Besides share

Prec. XV. during his tenure of the office aforesaid, be entitled to the share in the profits of the company which, under the said articles of association thereof, is payable to the general manager for the time being of the company.

of profits as per articles.

A. may resign.

Compensation to A. in case of winding

up, &c.

7. The said A. shall be at liberty to resign the said office at any time upon giving to the company three calendar months' notice of his desire so to do.

8. If, before the expiration of years from the date hereof, the company is wound up, or by any other means, except the death or resignation of the said A., his tenure of the said office shall be determined, the company shall pay to the said A. the sum of 2,0007. as liquidated damages for his loss of office.

IN WITNESS, &c. (a).

(a) See infra, p. 69, as to appointment of officers.

PRECEDENT XVI.

Prec. XVI. AGREEMENT for the APPOINTMENT of a SECRETARY by a CoмPANY. Leave of Absence. Power to Rescind.

Parties.

Recitals.

Appointment.

Salary.

THIS AGREEMENT, made the

The

of the other part.

7., divided into

Company, Limited (hereinafter called the company), of the one part, and B., of WHEREAS the capital of the company is shares of 7. each: AND WHEREAS the directors of the company are, by the articles of association thereof, empowered to appoint a secretary of the company, either for a fixed term or otherwise as therein mentioned, and to fix and determine his remuneration, which may be by way of salary or otherwise, as in the said articles mentioned:

of

Now IT IS HEREBY AGREED as follows:

1. The said B. shall be secretary of the company for a term years, to be computed from the date hereof.

2. There shall be paid by the company to the said B., as such secretary as aforesaid, a salary at the rate of 1. per annum. Such salary shall commence from the date hereof,

the first of such quarterly payments to be made on the day of

next.

3. The said B. shall, unless prevented [supra, p. 67].

to leave of absence.

4. The said B. shall, during his tenure of the said office, be B. entitled entitled to leave of absence for a period in each year not exceeding weeks, and, unless otherwise arranged between the board of directors of the company and the said B., such leave of absence shall be granted in each year as follows, namely, from the day of, &c., &c. The aforesaid salary of the said B. shall continue notwithstanding such leave of absence.

day of

to the

allotted to B.

5. In consideration of the premises, the company shall Shares to be forthwith allot and issue to the said B. ten of its shares, which shall be numbered in the books of the company

to

both inclusive, and shall be deemed for all purposes fully

paid up.

calendar

rescind.

6. Either of the parties hereto may determine the agree- Power to ment by giving to the other not less than months' notice in writing, and upon the expiration of the period specified in such notice, the said B. shall cease to be secretary of the Company (a).

IN WITNESS, &c.

(a) As to stamps, see supra, p. 17.

The Stamp Act, 1870, imposed duties on appointments to offices. See "Tilsley," pp. 8, 474. These duties were repealed by 38 Vict. c. 23,

8. 14.

APPOINTMENT OF OFFICERS AND AGENTS.

The articles of a company often purport to make appointments of managers, secretaries, agents, solicitors, and others; but it is generally expedient, after the incorporation, for persons so appointed to enter into an agreement in writing with the company, defining the terms and conditions of the appointment. Unless this precaution is taken, it may turn out, if any dispute subsequently arises, that there is no evidence of appointment, and that the officer cannot recover damages for breach of the agreement. It has been settled that at any rate a person not a party to the articles cannot rely on a stipulation contained therein as an agreement by the company with him. Eley v. Positive Government, &c., Co., 1 Ex. Div. 88. As to what is evidence of an appointment of an officer by the company, see Browning v. Great Central Mining Co., 5 H. & N. 856; 29 L. J. Ex. 399.

Moreover, if the agreement is not to be performed within a year, it is

As to appointment of officers by articles of

association.

An agreement should be executed.

Prec. XVI. necessary to have an agreement in writing, by reason of Section 4 of the Statute of Frauds. Eley v. Positive Government, &c., Co., 1 Ex. Div. 20; S. C. 88; and also Smith L. C. 7th ed. 335.

Remedy of officer or other agent for dismissal.

No specific
performance
of contract for

future ser

vices.

Resolution

or order to
wind up=
dismissal.

As to proof in
winding-up.
Yelland's
Case.

Agent cannot prove for

future commission.

Rhodes v. Forwood, H. L.

If an agent is appointed for a term, and is dismissed before the expiration thereof, he is entitled forthwith to sue the company (1) for damages for breach of the agreement; or (2) he may treat the contract as rescinded, and sue on a quantum meruit for the work actually performed by him. See the notes to Cutter v. Powell, Smith L. Cas. 7th ed., Vol. II., p. 1, et seq.

