Rogers v. Hill, 289 U.S. 582 (1933)
U.S. Supreme CourtRogers v. Hill, 289 U.S. 582 (1933)
Rogers v. Hill
Argued May 11, 1933
Decided May 29, 1933
289 U.S. 582
1. In a stockholder's suit to compel corporate officers to account for money received as extra compensation and to enjoin further payments, the plaintiff moved on the pleadings for judgment or, in the alternative, that payments be enjoined pendente lite. The District Court without passing on the merits, granted the temporary injunction. On appeal from the order, the Court of Appeals dealt with the merits adversely to the plaintiff in its opinion, but its decree merely reversed the injunction order and directed that mandate issue in accordance with "this decree," and the mandate directed further proceedings in accordance with "the decision" of the court. Upon receiving the mandate, the District Court entered a decree dismissing the bill on the merits, which was affirmed by decree of the Circuit Court of Appeals on a second appeal.
(1) That the mandate did not direct the dismissal, and that the decree on the second appeal was the final decree on the merits, reviewable in this Court by certiorari. P. 289 U. S. 586.
(2) A court's "decision" of a case is its judgment. Its "opinion" is its statement of reasons for the judgment. P. 289 U. S. 587.
(3) The Judicial Code, §§ 128 and 238, uses "decision" as the equivalent of "judgment" and "decree." Id.
(4) Even if the mandate on the first appeal were deemed to have included the opinion, the District Court, in its sound discretion, might still have allowed the plaintiff, on adequate showing, to file additional pleadings, vary or expand the issues, and take other proceedings to enforce the accounting sought. Wells Fargo & Co. v. Taylor, 254 U. S. 175. Id.
2. Section 11 of c. 185, General Corporation Act of New Jersey, provides:
"The power to make and alter bylaws shall be in the stockholders, but any corporation may, in the certificate of incorporation, confer that power upon the directors; bylaws made by the directors under power so conferred may be altered or repealed by the stockholders."
Held, that stockholders are not divested
of power to make or alter bylaws by delegation of that power to the directors in their charter. P. 289 U. S. 588.
3. Compensation of an officer of a corporation, whether by fixed salary or by a percentage of profits, is part of the operating expenses deductible from earnings in ascertaining net profits. P. 289 U. S. 590.
4. Extra compensation to officers of a corporation from a profit-sharing arrangement, though allowed by a standing bylaw enacted at a stockholders' meeting, and though reasonable and legal at the beginning, may become so great in later years, due to increases in the business and profits of the corporation, as to warrant investigation in equity in the interest of the company. P. 289 U. S. 591.
5. Such a bylaw is supported by the presumptions of regularity and continuity, and much weight is to be given the action of the stockholders in adopting it, but the rule prescribed by it cannot, against the protest of a shareholder, be used to justify payments so large as in substance and effect to amount to spoliation or waste of corporate property. P. 289 U. S. 591.
62 F.2d 1079 reversed.
Certiorari to review the affirmance of a decree of the District Court, which, after an interlocutory appeal from an injunction order, dismissed two consolidated suits brought by a stockholder of the American Tobacco Company against its president and some of its vice-presidents to require them to account to the corporation for payments of compensation, alleged to have been excessive, from the company's profits. For other phases, see Rogers v. American Tobacco Co., 53 F.2d 395, and Rogers v. American Tobacco Co., 143 Misc. 306, 309; 233 App.Div. 708; 60 F.2d 109.