Flanagan v. Glencoe Cotton Mills

August 1, 1921. The opinion of the Court was delivered by This evidence tends to show that the plaintiff was the bookkeeper of the defendant mill. That the mill bought in the stock of one of its deceased stockholders at 50 cents on the dollar and resold it at par to some of the people who were in with the management of the mill. The defendant purchased 25 shares and gave his obligation to the mill for the purchase money. He was then made a director. The mill had not been making money, but it became prosperous and gave by way of bonus to its directors about $40,000. This gift was ordered by the directors. Subsequently a stockholders' meeting was had and the action of the directors was approved. These directors owned a large majority of the stock. The plaintiff was secretary of the board, but he did not send out any notices of a stockholders' meeting. We are left only to presume that the stockholders were duly notified. Plaintiff demanded that his obligation to the corporation be marked paid, and asked for judgment for the balance. Some, if not all, of the directors, who were voted a bonus are said to have returned it; but there is no sufficient proof of it, or of any circumstances that rendered the payment of a bond necessary or proper, or an indorsement of it by the corporation.

It would be manifestly unfair, on this partial and incompetent statement of facts, to make a final judgment. As the record now stands, it appears that the directors voted a bonus to each other, and then resolved themselves into a stockholders' meeting and approved the action. A bonus equal to 40 per cent. of the capital stock was given to the directors, with no explanation, except that they had the money. No authority sustains that. The plaintiff paid out a part of it as Federal taxes; so there should be *Page 400 a full investigation in order that complete justice may be done.

It is therefore ordered that the judgment appealed from be reversed, that the case be sent back to the Court of Common Pleas for a full showing as to the facts of the case, and an accounting by all who took part in the $40,000 bonus, and that all the directors be made parties hereto.

MR. CHIEF JUSTICE GARY and MR. JUSTICE WATTS concur.