Specific performance of a contract for hiring and service will not be decreed. Stoker v. Brocklebank, &c., Co., 3 M. & G. 250; Brett v. East India, &c., Co., 2 H. & M. 404; W. R. 596; Mair v. Himalaya Tea Co., 1 Eq. 411.

And the fact that the agent is a member of the company, and that the regulations provide for his employment, would not enable him to procure the aid of the Court to prevent his dismissal from or secure his restoration to office. The rule in Foss v. Harbottle would prevent any such intervention.

A resolution or order for winding up is equivalent to a dismissal of a company's servants. Chapman's Case, 1 Eq. 346; Shirreff's Case, 14 Eq. 417.

And if an agent or servant has been appointed for a term at a salary, he will be entitled to prove in the winding up for the value of his salary for the unexpired residue of the term.

Thus, in Yelland's Case, 4 Eq. 350, Yelland had been engaged for a term of five years, from 1 July, 1865, as manager, at Bideford, of a branch of the English Joint Stock Bank, at a salary of 500l. per annum, with the right to occupy the bank premises as a dwelling-house, free of rent and taxes, and to act as agent for any Insurance company. An order was made to wind up the bank in May, 1866, and Yelland claimed to prove as a creditor. Page-Wood, V.-C., said: “I think that the proper course will be to ascertain the present value of an annuity of 5007., terminating on the first of July, 1870, and a proper rent for the bank premises for the rest of the term, regard being had to the risk to health and life. From this amount something will have to be deducted for Mr. Yelland being at liberty to obtain a fresh appointment; and regard must also be had to the liberty reserved to him by the agreement of acting as agent for other companies. The matter will go back to Chambers for calculation upon this principle." This case was followed in Ex parte Clark, 7 Eq. 550. But when, in addition to his salary, an agent is to have a commission on business done, he is not, upon a winding up, entitled to prove for what he might have otherwise earned. Ex parte Maclure, 5 Ch. 736. This was a case of a voluntary winding up, and the same rule must à fortiori apply in a compulsory winding up.

In a recent case before the House of Lords, it appeared that an agreement had been made between A. and B., that B. should be sole agent at Liverpool for the sale of A.'s coal during a term of years, at a certain commission; A. to have the control of the prices, with power for him to rescind if B. did not sell a certain minimum, and power for B. to rescind if A. could not supply a certain minimum. A. sold his colliery before the expiration of the term, and it was held that an action by B. against A. for damages for breach of the agreement occasioned thereby would not lie, for that the agreement did not bind A. to keep his colliery, or to send any coal to Liverpool. Rhodes v. Forwood, 1 Ap. Cas 257.

It follows from this case that if a company made such an agreement, Prec. XVI. and then passed into liquidation, the agent could not prove for damages. Compare the above case with Gilbert's Case, 26 L. T. 467, where an agent was allowed to prove for commission, which, but for a voluntary winding up, he might have earned.

Logan's Case.

It is very common, expressly to fix by agreement, the compensation Agreement to to be payable to the agent in case his agency shall be terminated by the specific sum company. Thus, in Logan's Case, 9 Eq. 149; 14 W. R. 273; Logan for loss of office. was by the articles appointed managing director of a company, at 8007. per annum, and a commission on profits. It was also provided that: "In the event of the said L. being at any time deprived of or removed from his office for any other cause than gross misconduct, the directors shall pay to him as compensation for loss of office a sum equal to three years' salary. . . . ." The company was ordered to be wound up, and Logan claimed to prove for three years' salary. Romilly, M.R., said: "I think Mr. Logan is entitled to prove against the company for the amount claimed by him. It is part of the contract between Logan and the company that if Logan is deprived of his office the company are to pay him a sum equal to three years' salary, provided the removal from office is not occasioned by gross misconduct. That is a contract to be construed most strictly against the company; and I think that Mr. Logan is entitled to his claim, without any deduction being made, as in Yelland's Case (supra, p. 70); for, suppose that while the company was a going concern, they had wished to remove him, because they wished to have a better man as manager, they would have had to pay him three years' salary, and he might have engaged himself to another company the very next day." See also Shirreff's Case, 14 Eq. 417; 20 W. R. 966.

It will be observed that the claim in Logan's Case was rested on the clause in the articles. Query whether this would now be considered a contract binding on the company, Eley v. Positive, &c., Co., 1 Ex. Div. 88. An express contract ought to be made after the incorporation of the company.

But where an order had been made to wind up a company of which T. was an officer, one of the terms of his engagement being, that, “5,0007. be paid to him if the company discontinue to employ him," it was held by Lord Cairns, that, "T. was not entitled to prove for the 5,000l., as there was no voluntary, active, and intelligent discontinuance by the company of the employment of T." Re Albert Life Ass. Co., Tait's Claim, 16 Sol. J. 46.