Francis v. Brigham-Hopkins Co.

Pearce, J., delivered the opinion of the Court. This is an appeal from a decree of the Circuit Court No. 2, of Baltimore City, dismissing the plaintiff’s two bills of complaint in certain consolidated cases which will now be explained. The first bill was filed by Isaac H. Francis, Jr., as stockholder, against The Brigham-Hopkins Company, a corpora ²⁶⁴ tion under the laws of the State of Maryland, and Robert D. Hopkins. The plaintiff sued, not only in his own behalf, but also on behalf of all other stockholders of the said Brigham-Hopkins Company, who should come in and contribute to the expenses of the suit.

The bill alleged that during the years ending July 1st, 1903, 1904, and 1905, respectively, Robert D. Hopkins was president and treasurer of said corporation, with a salary of $7,000 per annum; that Isaac H. Francis, since deceased, the father of the plaintiff, was vice-president and manager, with the same annual salary; that Walter Hopkins, was secretary, with the .same salary, and William Harry Francis, another son of Isaac H. Francis, was a director and foreman, and received a salary of $1,560. That the stock of said corporation was divided into 3,000 shares of the par value of $100 each, of which at the time the bill was filed, 1,327 shares were held by Robert D. Hopkins, 1,000 shares by the estate of Isaac H. Francis, deceased; 158 shares by Walter Hopkins; 50 shares by William Harry Francis, and 50 shares by the plaintiff, Isaac H. Francis, Jr., and the remaining 415 shares were held among other members of the Hopkins and Brigham families. The bill further alleged that before the end of the fiscal year ending June 30th, 1905, Isaac H. Francis became ill, and was unable to attend the regular stockholders meeting on August 1st, 1905, and died September 25th, 1905; that at the meeting of August 1st, 1905, Robert D. Hopkins, Isaac H. Francis, Walter Hopkins and William Harry Francis were elected directors of said company, and that on August 30th, 1905, a meeting of said directors was held at which all were present except Isaac H.' Francis, who was still ill, but who, it is charged, received no notice of said meeting. At that meeting the officers above named were re-elected to their respective offices.

The bill further charges that at said meeting “the directors went through the form of fixing the salary of Robert D. Hopkins at $10,000 a year and that of Walter Hopkins at $8,000,” and also “went through the form of passing a resolution” that ²⁶⁵ the inability of the vice-president to render any assistance for the past two years to the business, made it necessary for his son, William Harry Francis, to take his place, so far as the management of the male help was concerned, and the supervision of that part of the business, and that it was deemed proper to leave the question of the salaries of Isaac H. and William Harry Francis to be settled thereafter. That at a meeting October 21st, 1905, Robert D. Hopkins, Jr., was elected a director in place of said Isaac H. Francis, then deceased; that Robert D. Hopkins resigned as treasurer, retaining the position of president, and Walter Hopkins resigned as secretary. William Harry Francis was elected vice-president for the unexpired term of his father. Walter Hopkins was elected treasurer and Robert D. Hopkins secretary.

Salaries were then fixed as follows: President, $10,000; vice-president, $3,000; treasurer, $8,000; secretary, $2,600. On August 7th, 1906, the same officers were elected, and the same form was gone through for a further increase of salaries as follows: President, $16,000; vice-president, $7,000; treasurer, $11,000; secretary, $3,600. The bill then charges “that the above recited increases in the personal salaries of the Messrs. Hopkins were illegal and void (1) as in violation of sec. 1 of Art. 2 of the by-laws o said company, which provides that the compensation to be paid the president, vice-president, treasurer and secretary ‘‘shall be designated by the board previous to their election.” (2) Because it was not competent for Robert D. Hopkins and Walter Hopkins after they had been elected and had assumed the fiduciary position of directors, to vote to themselves an increase of salary, and that it was not within their power to represent and act for that corporation in a matter m which they have a personal interest in conflict with the interest of the corporation.

(3) And because ¡$7,000 a year is a reasonable and adequate salary to compensate either Robert D. Hopkins or Walter Hopkins for any services which théy have rendered, or are capable of rendering to the corporation; and that the salaries so voted are excessive and unreasonable and that the ²⁶⁶ voting of them is an unlawful and covert method on the part of the Hopkinses, as the owners and controllers of a majority of the stock, to divert into their own pockets money which should rightfully go as dividends to all the stockholders pro rata. The bill further charges that the two Hopkins above named, who control said company have been unwilling to allow the estate of said Isaac H. Francis the salary due him at the rate of $7,000 per annum from July ist, 1905, to the date of his death, September 25th, 1905. Also that the plaintiff had before filing his bill, made written demand on said company to compel Robert D. Hopkins and Walter Hopkins to make restitution to said company of the excess of salaries over $7,000 per annum received by each of them, with which demand said company refused to comply. The prayer of the bill is that the Brigham-Hopkins Company be enjoined from paying any further salary to Robert D. Hopkins until after such time as the salary theretofore received by him, will, if calculated at $7,000 a year, pay him for the services which he shall then have rendered said company, and that he be required to account with said company, and repay it, with interest at six per cent per annum from the date of their wrongful receipt by him all sums in excess of $7,000 a year; and for. such other and further relief &c.

A similar bill was filed by the plaintiff on the same day against Walter Hopkins — making the same allegations and