A corporate president violates his duty if he accepts any bonus or commission for any official act. Thus, if he sells corporation property and accepts from the purchaser a bonus for making the sale, he commits a breach of trust.
Pastor Pablo, the president of the appellant corporation participated in the procurement of two parcels of land in California for the appellant. After the closing of the escrows in 1964, the selling brokers in California paid Pablo two separate commissions amounting to $4,800.00 and $17,594.20, respectively. These amounts were never disclosed by Pablo until March 1965; thereafter, the appellant corporation sued Pablo. The trial court held that under the particular facts of the case, Pablo, acting for himself and as an officer of Pastor Pablo Realty, Inc., committed no wrong in accepting the two partial real estate commissions from the California real estate brokers and the court cannot compel him to turn those payments over to the corporation.
Can a corporate officer and director retain a commission received from the real estate brokers representing the sellers, when the said officer was acting for the corporation in the purchase of investment real estate?
The Court held that the appellee president was acting solely in his fiduciary capacity as a corporate director when he participated in the transactions from which he received the undisclosed commissions. The Court reasoned that a director who also serves as an officer of the corporation, such as the appellee president, could not recover compensation unless it was expressly provided for by statute, bylaw, regulation or contract. Therefore, the Court held the appellee president and appellee company were liable to appellant for the commissions they received, but found the appellee wife had no connection with the receipt of the commissions.