West v. Camden

135 U.S. 507 (1890)

WEST
v.
CAMDEN.

No. 278.

Supreme Court of United States.

Argued April 17, 18, 1890. Decided May 19, 1890. ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF MARYLAND.

Mr. S.T. Wallis and Mr. E. Calvin Williams for plaintiff in error.

Mr. Thomas W. Hall and Mr. Charles Marshall for defendant in error.

MR. JUSTICE BLATCHFORD, having stated the case as above reported, delivered the opinion of the court.

The first instruction virtually took the case from the jury, although it appears that, on a prayer by the defendant to the court to instruct the jury that the plaintiff had offered no evidence legally sufficient to entitle him to recover, and that their verdict must be for the defendant, the court refused to grant that prayer.

We think that under no circumstances could the plaintiff recover in this action, for the reason that the alleged contract was void as against public policy, and that the first instruction to the jury was correct. From the plaintiff's own testimony it appears that his only reliance was on the use of the defendant's influence as an officer of the Baltimore United Oil Company, and on his control over the stock in that company held by the Standard Oil Company. The plaintiff says of the defendant: "He was to be president of the company, and I supposed he would remain there and continue me and keep me in the position as vice-president and general manager. If he was to be president and hold five-sixths of the stock and continue to hold it, it was a surety that I should remain in the position."

The agreement alleged to have been made was one on the part of the defendant whereby he might be required to act contrary to the duty which, as an officer of the Baltimore United Oil Company, he owed to that company and to the stockholders other than the plaintiff. The same rule which is applicable to the case of a public office applies to the present case, although it does not appear that the defendant was to receive direct personal pecuniary compensation or gain for what he was to do. The plaintiff, on his own showing, dealt with the defendant in reference to the fiduciary relation which the latter bore to the stockholders, both of the Standard Oil Company and of the Baltimore United Oil Company. The agreement alleged was an agreement which bound the defendant as to his future action as a director of the Baltimore United Oil Company, and an agreement to keep the plaintiff permanently in the position of vice-president of that company, irrespective of its interests. It amounted to a stipulation on the part of the defendant that no contingency should happen which should require a change of management and a reduction of expenses.

The principle involved is well settled in regard to public employments. Meguire v. Corwine, 101 U.S. 108, 111; Oscanyan v. Arms Co., 103 U.S. 261, 272, 273. The same doctrine has been applied to the directors of a private corporation, charged with duties of a fiduciary character to private parties, on the view that it is public policy to secure fidelity in the discharge of such duties. Wardell v. Railroad Co., 103 U.S. 651, 658; Woodstock Iron Co. v. Extension Co., 129 U.S. 643, and cases there cited, especially Fuller v. Dame, 18 Pick. 472, 483. See, also, Guernsey v. Cook, 120 Mass. 501; and Woodruff v. Wentworth, 133 Mass. 309, 314.

We think this principle is equally applicable, on the ground of public policy, although there was not to be any direct private gain to the defendant; for, as was said by the Circuit Court in this case, it was the right of the other stockholders in the Baltimore United Oil Company "to have the defendant's judgment, as an officer of the company, exercised with a sole regard to the interests of the company." A personal liability for damages on the part of the defendant, in case the plaintiff should be removed after an agreement of the character alleged, was calculated to be a strong incentive to the defendant to act contrary to the true interests of the company and of its other stockholders. Bliss v. Matteson, 45 N.Y. 22; 1 Morawetz Corp. §§ 516, 519.

These views cover also the last instruction to the jury; and it becomes unnecessary to examine the question raised as to the second instruction, which was to the effect that, as the alleged contract was not in writing, the plaintiff could not recover upon it, because it was invalid under the fifth clause of the fourth section of the statute of frauds of Maryland, as being an agreement not to be performed within the space of one year from the making thereof; for, even though that might have been an erroneous instruction, it did no harm to the plaintiff, because he could not recover in any event. Deery v. Cray, 5 Wall. 795, 807; The Schools v. Risley, 10 Wall. 91, 115; Deery v. Cray, 10 Wall. 263, 272; Brobst v. Brock, 10 Wall. 519, 528; Barth v. Clise, 12 Wall. 400, 403; Tweed's Case, 16 Wall. 504, 517; Walbrun v. Babbitt, 16 Wall. 577, 580, 581; Decatur Bank v. St. Louis Bank, 21 Wall. 294, 301; McLemore v. Louisiana State Bank, 91 U.S. 27, 28; Mobile & Montgomery R'y. Co. v. Jurey, 111 U.S. 584, 593; Lancaster v. Collins, 115 U.S. 222, 227, and cases there cited; Evans v. Pike, 118 U.S. 241, 250.

Judgment affirmed.