the defendant company was proposed by William Hjorth, a resident of Jamestown, New York, for the purpose of taking over and operating under an oil lease which he had secured covering certain lands in Natrona county in this state, including the quarter section involved in this controversy. The company was incorporated and organized in June, 1912, under the laws of New York, after a stock subscription list had been circulated and signed. Thereupon the lease aforesaid was taken over by, the company and it. proceeded to operate thereunder. At the organization meeting F. O. Strandberg was elected president of the company, and the said William Hjorth was elected secretary and treasurer. The officers and most of the stockholders, as we understand, resided in or near Jamestown, and the company
Some time in 1912, the exact time not being material, though we understand it to have been in October, the company’s operations under the lease aforesaid resulted in a producing well upon the quarter section of land here involved, and there seeming to have been some delay or difficulty in arranging for a disposition of the oil from that well, the plaintiff interested himself in the matter and corresponded and had an interview with a representative of another oil company concerning it prior to January, 1913, but without any definite 'result. He also corresponded about it with the defendant’s representative in the field, in which correspondence the matter of selling the defendant’s interest in the tract aforesaid was referred to. The matter of this correspondence is only incidental to the present controversy, and is mentioned here only as showing that the question of selling defendant’s interest in the lease upon said tract had been under consideration prior to January, 1913, and the negotiation finally resulting in a sale. Mr. Hjorth, the sec
Nothing definite having been accomplished as to the sale of defendant’s oil or the well aforesaid, or that part of its lease which included the well, the plaintiff was visited at his office in Jamestown early in January, 1913, by Mr. S. S. Cramer of Milwaukee, Wis., who afterwards became one of the purchasers of the defendant’s said interest, the other
“Resolved, that Wm. Hjorth and Frank G. Curtis be and they are hereby authorized to go to Milwaukee, Wis., on behalf of this company, to confer with S. S. Cramer and others relative to the disposition of our oil products or lease, and report at the regular annual meeting of the company to be held Feb. 3, 1913.”
On the following day, January 25, 19x3, the directors held a meeting at which a motion was made and carried to the effect that William Hjorth and Frank G. Curtis be given power to sell the company’s lease on Section 33, (the quarter section here involved), using their best judgment, but at a price not less than $75,000. Pursuant to the resolution and authority aforesaid the plaintiff and Mr. Hjorth went to Milwaukee and there conferred with Mr. Cramer and Mr. Wadhams, and made a written report concerning the matter at the annual meeting of the defendant’s stockholders held on. February 3, 1913. It is unnecessary to refer to the report otherwise than to say that it was stated therein that they had quoted a price for the lease of one hundred thousand dollars cash and one hundred and fifty thousand dollars of eight per cent, preferred stock in a refining company to be formed for the purpose of taking over the lease, and that the conference resulted in their submitting to Wad-hams and Cramer the following written proposition upon which the latter asked an option of sixty days:
*13 “Milwaukee, Wis., Jan. 31, 1913. “Messrs. E. A. Wadhams and S. S. Cramer,
Milwaukee, Wis.
Gentlemen:
Our Hjorth Oil Co. would sell you quarter section No. 33 which has our well No. 1 upon it for $100,000 cash and $150,000 preferred stock in a corporation to be formed to refine the oil from our property. The proposed corporation to be incoporated at not to exceed $1,200,000. The preferred stock shall draw 8% cumulative dividend and equally participate with common stock on all over 8% paid to common stockholders. The Hjorth Oil Co. shall sell all of its oil in the future to your proposed refinery company for the ruling price of oil and you shall take our oil under these conditions. The Hjorth Oil will agree not to enter into the refining business.
Approved Yours very truly,
Wm. Hjorth Frank G. Curtis.”
We understand from the evidence that the record of the proceedings at that meeting does not show any action upon said report. But on the day following the meeting the plaintiff wrote to the prospective purchasers that it had been decided at the meeting to give them an option in accordance with “the enclosure,” and he testified that an option agreement was prepared and sent to them with the letter. The agreement was returned with the statement that it could not be accepted, but that they had been willing to pay $100,000 in cash and $150,000 in common stock in the new company. An amended option was then sent them by plaintiff providing, as we understand, for a division of the stock payment into part preferred and part common, which does not seem to have been accepted, though the time granted for acceptance was afterwards extended a few days and in the meantime several letters concerning it passed between them and the plaintiff, the latter insisting that the property was fully worth more than the price specified in the option agreement in answer to proposals to pay a less amount, the last letter
“Whereas the option does not so provide, you assured me in your correspondence that if you could decide yes or no before the 21 days expired which we extended to you at $100.00 per day, that you wouíd do so. We hope that you will let us know forthwith if you do not want the property at the agreed price, as we figure the $100.00 a day a considerable loss as compared with our other prospects.”
