of the benefits of such officer's services, they are as much bound as if they had formally contracted for the services.21

§ 2738. Implied contracts to pay for services-In general. In a Massachusetts case, Justice Morton, later Chief Justice, has stated the rule as follows, "A bank or other corporation may be bound by an implied contract in the same manner as an individual may. But in any case, the mere fact that valuable services are rendered for the benefit of a party does not make him liable upon an implied promise to pay for them. It often happens that persons render services for others which all parties understand to be gratuitous. Thus directors of banks and of many other corporations usually receive no compensation. In such cases, however valuable the services may be, the law does not raise an implied contract to pay by the party who receives the benefit of them. To render such a party liable as a debtor under an implied promise, it must be shown not only that the services were valuable, but also that they were dered under such circumstances as to raise the fair presumption that the parties intended and understood that they were to be paid for; or, at least, that the circumstances were such that a reasonable man in the same situation with the person who receives and is bene fited by them, would and ought to understand that compensation was to be paid for them." 22 This statement was quoted with approval by Chief Justice Fuller of the Supreme Court of the United States, 23 and the statement has been quoted by other courts, federal and state, as stating the correct rule.24 The rule is sometimes stated

21 Ruttle v. What Cheer Coal Min. Co., 153 Mich. 300, 117 N. W. 168. 22 Pew v. First Nat. Bank, 130 Mass. 391.

23 Fitzgerald & M. Const. Co. v. Fitzgerald, 137 U. S. 98, 34 L. Ed. 608.

24 United States. Montana Tonopah Min. Co. v. Dunlap, 196 Fed. 612, aff'g 192 Fed. 714. See In re McCarthy Portable Elevator Co., 196 Fed. 247, aff'd 201 Fed. 923.

Massachusetts. See Apsey v. Chattel Loan Co., 216 Mass. 364, 103 N. E. 899; Marcy v. Shelburne Falls & C. St. R. Co., 210 Mass. 197, 96 N. E. 130.

Michigan. Notley v. First State

ren

in a different form, in speaking of the presumptions which arise when recovery is sought on an implied contract. Thus it is held that no presumption of an agreement to pay arises from the mere rendition of the services, no matter how valuable they may be,25 and in the absence of an express agreement, it is presumed that services rendered by an officer are performed gratuitously.26 In accordance with this rule, in order to admit of recovery on an implied contract, it must be shown that the services were valuable and performed under circumstances raising a presumption that they were to be paid for.27 Accordingly it has been held that where a director of a corporation is appointed by the governor under a statute which makes it an express duty of the corporation to pay compensation not only for the services rendered but also for attendance at

*

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back pay or compensation therefor;
and it is beyond the powers of the
board of directors, after such services
are rendered, to pay for them out of
the funds of the corporation, or to
create a debt of the corporation on
account of them.
But such
officers who have rendered their serv-
ices under an agreement, either ex-
press or implied, with the corporation,
its owners or representatives, that
they shall receive reasonable, but in-
definite compensation therefor, may
recover as much as their services are
worth; and it is not beyond the pow-
ers of the board of directors to fix
and pay reasonable salaries to them
after they have discharged the duties
of their officers." National Loan &
Investment Co. v. Rockland Co., 94
Fed. 335, quoted in Montana Tonopah
Min. Co. v. Dunlap, 196 Fed. 612, in
which case the evidence was held suffi-
cient to support a finding that there
was an implied contract, in the cir-
cumstances, to pay one who was an
officer and a director for services ren-
dered by him. See also McCarthy v.
Mt. Tecarte Land & Water Co., 111
Cal. 328, 43 Pac. 956.

Under West Virginia Code 1913, c. 53, 53 (§ 2885), which provides that no compensation shall be allowed for services rendered by the president or

any director as such, unless it be allowed or authorized by the stockholders, an officer of a corporation who is also a director is not entitled to recover compensation for services rendered in the discharge of his official duties as upon an implied contract, except under some special or extraordinary circumstances, or when there is a special contract duly authorized by a by-law of the stockholders or with proper action of the directors. Goodin v. Dixie-Portland Cement Co., W. Va. 90 S. E.

544.

25 Notley v. First State Bank of Vicksburg, 154 Mich. 676, 118 N. W. 486.

26 Gaul v. Kiel & Arthe Co., 133 N. Y. App. Div. 621, 118 N. Y. Supp. 225, modified 199 N. Y. 472, 92 N. E. 1069.

27 New York & N. H. R. Co. v. Ketchum, 27 Conn. 170; Apsey v. Chattel Loan Co., 216 Mass. 364, 103 N. E. 899; Notley v. First State Bank of Vicksburg, 154 Mich. 676, 118 N. W. 486; St. Louis Sanitary Co. v. Reed, 179 Mo. App. 164, 161 S. W.

315.

