Bennett v. Lenoir

SCHOTTKY, J. pro tem. Ellen Bennett and Isabel Carl, registered nurses and members of the Directory of Registered Nurses of Alameda County, Inc., a nonprofit corporation organized for the purpose of placing registered nurses in employment, commenced an action against the directory and its directors and also against Jean Bar the and Bertha Baillard Cunliff, registered nurses, who were, respectively, executive director and assistant executive director, to restrain the latter two from operating an employment service for nonprofessional people under the name of Western States Placement Bureau or any similar name, or from the premises of the directory, and for an accounting of the proceeds of such prior operation, on the ground that such service had been a subsidiary operation of the directory and had been obtained by defendants Barthe and Cunliff unlawfully and through fraud and undue influence upon the directors. The complaint alleged that plaintiffs brought the action in a representative capacity, and had made no demand upon the officers and directors of the corporation for the reason that such demand would have been useless because the officers and directors were under the domi[526]nation and control of defendants Barthe and Cunliff. The trial court found in favor of defendants on all issues and this appeal is by plaintiffs from the judgment rendered in favor of defendants.

There was little, if any, conflict in the evidence, and the factual situation as disclosed by the record is as follows:

Defendant Jean Barthe was an employee and agent of the Directory of Registered Nurses of Alameda County, Inc., with the title of executive director. She was invested by said corporation with full authority in the management of corporation affairs and had power to employ and discharge all office force and employees of the corporation. She had authority generally to assume full charge and control of all of the activities of the corporation, subject only to the control of the board of directors. The board of directors and the corporation reposed complete trust and confidence in her. She had been executive director of the directory since its inception, a period of 16 years. She directed both the directory and the subsidiary operation of the placement service from the same premises. She was not a member of the board of directors but generally attended meetings of the board.

On December 28, 1946, a meeting of the board was properly called and held at Miss Barthe’s house with all members present except one. At this meeting Miss Barthe called the attention of the directors to the fact that her contract of employment would expire at the end of 1946, that the past year had been a “very difficult” one financially, and that she desired to have some independent business—an employment agency of her own. The entire question of Miss Barthe's employment was discussed, everyone present agreeing that they desired her to remain, and the directors suggested that she have her attorney draw up a proposed contract. This was the first time the question of the directory’s relinquishing to Miss Barthe the service for placement of nonprofessionals had come before the directors, and at that time Miss Barthe explained to them that she thought such employment service was capable of earning $800 to $1,000 a month with proper handling (i.e., as a separate organization for nonprofessional nurses, technicians, etc., so that collections could more easily be enforced), but that during the year 1946 it had earned only "Six hundred and some dollars.” The next meeting was held on January 25, 1947, at which time the contract here in dispute was presented to the board of directors by Miss Barthe. It was available for all the directors to read, though all may not have