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tion it was originally executed. They have not acquired any rights upon the faith of it. The contracts which they seek to enforce were not secured by defendant from those who expected protection under it. We not only think that it is legal and equitable that defendant's revocation should be effective as against these parties, but that it would be extremely inequitable to hold the reverse.

The learned counsel for the plaintiff has called to our attention many cases which he claims are opposed to the views expressed. While some of them may contain isolated expressions which seem to sustain his view, we think that all of them which ought to be at all controlling upon this court may be clearly distinguished from the case at bar, and we shall only refer briefly to a few of them.

In Connecticut Mut. Life Ins. Co. v. Spratley, 172 U. S. 602, 19 Sup. Ct. 308, 43 L. Ed. 569, it appeared that plaintiff in error had been engaged for many years in transacting a general insurance business in Tennessee under a statute which, amongst other things, provided that any corporation that had any transaction with persons or concerning any property situated in the state through any agency whatever acting for it within the state should be held to be doing business within the meaning of the act, and also that process might be served upon any agent of the corporation found within the county where the suit was brought no matter what character of agent such person might be. Thereafter, having issued many policies, the corporation assumed to withdraw from the state by recalling its agents and refusing to take new risks or issue new policies within the state. At this time many policies were outstanding upon which it continued to collect premiums through agent residing in another state. Action was brought in the courts of Tennessee upon policies issued for the benefit of residents of that state while the company was regularly engaged in doing business there and before its attempt to withdraw, and service in said action was made upon a conceded representative of the company who had come into the state for the purpose of adjusting and settling losses under said policies. It was held that under the circumstances of that case the company was doing business within the state, and that service was properly made upon it in the manner indicated. It will be at once observed that independent

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with permission certain conditions for the service of process, and the principle upheld was that the company could not defeat the rights of the policy holder and by an attempted withdrawal from the state force him into some foreign jurisdiction.

Mutual Reserve Fund Life Association v. Phelps, 190 U. S. 147, 23 Sup. Ct. 707, 47 L. Ed. 987, was based upon the same principle of upholding in favor of a citizen of Kentucky who had received from the plaintiff in error a policy of insurance while it was regularly transacting business in that state, the right to institute action by service of process upon the insurance commissioner in accordance with the provisions of a statute which permitted the company to transact business in that state under conditions allowing such service of process, notwithstanding the company after issuing the policy had attempted to withdraw from the state and cancel the right of service upon the commissioner.

In Birch v. Mutual Reserve Life Ins. Co., 91 App. Div. 384, 86 N. Y. Supp. 872, affirmed without opinion 181 N. Y. 583, 74 N. E 1115, judgment was recovered in the state of North Carolina upon various contracts of life insurance executed in that state while the defendant was regularly engaged in transacting its life insurance business there. Action was commenced by service of process upon the insurance commissioner, and it was held that such service was good, although the defendant had attempted to withdraw from the state and revoke its power of attorney before service was made. We see nothing in any of these cases which impairs the force of the conclusions reached by

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JACOBSON et al. v. BROOKLYN LUMBER CO. et al.

of the statutory provision defining what (Court of Appeals of New York. Feb. 27, 1906.)

should be held to constitute doing business within the meaning of the act under which plaintiff in error operated in the state of Tennessee, this decision was entirely in line with the principle adjudicated by this court in the Woodward Case. The rights involved were those of a policy holder resident in the state who had there contracted with the company while it was transacting business in that state under a statute which coupled

1. APPEAL-REVIEW-INTERMEDIATE COURTS -QUESTIONS OF FACT.

Under Const. art. 6, § 9, providing that the jurisdiction of the Court of Appeals, except in certain cases, shall be limited to the review of questions of law, and that no unanimous decision of the Appellate Division of the Supreme Court that there is evidence supporting a finding of fact shall be reviewed, an action decided before the enactment of Code Civ. Proc. 1023 (Laws 1904, p. 1252, c. 491), will not be reviewed as to such facts, although appellant did not have opportunity to obtain at Special

Term a ruling upon additional facts which he deemed established by the evidence. 2. SAME.

Under Const. art. 6, § 9, it is only the evidence and the proceedings on the trial that the court will not examine, and, the pleadings being part of the judgment roll, they may and should be read by the Court of Appeals in connection with a decision upon the issues to ascertain whether the facts admitted and found sustained the judgment.

3. CORPORATIONS-ACTION AGAINST OFFICERS - RIGHT OF STOCKHOLDERS - CONDITION. PRECEDENT.

A prior demand upon the corporation to sue is not a prerequisite to an action by the stockholders against the executive officers, who also constitute a majority of the acting board of directors.