Following the receipt of that letter and referring to it Mr. Wadhams, on April 14, 1913, telegraphed the plaintiff that they assumed a former conversation with the plaintiff a relinquishment of options, and on the same date the plaintiff telegraphed to Wadhams and Cramer asking if they would be at home Wednesday “to confer with us” and to wire reply, responding to which on the same date Wadhams telegraphed the plaintiff an affirmative answer. In the meanT time, on April 10, 1913, at a meeting of defendant’s directors it had been decided “that a committee of three consisting of F. O. Strandberg, William Hjorth, and Frank G. Curtis, as attorney, go to Milwaukee to confer and close a deal with Wadham and his people.” The trip to Milwaukee was delayed a few days, and plaintiff testified that such delay was at his suggestion to await further developments, and on April 15, 1913, another meeting of the directors was held at which a resolution was adopted that Frank O. Strand-berg, William Hjorth, and Frank G. Curtis, as a committee of three, be authorized to sell, assign and transfer any of the property, rights or interests of the company in Wyoming for'such an amount and on such terms and-conditions as said committee, acting jointly, elects, and to sign, seal and deliver the necessary papers.
The committee thus appointed and authorized by these resolutions went to Milwaukee immediately after the meeting of April 15th, and closed the sale with Wadhams and Cramer, which was finally accepted and ratified by the company, as found by the trial court, and on the general terms stated in the findings. It also appears that at a previous
The contract for the sale having been agreed upon on April 16, 1913, the stockholders of the defendant company held a meeting at Jamestown on April 18, 1913, at which gratification was expressed over the consummation of the sale and the thanks of the company were extended to Messrs. Strandberg, Hjorth and Curtis, and from the proceeds to be received from the sale it was decided that a dividend of 200 per cent, be declared. All of the correspondence with the purchasers preceding the sale seems to have been carried on for the Hjorth Oil Company by plaintiff; he also acted generally as spokesman for the committee in their conference with the purchasers; and the money for the cash payment was delivered to the company through his hands.
Before closing this recital of the facts the further fact should be mentioned that Wadhams and Cramer had first learned of the defendant’s property through an agent sent by them to investigate the field in which the property is located, who had reported about this property, and that one of the defendant’s representatives in the field had named $100,000 as a price for which the company’s interest might be purchased, and, further, said agent’s opinion that the property would be cheap at that price, though those facts do ■not seem to have been communicated to the plaintiff. And that report of his agent was the cause of Cramer’s going to Jamestown in January, 1913.
The only material point upon which there is a substantial conflict is whether there was an understanding that plaintiff was or was not to receive compensation for his services or what was said concerning it. The plaintiff testified that after the adoption of the resolution at the January meeting authorizing-him and Mr. Hjorth to go to Milwaukee to con-ter with Cramer and others, some one present asked what he was going to charge and that he replied by saying: “I will go for $15 a day and expenses if I do not close a deal, but if I close a deal I will expect to be paid what is right”; that Mr. Hjorth- then rose and said that he would go for nothing except his expenses, and that he, the plaintiff, then said: “I will go for nothing except my expenses unless I close a deal. If I close a deal I will expect what is right, for I anticipate the laborer is still worthy of his hire.” And he is corroborated in this by two of the stockholders who were present at the meeting, one of whom had offered the resolution aforesaid. In passing it might be said that Mr. Hjorth had been representing the company in the field, and was receiving a salary of $150 a month when away from home. Most of the witnesses for defendant, who were examined on the subject, admitted that something was said at the meeting aforesaid about plaintiff’s compensation, but testified that what was said or what they understood was that plaintiff was to receive $15 a day, his usual fee when away from home as added by some of the witnesses, in addition to expenses, if a deal was closed or a sale made, and such witnesses generally denied that plaintiff, at such meeting, made the statement aforesaid about a laborer being worthy of his hire, some of them testifying that the statement was made at a meeting held after the sale.
