Columbian Insecticide Co. v. Driscoll Et

PIERCE, J. This is an appeal from a final decree dismissing the plaintiff's bill of complaint. The plaintiff 'waives the printing of the commissioner's report of the evidence; * * * is willing to rest its case before the full court on the pleadings and the report of material findings by the Judge set forth in the documents entitled 'Statement of findings, rulings and order for decree' and in the memorandum filed Dec. 11, 1929.' The plaintiff is a corporation and the defendant Frederick J. Driscoll was formerly its manager, treasurer and the 'sole beneficial owner of the shares of stock of the plaintiff.' The plaintiff seeks to recover a sum of money which, the bill alleges, the defendant Frederick J. Driscoll, under the guise of salary, withdrew from the funds of the corporation and which was disproportionate to any work, labor or services rendered to the corporation by him. The plaintiff also seeks to recover $1,000 which, the bill alleges, Frederick J. Driscoll caused to be appropriated and expended in the defense of an action in which Driscoll was interested but the corporation was not interested beyond being a nominal party. In their answer the defendants admit that Frederick J. Driscoll withdrew $6,566.78 as salary for his services as treasurer of the corporation from December, 1923, until July, 1926, and that 'the corporation appropriated certain sums of money for legal services, but deny that said sums of money were improperly appropriated to this service or that the said services were not performed for the corporation.' The defendants admitted at the hearing that if the liability was established against the defendant Frederick J. Driscoll the other defendants were liable. The 'Statement of Findings' recites that the corporation was organized by Patrick J. Bonner, now deceased, in 1904; that ten shares of stock were issued, of which Bonner held eight; that one of the two remaining shares was transferred to Annie L. Croken, an employee, and the other to Annie M. Pape, now Annie M. Gore, sister of Bonner's wife; that these shares were held by the employees as qualifying shares and that neither employee had any beneficial interest in the capital stock of the corporation; that the corporation from its organization in 1904 until November, 1922, was managed and controlled exclusively by Bonner and that no dividends were ever declared; that in November and December, 1904, Bonner transferred the eight shares to Frederick J. Driscoll, the purpose of the transfer being to avoid the effect of an agreement with his wife that he would not change the provisions of his will by which the stock after his death was to go to Annie M. Pape; that after the transfer of the stock Frederick J. Driscoll became the sole beneficial owner of all the stock and managed and controlled the corporation and its affairs substantially as Bonner had done; that he caused new officers to be elected, ousting Annie M. Pape, and was himself elected treasurer at an annual salary of $5,000; that new by-laws which he caused to be adopted were illegal by reason of defective and insufficient notices; that at a meeting of the directors and stockholders, of which Annie M. Gore was notified but which she did not attend, the corporation ratified and confirmed the acts of Frederick J. Driscoll from December 18, 1923, to July 1, 1926 -- the period while he was in control -- and all persons beneficially owning stock in the plaintiff corporation during said period assented to and approved such acts and conduct; that while it may be that the acts of Bonner and Driscoll, including the withdrawal of funds specified in the bill, were in fraud of the rights of parties to or beneficiaries under the alleged agreement between Bonner and others as to the Disposition of the capital stock of the plaintiff under Bonner's will, such acts were not fraudulent as to the present plaintiff corporation.