[Ed. Note. For cases in point, see vol. 12, Cent. Dig. Corporations, § 792.]

4. SAME-DEFENSES.

Where the officers of a corporation have unlawfully credited themselves with amounts to which they were not entitled, and the stockholders bring an action against them therefor, it is no defense that the net assets of the corporation have not been depleted but increased, and that the amounts taken as salaries were legitimate and commensurate with the increased business and resulting profit,

5. SAME.

In an action by stockholders of a corporation against the officers for wrongfully occasioning a loss to the corporation, it is no defense nor a mitigating circumstance that, despite such illegal and wrongful acts, the corporation is still solvent, or that the stock has increased in value during the time when the alleged illegal and wrongful acts have been committed. 6. SAME-OFFICERS-INDIVIDUAL BENEFITS.

Officers of a corporation cannot, while acting in their fiduciary capacity, make an agreement with themselves individually and for their personal benefit.

[Ed. Note.-For cases in point, see vol. 12, Cent, Dig. Corporations, § 1340.j

Appeal from Supreme Court, Appellate Division, Second Department.

Action by Morris Jacobson and others against the Brooklyn Lumber Company and others. From a judgment for defendants (92 N. Y. Supp. 1130, 101 App. Div. 609), plaintiffs appeal. Reversed..

Joseph M. Gazzam, Jr., for appellants. George C. Case, for respondents.

CHASE, J. The plaintiffs are minority stockholders of the defendant corporation. This action is brought by them on behalf of themselves and all other stockholders similarly situated to recover for the corporation from the individual defendants the amounts received by them for salaries as officers of the corporation from the year 1892, and to cancel any and all alleged resolutions on the books of the corporation purporting to authorize said individual defendants to credit themselves with certain amounts for accumulated or deferred salaries, and also to redress other alleged wrongs to the corporation. The issues were tried at Special Term, and a decision was rendered stating separately certain findings of fact and conclusions of law, upon which. judgment was

entered dismissing the complaint of the plaintiffs. An appeal was taken from said judgment to the Appellate Division, where the judgment was unanimously affirmed, and from the judgment of affirmance an appeal is taken to this court.

The findings of fact contained in said decision are disconnected and not sufficiently complete to present fully the appellants' contention, and plaintiffs insist that, notwithstanding the unanimous decision of the Appellate Division, this court should consider not only the facts as found in the decision, but also the facts which are admitted by the pleadings and the facts established on the trial by uncontroverted evidence. This ac tion was decided after September 1, 1903, when the last amendment to section 1022 of the Code of Civil Procedure (chapter 85, p. 237, Laws 1903) took effect, but before the re-enactment of section 1023 of the Code of Civil Procedure (chapter 491, p. 1252, Laws 1904). The plaintiffs claim to be at some disadvantage because they did not have an opportunity to present to the court at Special Term a statement of the facts which they deemed established by the evidence and the rulings on questions of law which they desired the court to make, and they urge that there are therefore special reasons in this case why the court should examine the evidence to see whether there are facts not found in the decision, but which were established by uncontroverted evidence. It is provided by section 9 of article 6 of the Constitution of the state of New York as follows: "After the last day of December, one thousand eight hundred and ninety-five, the jurisdiction of the Court of Appeals, except where the judgment is of death, shall be limited to the review of questions of law. No unanimous decision of the Appellate Division of the Supreme Court that there is evidence supporting or tending to sustain a finding of fact or a verdict not directed by the court shall be reviewed by the Court of Appeals. Section 191, Code Civ. Proc.

This court, in Hilton v. Ernst, 161 N. Y. 226, 55 N. E. 1056, say: "The facts as found are absolutely conclusive here. The appellants can neither add to them nor take from them by urging that, as a question of law, there are facts not found which rest on undisputed evidence, and facts found which are unsupported by any evidence." The court was then considering a case where a judgment had been entered upon a report of a referee, which stated separately his findings of fact and conclusions of law, and in which the judgment so entered had been unanimously affirmed in the Appellate Division. In Sweet v. Henry, 175 N. Y. 268, 67 N. E. 574, the court say: "This court is confined to the findings of fact and is, not permitted to look into the record for additional facts." See, also, Rodgers v. Clement, 162 N. Y. 422 56 N. E. 901, 76 Am. St. Rep. 342, and Nation

al Harrow Co. v. Bement & Sons, 163 N. Y. 505, 57 N. E. 764.

