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Merrill v. United Box Board & Paper Co.

Supreme Court of New York, Appellate Division

March 23, 1911

CYRUS S. MERRILL, Respondent,
v.
UNITED BOX BOARD AND PAPER COMPANY, Appellant.

Page 834

APPEAL by the defendant, the United Box Board and Paper Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Albany on the 22d day of August, 1910, upon the report of a referee.

COUNSEL

Frederick E. Wadhams [James Todd of counsel], for the appellant.

William S. Ostrander, for the respondent.

PER CURIAM:

So far as the payments already made to the plaintiff are concerned, the court finds no reason for requiring him to refund them. The propriety of a contract for five years under all the circumstances of the case is not apparent. The burden of proof rested with the plaintiff to show its fairness and propriety when he seeks to recover for time not served. He has not met that burden, and, under all the circumstances, the court is satisfied he should receive no further compensation after the notice was given terminating his services. The counterclaim for $5,000, the balance due upon the bond account, was sustained by a fair pre-ponderance of evidence.

The judgment should, therefore, be reversed upon the law and facts, the referee discharged and a new trial granted, with costs to the appellant to abide the event.

All concurred, BETTS, J., in result in opinion, except HOUGHTON, J., dissenting and voting for an affirmance of the judgment, with a deduction, however, of the $5,000 counterclaim from the plaintiff's recovery.

BETTS, J. (concurring):

I think this contract comes under the class of cases where a director undertakes to and does contract with his corporation by his fellow-directors. Such a contract is not void, but is voidable at any time, at the instance of the directors.

This was a contract for the employment of a director for a term of five years, of which about three years had elapsed when plaintiff was discharged and the contract terminated. Upon the change of the personnel of the directors, this contract was promptly disaffirmed and the plaintiff discharged from any further service to the defendant.

Page 835

The plaintiff accepted this employment and entered upon this contract in the light of the law as it existed at the time, and he cannot complain if his corporation with whom he contracted saw fit at any time to disaffirm that contract, as it was simply acting within its rights.

Perhaps the first case in this State in which the principle above enunciated was set forth, and certainly one in which it was presented with much vigor and clearness, was an opinion by the chancellor in Davoue v. Fanning (2 Johns. Ch. 252, 257), written in 1816, which was a case where a trustee under a will sought to and did sell the trust estate, and himself became interested in the purchase thereof. The chancellor held: 'The case, therefore, falls clearly within the spirit of the principle that if a trustee, acting for others, sells an estate and becomes himself interested in the purchase, the cestui que trust is entitled to come here, as of course, and set aside that purchase, and have the ...


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