Hyman v. Karl Stern Co.

JAMES, J.

Plaintiff brought this action to recover on two counts for amounts of salary alleged, to be unpaid to her

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by the defendant corporation. Judgment was in her favor, and defendant has appealed.

It was shown in evidence that, about the 1st of April, 1917, Karl Stern, who was then conducting a business similar to that which was and theretofore had been engaged in by the plaintiff, proposed to the plaintiff that she consolidate her business with that of Stern. The terms of consolidation were agreed upon and the defendant corporation was formed and shares issued in the proportion of ten to Stern and one to plaintiff. Some few shares were placed in the hands of an employee for the purpose of making a third director. Stern characterized himself as the manager of the concern. By-laws were adopted, among which was one containing the provision that salaries of the officers and employees should be fixed by the board of directors. It does not appear that the directors formally acted under that provision. As a part of the arrangement between the plaintiff and Stern, the matter of salaries to be drawn by each of them was considered and it was agreed that Stern should receive fifty dollars per week and the plaintiff twenty-five dollars. However, according to the plaintiff’s testimony, Stern said that as the business needed capital he and the plaintiff should not draw the full amount of their salary at the start, and, agreeing to that suggestion, plaintiff for the first year drew but fifteen dollars per week. At the end of the first year a meeting of the stockholders was held and an advance of two dollars and fifty cents per week was allowed on account of the salary to be paid to the plaintiff. Plaintiff, from April 1 to August 10, 1918, drew seventeen dollars and fifty cents per week. At the latter date she ceased to render any services and later brought this action. In her complaint she claimed the right to recover the unpaid ten dollars per week for the first year’s work and twelve dollars and fifty cents per week for that period of time from April 1, 1918, to August 10th of the same year.

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The first contention of appellant is that the condition of the by-law declaring that the directors should fix the salaries of officers and employees was not complied with, and that any arrangement entered into between Stern and the plaintiff as to salaries to be. paid was invalid. We think there is no merit in this contention. If the two persons who owned and controlled the corporation to all substantial effect