The reasons why the court will not look into the record for additional facts have been heretofore fully stated, and such reasons do not permit of any exception to the rule by reason of the fact that the plaintiffs have not had an opportunity to obtain at Special Term a ruling upon additional facts which they deemed established by the evidence. The evidence, therefore, cannot be examined for the purpose of ascertaining whether there are facts established by uncontroverted evidence not included in the findings contained in the decision. The Constitution does not in terms or otherwise prohibit an examination of the pleadings to ascertain what facts are admitted thereby. It is provided by section 522 of the Code of Civil Procedure that "Each material allegation of the complaint, not controverted by the answer, and each material allegation of new matter in the answer, not controverted by the reply, where a reply is required, must, for the purposes of the action, be taken as true." The decision of the court or the report of a referee is required "upon the trial of the whole issues of fact." Code Civ. Proc. § 1022. It is commendable practice for the purpose of preserving a continuity of statement to include in the findings of fact a complete story of the transaction, so far as the same is material and can be given from the facts admitted in the pleadings or determined upon the trial of the whole issues of fact, but the statutes do not require findings of fact, except upon the issues tried.

It was held by this court, in Wiltsie v. Eaddie, 4 Abb. Prac. (N. S.) 393, that an exception does not lie to the report of a referee upon the ground that he has refused to find upon a question of fact other than one arising from the issues in the cause. Upon the facts alleged in the complaint which have not been controverted by the answer there is no issue. Findings are not necessary as to such facts in the determination of the issue. Bram v. Bram, 34 Hun, 487. In Eaton v. Wells, 82 N. Y. 576, this court, in considering an action brought for the foreclosure of a mortgage, say: "There was no need of proof of the amount of the debt aside from the averments of the pleadings. There was then no trial of an issue of fact. No findings of fact were needed, for there were no facts to be found. The pleadings contained them." When a complaint is dismissed before the introduction of testimony, it is a determination that the complaint does not state facts sufficient to constitute a cause of action, and in such case findings are not required. Neither does a case where judgment is rendered on the pleadings. Wood v. Lary, 124 N. Y. 83, 26 N. E. 338. It would seem therefore that there is no statutory provision requiring that findings be made by a court or referee to include the facts admitted by the pleadings. The pleadings are

a part of the judgment roll, and the admis sions therein can always be read in connection with the decision of the court or the report of the referee upon the issues, and they should be so read by this court to ascertain whether the facts so admitted and found sustain the judgment. This court has substantially so held in Rodgers v. Clement, supra, and we find no expression of the court that must necessarily be considered to the contrary. It is the evidence and the proceedings on the trial that the court will not examine to ascertain whether there are facts not found which rest on undisputed evidence or facts found which are unsupported by any evidence.

It is admitted by the pleadings that the defendant corporation was organized October 29, 1891; that the defendant Verity has at all times been its president, and the defendant Robertson its vice president; that since December 1, 1894, said Robertson has also been its treasurer; that said defendants Verity and Robertson have ever since the organization of the company been the owners of a majority of its stock and members of its board of directors; that there were originally five stockholders, all of whom were made directors of the company for the first year; that the plaintiff Arthur C. Jacobson was elected the first secretary and treasurer thereof; that the capital stock of the corporation is $50,000, and $44,400 thereof has been issued; that the stock is now all owned by the two plaintiffs and the two individual defendants, except five shares which are owned by a brother of the defendant Robertson; that on the 27th day of October, 1892, at a special meeting of the board of directors, a resolution was adopted removing the defendant Arthur C. Jacobson from his office as secretary and treasurer; that on the 7th day of November, 1892, a resolution was passed at a stockholders' meeting reducing the number of directors from five to three, and thereafter from year to year three persons were elected directors of the company; that since 1894 the brother of said defendant Robertson has been annually elected a director with said defendants Verity and Robertson; that during the first year after the organization of the corporation the board of directors paid to the president, vice president, and treasurer each a salary of $2,500; that for each of the years 1893 and 1894 the defendant Verity as president was paid $3,500, and the defendant Robertson as vice president $2,500; that for the year 1895 the defendant Verity as president was paid $3,500, and the defendant Robertson as vice president and treasurer $3,500; that for each of the years 1896 to 1898, inclusive, the defendant Verity as president was paid $5,000, and the defendant Robertson as vice president and treasurer was paid $5,000; that in the fall of 1898 and during each year thereafter until the commencement of this action a resolution was entered in the minutes of the

legal and wrongful acts the corporation is still solvent, or that the stock has increased in value during the time when the alleged illegal and wrongful acts have been committed. Kavanaugh v. Commonwealth Trust Co., 181 N. Y. 121, 73 N. E. 562.