The only evidence as to the reasonable value of plaintiff’s services is his testimony fixing it at “$35,000 and more,” and stating the basis or percentage upon which it was computed at that amount, and explaining the reasons therefor, including the time occupied, the advantage to the company from the sale and the provision in the contract for disposing of its oil, and other matters considered in estimating such value. The. defendant offered no evidence on the subject.
There is sufficient evidence to sustain the finding that the plaintiff, in addition to his law practice, was engaged in the business of a broker in the sale of stocks, bonds and other properties, but that fact does not seem to us to be very material, except as showing a reason for the plaintiff’s employment or appointment to negotiate and make the sale. The fact of his experience in such matters together with the fact that he had been in correspondence with the parties, had met one of them, and proposed their purchase of the property, may have been considered in appointing him as one of a committee to confer with the prospective purchasers and with authority to negotiate and consummate the sale. In our view of the case, under the issues and upon the evidence, the right of the plaintiff to compensation for his services in connection with the sale does not depend upon his having been employed strictly or distinctively as a broker, and for that reason it is not essential to his recovery of a reasonable compensation that he should have produced the buyers or been the sole procuring cause of the sale, although we are inclined to the opinion that if his employment should be considered as calling for his services strictly as a broker the evidence would be sufficient to sustain a finding to the effect that he had produced the buyers and was the procuring cause of the sale, within the rule under which those conditions are to be considered in determining a broker’s right to compensation.
As we understand and construe the petition and findings, therefore, the right of the plaintiff to recover the reasonable value of his services is not thereby limited to services rendered under an employment distinctively or strictly as a broker, but will sustain the judgment if upon the law and the evidence the plaintiff is entitled to recover at all for his services renderd under his appointment aforesaid. And we deem it unnecessary to determine whether the evidence shows
His services, however, were such as are usually performed by a broker or agent in the sale of property belong
It is well settled that when a stockholder, who is not an officer or director, renders a service to the corporation by proper request or authority a contract is implied to pay the reasonable value of his services, unless the circumstances negative such implication, as by showing that the services were to be gratuitous. (2 Thomp. on Corp. Sec. 1730; Goodin v. Dixie-Portland Cement Co., (W. Va.) 90 S. E. 544; Fitzgerald Const. Co. v. Fitzgerald, 137 U. S. 98; 10 Cyc. 900, 935, 1034; Cheeney v. Lafayette, B. & M. Ry. Co., 68 Ill. 570, 18 Am. Rep. 580; Holder v. Lafayette, B. & M. Ry. Co., 71 Ill. 106, 22 Am. Rep. 89.) And by the great weight of authority such a contract may be implied in favor of a director or other officer as to services outside the scope of his official duty. (2 Cook on Corporations, Sec. 657; 3 Clark & Marshall on Pfiv. Corporations, Sec. 671; Montana Tonapah Min. Co. v. Dunlap, 196 Fed. 612; Dunlap v. Montana Tonapah Min. Co., 192 Fed. 714; Huffaker v. Krieger’s Assignee, 107 Ky. 200; Paine v. Kentucky Refining Co., 159 Ky. 270; Santa Clara Min. Association v. Meredith, 49 Md. 389; National Loan & Inv. Co. v. Rockland Co., 94 Fed. 335; Barenstecher v. The Hof Brau, 67
We find the rule as to services rendered by one who is only a stockholder well stated in Gooding v. Dixie-Portland Cement Co., supra, as follows:
“The principle underlying the rule respecting directors is that they are trustees for the stockholders, and that in the absence of express contract they should not be permitted to recover for services rendered in the performance of the ordinary duties pertaining to their offices upon any implied contract therefor; but the reason for this rule is not generally applicable to stockholders. They stand.in no fiduciary relation • to the corporation, and we hold, with the great weight of authority, that when the circumstances of the employment do not negative such implication, and the stockholder is called upon by corporate authority to perform some special service, whether of an official character or otherwise, a contract is raised by implication to pay him what his services are reasonably worth.”
