New Capital for Small Businesses, Inc. v. Saunders

SALSMAN, J.

This is an appeal by Cyril Saunders from a judgment awarding respondent $14,000 plus interest and costs, on a common count for money had and received.

Appellant, an attorney at law, organized the respondent corporation February 9, 1960, and was its counsel. At time of organization there were three directors. On February 13, 1960, the board of directors was increased from three to seven. Appellant was one of the seven first directors, and remained a director at all times involved in the present controversy. The respondent corporation secured a permit from the Commissioner of Corporations for the sale of its stock, and on or about March 16, 1960, appellant made application to the Commissioner of Corporations for authority to act as agent of the respondent corporation in the sale of its stock. The commissioner’s certificate of authority to act as respondent’s agent issued to appellant on April 7, 1960. In the application appellant did not reveal the fact that he was a director of respondent. It was appellant’s claim at trial that on March 5, 1960, he had been authorized by a resolution of the board of directors of respondent to make such an application, and that it was agreed by the board of directors he was to receive a 10 per cent commission on stock sales. He produced a copy of the minutes of the claimed meeting of the board, dated March 5, 1960. Two directors, however, testified no such meeting ever took place; that appellant was not authorized to act as agent in the sale of stock, nor was there any understanding or agreement he was to receive a commission on stock sold. The trial court found the claimed meeting of the board did not take place

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and that appellant was not authorized by the respondent corporation to act as its agent or to be paid a commission on the sale of its stock. Respondent’s stock was quickly sold, most of it through the efforts of persons other than appellant. On May 13, 1960, and July 12, 1960, appellant had issued to himself checks totalling $14,000 which he claimed as commissions on the sale of stock. The checks required two signatures, one of which was that of appellant, and the other that of respondent’s treasurer. The trial court found that these funds were taken and removed from respondent's treasury without the knowledge, consent, approval or subsequent ratification of its board of directors, and thereupon rendered its judgment in respondent’s favor.