directors that the defendant Verity be paid ↑ mitigating circumstance that despite such ila yearly salary of $8,000, and the defendant Robertson as vice president and treasurer a yearly salary of $8,000, but such resolution further provided that each of said officers should draw on account of his salary but $5,000 each year, and that the balance of the salary, namely, $3,000, should be allowed to "accumulate until such time as the company could, in the judgment of the directors, afford to have it withdrawn from the business"; that a statement of the assets and liabilities of the corporation was furnished by the treasurer on January 22, 1903, which shows a credit to the defendant Robertson of $35,992.49, and to the defendant Verity of $32,097.59; that said credits to the individual defendants amounted to more than 50 per cent. of the total assets of the corporation at that time.

Neither the good faith, honesty nor legality of the acts of officers of a corporation can be determined by ascertaining whether the market value of the capital stock of the corporation has increased or diminished during the time when said acts were performed. A corporation may lose money notwithstanding good, faithful, honest endeavor by its officers, and it may increase its assets notwithstanding selfish and illegal acts by them. The results of transactions are considered in determining the value of services performed for which a person or corporation is liable, but

The court, among others, found the follow- the value cannot be determined by any rule ing as facts:

"(8) Defendants Verity and Robertson have been officers and directors of the company from its organization. They have devoted all their time to the business of the corporation, they have extended its business, placed it on a sound basis, and through their efforts the stock, part of which is held by the plaintiff, has been rendered valuable, so that it is conceded to be worth considerably more than par. The company is now in a prosperous condition as a result of their management, and there are undivided profits in the treasury.

"(9) Defendants Verity and Robertson have voted themselves increase in salary. The increases in salary are legitimate and commensurate with the increase in business and resulting profit."

"(14) Plaintiffs had the right to inspect the books and to be present and vote at stockholders' meetings. They have made no effort to assert their alleged rights, either in the meetings of directors or stockholders. They stood aloof, unfriendly, critical, for 10 years, and resort to a court of equity.

"(15) Plaintiffs' property has advanced in value so that it is worth double what it was at the outset. They have failed to show loss or damage."

As a conclusion of law it found that defendants are entitled to judgment dismissing the complaint on the merits.

A demand upon the defendant corporation to bring this action was unnecessary, as the individual defendants against whom the wrong is charged are the executive officers of the corporation, and they also constitute a majority of the acting board of directors thereof. Hanna v. Lyon, 179 N. Y. 107, 71 N. E. 778; Niles v. N. Y. C. & H. R. R. R. Co., 176 N. Y. 124, 68 NE 142; Sage v. Culver, 147 N. Y. 241, 41 N. E. 513; Helliwell on Stock & Stockholders, § 405. If the individual defendants have illegally and wrongfully occasioned a loss to the defendant corporation, it is neither a defense nor a

of proportion, nor can the amount to be paid therefor be intentionally so gauged as to absorb substantially all the profits of a corporation that have accrued or that the corporation may at some future time be able to pay and have withdrawn from the business.

The trial court has not found that the defendant corporation ever promised to pay the defendants the salaries stated, or that the defendants ever rendered services of a value equal to the amount of such salaries. The finding, in substance, is that the defendants helped themselves to the several amounts received by them and credited themselves with said amounts now appearing on the books of the corporation; the exact language of the finding being: "Defendants Verity and Robertson have voted themselves increase in salary." The findings which it is claimed justify their acts in so taking and crediting to themselves increased salaries are, in substance, that the net assets of the corporation have not been depleted, but increased, and that the salaries are legitimate and commensurate with the increased business and resulting profit. The relation of an officer of a corporation to it is fiduciary, and he must at all times act in good faith and unselfishly towards the corporation. The relation is such that an officer of a corporation cannot make an agreement with himself acting on the one part individually and for his own benefit, and on the other part in his fiduciary capacity as an officer of the corporation. It is said in 10 Am. & Eng. Cyc. of Law, 790: "A director cannot with propriety vote in the board of directors upon a matter affecting his own private interest any more than a judge can sit in his own case, and any resolution passed at a meeting of the directors at which a director having a personal interest in the matter voted will be voidable at the instance of the corporation, or the shareholders, without regard to its fairness, provided the vote of such director was necessary to the result." The courts in this state have frequently asserted the void