Evidence held insufficient to establish an implied contract to pay a president for his services. Notley v. First State Bank of Vicksburg, 154 Mich. 676, 118 N. W. 486.

meetings of the directors, and such director receives compensation for his services for a considerable period of time, and there is evidence that other directors understand that he is to be paid for his services, a contract will be implied that the director is to be paid.28

This rule denying officers of corporations compensation is not varied by the fact that they own nearly all of the stock of the corporation.29 There is, however, a set of cases which, while fully sus taining the proposition that directors are trustees incapable of contracting with themselves, nevertheless recognize a tendency in modern times towards the formation of small business corporations, and, realizing that those most interested and holding practically all of the stock will in all probability become the directors and officers thereof, take the view that the corporation which has benefited by the work done by the officers should be compelled to pay for it, and accordingly permit a recovery on a quantum meruit. The officer has the burden, however, of showing the fair and reasonable value of the services rendered.30 The right to compensation in these classes of cases depends upon the circumstances, and the evidence may be such as to preclude the finding of an implied contract.31

The rule permitting a recovery by a director on a quantum meruit in a proper case applies to a de facto director as well as to one holding office de jure.32

Stockholders who are not directors or officers and who render services to the corporation upon proper request do so under an implied agreement that they are to be paid the reasonable value of such services, unless the circumstances negative such an implication, as by showing that the services were to be gratuitous.33

28 Apsey v. Chattel Loan Co., 216 Mass. 364, 103 N. E. 899.

29 Gaul v. Kiel & Arthe Co., 133 N. Y. App. Div. 621, 118 N. Y. Supp. 225, modified 199 N. Y. 472, 92 N. E. 1069.

30 Carr v. Kimball, 153 N. Y. App. Div. 825, 139 N. Y. Supp. 253, citing Fithcett v. Murphy, 46 N. Y. App. Div. 181, 61 N. Y. Supp. 182; MeNaughton v. Osgood, 41 Hun (N. Y.) 109.

31 See Red Bud Realty Co. v. South, 96 Ark. 281, 131 S. W. 340, referring to extra services.

32 See Shively v. Eureka Tellurium Gold Min. Co., 5 Cal. App. 236, 89 Pac.

§ 2739. -Special, unusual or extraordinary services rendered by officers or directors-General rule. Some of the cases which adhere to the rule that directors and other managing officers of a corporation are not entitled to compensation, in the absence of express agreement or provision therefor, admit that the rule does not apply where such officers render unusual or extraordinary services, or perform duties not within the line of their duty in the particular office that they occupy. The earlier cases speak of this as the "liberal" rule. This exception, if it may be called such, is now so well established as to be a rule of similar dignity with the general doctrine stated at the beginning of this chapter, and, according to the great weight of authority, if a director or other officer renders services clearly outside of his duty as such, at the request of the corporation or board of directors, with the understanding that they are to be paid for, the law will imply a promise to pay what they are reasonably worth, and in such cases it is not necessary that there be a special agreement to pay, or precedent resolutions, charter provisions, and the like, providing for compensation.34

As to the right of stockholders to compensation where they are officers but not directors, see § 2736, supra.

34 United States. Corinne Mill, Canal & Stock Co. v. Toponce, 152 U. S. 405, 38 L. Ed. 493; Fitzgerald & Mallory Const. Co. v. Fitzgerald, 137 U. S. 98, 34 L. Ed. 608; Title Insurance & Trust Co. v. Home Tel. Co., 200 Fed. 263; Montana Tonopah Min. Co. v. Dunlap, 196 Fed. 612; In re Gouverneur Pub. Co., 168 Fed. 113.

Arkansas. Red Bud Realty Co. v. South, 96 Ark. 281, 131 S. W. 340 (a president); Mount Nebo Anthracite Coal Co. v. Martin, 86 Ark. 608, 112 S. W. 882, 111 S. W. 1002.

California. Bassett v. Fairchild, 132 Cal. 637, 52 L. R. A. 611, 64 Pac. 1082, 61 Pac. 791. See also Graves v. Mono

Lake Hydraulic Min. Co., 81 Cal. 303, 22 Pac. 665.

Colorado. Ruby Chief Mining & Milling Co. v. Prentice, 25 Colo. 4, 52 Pac. 210; Brown v. Republican Mountain Silver Mines, 17 Colo. 421, 16 L. R. A. 426, 30 Pac. 66.

Dakota. Edwards v. Fargo & S. Ry. Co., 4 Dak. 549, 33 N. W. 100.

Illinois. Rosehill Cemetery Co. v. Dempster, 223 Ill. 567, 79 N. E. 276; Chicago Macaroni Mfg. Co. v. Boggiano, 202 Ill. 312, 67 N. E. 17; Lafayette, B. & M. R. Co. v. Cheeney, 87 Ill. 446; Gridley v. Lafayette, B. & M. R. Co., 71 Ill. 200; Cheeney v. Lafayette, B. & M. R. Co., 68 Ill. 570, 18 Am. Rep. 584; Rockford, R. I. & St. L. R. Co. v. Sage, 65 Ill. 328, 16 Am. Rep. 587.

Indiana. Greensboro & N. C. J. Turnpike Co. v. Stratton, 120 Ind. 294, 22 N. E. 247.

Iowa. Brown v. Creston Ice Co., 113 Iowa 615, 85 N. W. 750.

Kentucky. Paine v. Kentucky Refining Co., 159 Ky. 270, Ann. Cas.

The circumstances must be such as to give rise to an implied promise in accordance with the principles governing the law of implied contracts. A promise will not be implied from the mere fact that the services were rendered, and that they were valuable, but it must also appear that "they were rendered under such circum