In Clark and Marshall on Corporations, it is said in substance that while the directors of a corporation are not entitled to salary or other compensation when performing nothing more than the usual and ordinary duties , pertaining to their office, in the absence of an express provision or agreement for compensation when the services are performed, such rule applying also to directors serving in an official capacity, the rule, by the weight of authority, does not apply to services rendered by a director, president, vice-president or other managing officer, as a mere attorney, broker, or agent, or in a purely ministerial capacity, or otherwise outside of the usual and ordinary duties of his office; and that by the overwhelming weight of authority the doctrine denying compensation to directors and other
In National Loan & Inv. Co. v. Rockland Co., supra, Circuit Judge San'born, speaking for the U. S. Court of Appeals for the Eighth Circuit, discusses the rule as to directors and officers, and concludes as follows:
“Some authorities have gone so far as to hold that officers of a corporation, who are also its directors, cannot recover for the discharge of their duties unless their compensation is fixed by a by-law or by a resolution of the board before their services are rendered. * * * * We are unwilling to hold that such officers should be deprived of all compensation because the amounts of their salaries were not definitely fixed before they entered upon the discharge of their duties. A thoughtful and deliberate consideration of this entire question, and an extended consideration of the authorities upon it, has led to the conclusion that this is the true rule: Officers of a corporation, who are also directors, and who, without any agreement, express or implied, with the corporation or its owners, or their repesentatives, have voluntarily rendered their services, can recover no back pay*24 or compensation therefor; and it is beyond the powers of the board of directors, after such services are rendered, to pay for then:, out of the funds of the corporation, or to create a-debt of the corporation on account of them. (Citing cases.) But such officers, who have rendered their services under an agreement, either express or implied, with the corporation, its owners or representatives, that they shall receive reasonable, but indefinite, compensation therefor, may recover as much as their services are worth; and it is not beyond the powers of the hoard of directors to fix and pay reasonable salaries to them after they have discharged the duties of their offices.”
In the Maryland case above cited, Santa Clara Mining Association v. Meredith, after stating the general rule as to the necessity for an express contract to entitle a director or president of a corporation to recover compensation for services within the line and scope, of his duty as such, the court say: “But if a president or director of a corporation renders services to his corporation which are not within the scope of, and are not required of him by, his duties as president, or director, but are such as are properly to be performed by an agent, broker or attorney, he may recover compensation for such services upon an implied promise.”
In Huffaker v. Krieger’s Assignee, supra, directors were held entitled to compensation for their services in disposing of the property of the corporation, through which the corporation was relieved of its embarrased financial condition, and enabled to pay fits debts and a considerable dividend to the stockholders; it being held that such services did not pertain to the ordinary duties of the office of director and a contract was implied to pay for them; it appearing that to effect the sale the directors had been required to expend large amounts from their personal means, to travel to distant cities, and remain there for months. And in Paine v. Kentucky Refining Company, supra, it appeared that a director had been appointed a member of a committee to audit and investigate a great mass of books and accounts of the corporation, and eighteen subsidiary companies, in an effort to
If a director or managing officer is permitted to recover upon an implied contract a reasonable compensation for services rendered outside of his official duties, it must certainly be true that one who does not hold such official position, but is merely a stockholder, or if he be also an assistant secretary, may likewise recover a reasonable compensation for his services when called upon by corporate authority to perform them, and especially when it has been agreed or understood that he was to be paid for such services. The plaintiff was not in fact assistant secretary at the time of the sale nor during the latter and greater part of the period of the negotiations, but there is nothing in the evidence to show that the duties of that position were other than merely ministerial, and clearly they did not include the carrying on of negotiations for and selling valuable property of the corporation. Something is said in the brief about the plaintiff, as assistant secretary, being a salaried officer, but as we recall the evidence he was paid for his service in that capacity. only the sum of fifteen dollars per month.
We have thus considered the case upon its merits under the evidence and the findings and the exceptions to the findings, notwithstanding that we have failed to find in the bill of exceptions anything to show an exception to the overruling of the motion for new trial, although the journal entry of the overruling of the motion in the record outside the bill -shows an exception. But the question was not raised or suggested by counsel. For the reasons aforesaid we are of the opinion that the judgment must be affirmed, and it will be so ordered. Affirmed.
Reference
- Full Case Name
- HJORTH OIL COMPANY v. CURTIS
- Cited By
- 2 cases
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- Published