Petty v. Knight-Petty Merc. Co.

Opinion by LOGSDON, C. As presented in -the brief of defendant, only two contentions are made in this court, as follows: First, that the trial court erroneously admitted certain testimony over the' objections and exceptions of defendant. Second, that there is a variance between the allegations and the proof on the part of plaintiff, and that the evidence is therefore insufficient to support the verdict and judgment. Under his first contention defendant sets out in his brief a large portion of the testimony of the witness Ellinger as to the contents of the general ledger accounts of the corporation. At the time these accounts were entered the witness was not a director of the corporation, but at the time he testified he was both a director and officer. These accounts had been kept and the en-fries made by the defendant, or under his direction, while he was an officer and director in the company. They were books and property of the corporation. These accounts were introduced in evidence. No contention is made that this testimony contradicted those records. It was merely explanatory of their contents. He was also permitted to testify concerning the contents of the articles of incorporation and of the certificate of incorporation. These two instruments were introduced in evidence, and, while oral testimony as to their contents was objectionable and should have been excluded, it is inconceivable how it could be prejudicial. The testimony was not in contradiction of them. A complaining party has the burden of pointing out and showing the prejudicial effect of testimony erroneously admitted or excluded where such prejudice is not apparent on the face of the record. This has not been done in reference to the testimony of Ellinger. “The court, in every stage of action, must disregard any error or defect in the pleadings or proceedings which does not affect ibe substantial rights of the adverse party; and no judgment shall be reversed or affected by reason of such error or defect.” Comp. Stat. 1921. sec. 319. This statute applies in the situation here presented. Hertzel et al. v. Weber et al., 31 Okla. 5, 120 Pac. 589; O. B. Garrison & Co. v. Meyers et al., 52 Okla. 100, 152 Pac. 838; Baird v. Connover, 66 Okla. 288, 168 Pac. 997; Boatman v. Coverdale, 80 Okla. 9, 193 Pac. 874. Under his second contention defendant insists that becauste plaintiff’s second and fourth causes of action were for money had and received by defendant to plaintiff’s use, while the proof showed merely credits on his account with the company without any actual or manual transfer of the money, therefore there is a variance between the allegations and the proof fatal to a recovery. In his opening statement to the jury, upon being interrupted by plaintiff’s counsel, counsel for defendant used the following language; “We are not bringing suit to recover anything, but. they are bringing a suit, and they have got to show that we are not entitled to it. They claim we over paid ourselves. Tf we. can show that we are entitled to it, we are entitled to show it by a general denial. They claim that we have this money; we claim that we have a right to retain it, and we deny the allegation that we have no right to the money. We are not .suing ^ to recover: they are the plaintiff in this action and not the defendant, and therefore we have a right to show any defense under the general denial that will entitle us to defeat their recovery.” This was a clear and unequivocal admission that defendant received the money and that he was going to keep it if he could. It showed a clear understanding and comprehension of the issue raised by the pleadings. This statement constitutes a solemn admission in the course of the trial that defendant received the money as alleged by plaintiff, and defendant is bound by it. Patterson v. Morgan, 53 Okla. 95, 155 Pac. 694: Hunt v. Rawleigh Medical Co., 71 Oklahoma, 176 Pac. 410; Grimmett v. Grimmett, 80 Okla. 176, 195 Pac. 133. But it is further contended that the evidence is insufficient to warrant recovery under the second and fourth causes of action because it is not shown that the salary received and credited by defendant on the books of the company was unreasonable or disproportionate to the value of; the services rendered. It is sufficient answer to this contention to say that the salary received by defendant was not authorized by the corporation. Defendant doesn’t even contend (hat it. was. His direct testimony on this point was as follows; “Q. What statements did you ever make to Mr. Knight and to Mr. Ellinger during the year 1918, as to what your salary would be for that year? A. Well, when Curtis was leaving, about the time that Curtis was leaving, I told Mr. Knight that I could not-stay on the work on an equal salary with him, and that I could not think of doing if, and he answered back that I was buying the meats and the goods at cost that I got out of the store, and that that ought to satisfy me.- Q. Well, did he object to you draw *252 ing any more than he? A. Yes, he objected.” On cross-examination (C.-M. p. 163) he testified: “Q. So you agreed with yourself as president of this corporation that your services for 1918 were worth $150 a month? A. Yes, sir. Q. And you gave yourself credit for it at the close of 1918? A. Yeu, sir. Q. And when did you come to the conclusion that $150 a month — that your salary was to be $150 a month? A. Oh, I guess I concluded that all along, possibly. Q. Well, why didn’t you carry it out and cred-’ it yourself with $150 a month there? A. Well, I was not keeping up with that part of it.” It is thus seen that with full knowledge that the other director,' Knight, objected to the increase of salary, and without consulting Mr. Ellinger, who silently owned $4,000 of the $7,000 stock standing in defendant’s name on the books of the company, defendant decided to pay himself $150 a month for the year 1918. Instead of making the books show this from month to month he waited until the clo'se of the year and then credited a lump sum of $1,800. In 7 R. C. L., sec. 446, the general 'principle applicable to the facts here presented is thus stated: ‘‘The broad rule has been announced that a director of a corporation cannot recover for services rendered to it except as an express contract therefor can be, shown, although such services are not within the scope of his official duties. As has been said, corporate officers have ample opportunities to adjust and fix their compensation before they render their services, and no great mischief is likely to result from compelling them to do so, hut if, on the other hand, actions are to be maintained by corporate officers for services which, however faithful and valuable, were not rendered on the foot of an express contract, there would, be no limitation to corporate liabilities, and stockholders would be devoured by officers.” Defendant’s brief presents and relies on no authorities sustaining the contentions made, and it is evident that he reposes no very great confidence in the arguments advanced in opposition to the general principles involved. It is therefore concluded upon the whole case that no prejudicial error has been shown in the admission or rejection of testimony by the trial court, and that the verdict of the jury is amply sustained. For the reasons herein stated the judgment of the trial court should be in all things affirmed. By the Court: Tt is so ordered.