Fox v. . Arctic Placer Mining Milling Co.

Plaintiff, a mining engineer, rendered "consulting service" to the defendant corporation, of which he was vice-president and a director, without any agreement as to compensation. The services were valuable.

To make out his case, he must show an implied contract to pay him. To do this he must satisfy a jury:

1. That the services rendered by him were outside of his duties as such director and vice-president.

2. That they were (a) rendered with the expectation of pay, and (b) accepted under such conditions that the officers of the defendant as reasonable men ought to have understood that they were to be paid for. (Marcy v. Shelburne Falls Colrain St.Ry. Co., 210 Mass. 197; Fitzgerald M. Construction Co. v.Fitzgerald, 137 U.S. 98, 111.)

What can be said, as matter of law, as to the duties of plaintiff as vice-president and director? Can it be clearly said that it was the duty of plaintiff, in his capacity as an officer and director of defendant, to render gratuitously the services sued for? Was he under any obligation to consult with and advise the other officers of the company, not in the absence of the president, but outside of meetings of the directorate, without pay?

"Neither the charter nor the by-laws of the corporation cast any special duties on the vice-president or director. The vice-president was only required to act in the absence of the president, and no special duties of management were in terms cast upon the president. It was provided that he preside at all meetings, sign all certificates of stock, contracts, checks, etc., `and generally do and perform such other duties as are incidental to his office and not in conflict with these by-laws and the articles of association.' No duty was cast on any individual director as such. The board of directors, as a body, were charged with the usual duty of care of the affairs of the corporation, but all the power and duty cast upon them was upon them as a board, and not individually." (Corinne Mill, Canal Stock Co. v. Toponce, 152 U.S. 405, at p. 408.)

What was said in Kavanaugh v. Commonwealth Trust Co. (223 N.Y. 103) as to the affirmative duty of a director in a financial institution, deals with him as a member of the board and not as an individual. It is only "as a body" that directors are chosen "to manage and control the business of the corporation." It may not well be said that the services which plaintiff performed were those which an unpaid director or vice-president owes to his company. Such a one is not always at the beck and call of the corporation, when his duties are not so defined.

What can be said as to the inference that the services rendered by plaintiff were not gratuitous? No obligation is implied from the mere rendering of beneficial services by an officer to his corporation, outside his duties as such officer. When a director is called on to render services other than acting on the board in the intelligent direction of the affairs of his company, the services are ordinarily deemed gratuitous if they are mere matters of advice as to policy, or even more important services if not customarily compensated.

"It is common knowledge that valuable services are rendered frequently to business, banking, insurance and public service as well as to charitable corporations by their president and directors under circumstances which negative any presumption that compensation is to be paid." (Marcy v. Shelburne Falls Colrain St. Ry. Co., supra.)

The law does not allow corporations to blunder by implication into obligations to their officers, not contemplated at the time services were rendered.

If plaintiff had been neither vice-president nor director of defendant, contractual liability would ordinarily be inferred as matter of law from the rendition of valuable services by him at the request of the corporation. But here the presumption of fact is that, although the services were valuable, there is no intention either to ask for or to make payment when an officer of a corporation is called in to consult and advise with the other officials. Has that presumption been overcome by the circumstances, showing the real intention of the parties in this ease? I think not. Officers of a corporation are not expected to charge for such services and no reasonable man would understand that compensation was expected therefor. When a director acts asa part of the corporation, he is understood to act gratuitously and no agreement is implied to the contrary. When we come to the draft of the dredging lease and the compilation of the surveys by plaintiff, in view of the previous dealings of the parties, a jury might say that these were peculiar, extra and special services, beyond consultation and advice, which plaintiff would not, in the ordinary course of business, be expected to burden himself with without compensation. If he had been called upon merely to prepare such papers for the company, I think a reasonable man might say that he stood as a lawyer director, retained to act for his company in a law suit, expecting pay and with the tacit understanding that he should be paid. Yet it might be said that even these services were the mere incidents and indicia of intelligent advice, rendered without reward or the hope thereof, except as the corporation's prosperity might be thus advanced, to plaintiff's indirect gain and advantage.

I concur that a new trial should be granted.