ability of acts and votes of corporate officers, when they are affected by private interests. Butts v. Wood, 37 N. Y. 317; Kelsey v. Sargent, 40 Hun, 150; Copeland v. Johnson Mfg. Co., 47 Hun, 235; Barnes v. Brown, 80 N. Y. 527; Ziegler v. Hoagland, 52 Hun, 385, 5 N. Y. Supp. 305; Beers v. N. Y. Life Ins. Co., 66 Hun, 75, 20 N. Y. Supp. 788; Duncomb v. N. Y., H. & N. R. R. Co., 84 N. Y. 190; Burden v. Burden, 8 App. Div. 160, 40 N Y. Supp. 499; Munson v. Syracuse, G. & C. R. R. Co., 103 N. Y. 58, 8 N. E. 355; Sage v. Culver, 147 N. Y. 241, 41 N. E. 513; Marshall v Industrial Federation of America (Sup.) 84 N. Y. Supp. 866. See American & English Ency. of Law (2d Ed.) vol. 21, 897-910; Cook on Stock and Stockholders (3d Ed.) § 657; Taylor on Private Corporations (5th Ed.) §§ 646, 647, 618.

The findings of the court, taken with the admissions in the pleadings, do not justify the conclusion of law that the plaintiffs' complaint should be dismissed.

The facts upon which the question of laches can be considered are not sufficiently before us to require a statement of the opinion of this court in relation thereto, but it seems reasonably clear, at least, that laches cannot be urged against the plaintiffs as against their right to have considered and determined the question whether the defendants are entitled to the deferred or accumulated salaries credited to them on the books of the corporation.

The judgment of the Appellate Division and of the Special Term should be reversed, and a new trial granted, with costs to abide the final award of costs.

CULLEN, C. J., and GRAY, EDWARD T. BARTLETT, HAIGHT, and VANN, JJ., concur. WILLARD BARTLETT, J., not sitting.

Judgment reversed, etc.

(184 N. Y. 163)

LEVY V. JAMES MCCREERY REALTY

CORP.

(Court of Appeals of New York. Feb. 27, 1906.) TRIAL-DISMISSAL-MATTER OF LAW.

Where the Appellate Division affirms a judgment dismissing a complaint entered on a verdict in an action to recover for services in renting certain property for defendants, on the ground that defendant was entitled to dismissal as a matter of law, the judgment is too broad if there is any evidence from which the jury could find as a matter of fact that the parties had never agreed on a lease.

Appeal from Supreme Court, Appellate Di vision, First Department.

Action by Arthur S. Levy, surviving partner of the firm of I. K. Cohn & Co., against the James McCreery Realty Corporation. From a judgment of the Appellate Division (92 N. Y. Supp. 143, 102 App. Div. 611), affirm

ing a judgment for defendant entered on a verdict, plaintiff appeals. Affirmed.

Emanuel J. Myers, for appellant. Eugene G. Kremer, for respondent.

HISCOCK, J. The copartnership of which the present plaintiff is the surviving member brought an action to recover for services alleged to have been performed in procuring a tenant for defendant's property. The claim was disputed and we think that there was sufficient evidence to sustain the verdict rendered by the jury in favor of defendant upon this issue, and that the judgment thereon should be affirmed.

The complaint as originally served, amongst other things, alleged that plaintiffs "while engaged in business as real estate brokers aforesaid, inquired of the said defendant whether the said defendant desired to rent and lease the premises on the southerly side of FortySecond street in the city of New York for theatrical purposes, and upon receiving assent thereto entered into negotiations with divers persons. * That thereafter and

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on or about the 3d day of October, 1901, the said plaintiffs procured and obtained tenants for the said defendant's premises. That in consideration of such services and the procuring of such tenants the said defendant promised and agreed to pay to the said plaintiffs the sum of three thousand dollars ($3,000) as compensation for their services." The evidence introduced in behalf of the plaintiff tended to establish certain negotiations between the parties hereto and other people for the leasing by the latter of only a portion of the premises owned by defendant and referred to in the complaint. This evidence covering only a portion of the premises was regard. ed by plaintiff as so at variance with the allegations of the original complaint which apparently set forth a contract predicated upon a leasing of the entire premises, that at the close of the case permission was asked to have the complaint amended to conform to the proofs. This request was followed by a discussion between the court and the counsel upon the respective sides as to the identity of the portion of the premises for the leasing of which plaintiff was to secure his commissions. This discussion as contained in the record does not very clearly or intelligibly distinguish and bound that portion of the premises which supplies the ground work for plaintiff's claim. Finally the court assumed and stated that the premises involved were correctly shown and described upon a diagram in evidence as Exhibit 8. And thereafter the entire situation was cleared up and the issue between the parties definitely stated and formulated by the court as a claim by the plaintiff "that the defendant employed him to find a tenant for the premises shown on the diagram, Exhibit 8, mentioning practically the metes and bounds. That is a short

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