Camden Land Company v. Lewis

Supreme Judicial Court of Maine · 1905 · Corporations

101 Me. 78 (1905)

Updated August 22, 2026

Corporationsmultifariousnessdirector self-dealingquorumratificationknowledgetreasury stockcorporate officer authority

Facts

William D. Lewis, president of the plaintiff, arranged purchases of the Sagamore and Sherman farms in the name of Walter E. Lewis, trustee, and portions of the purchase price were paid with money derived from sales of the plaintiff's stock. Most of those proceeds came from stock held by Lewis and Symonds as trustees for stockholders of an older company, but two payments came from treasury stock of the plaintiff that William D. Lewis had improperly transferred or accounted for in connection with his own salary and sales activity. The corporation sought to have both farms conveyed to it and also filed a broader third bill seeking conveyance of the farms plus accountings from different defendants for stock issued, held, or sold. The farms were later placed in trust for various family members and a few persons who had contributed new money to complete the purchases.

Issue

Whether the plaintiff could, through the first two bills, claim equitable rights in the Sagamore and Sherman farms because trust funds of the corporation were traced into the purchase payments, and whether the broader third bill could stand despite joining distinct claims against different groups of defendants. The case also raised whether self-interested director actions and officer handling of treasury stock were validated by a later stockholder ratification.

Rule

An equity bill is multifarious when it joins distinct causes of complaint seeking different relief against different groups of defendants. Directors cannot vote salaries or similar benefits to themselves when their presence is necessary to a quorum, and a corporate officer cannot, without proper board authority, appropriate treasury stock to pay his own claim or keep excess proceeds from stock sales. Ratification of unauthorized corporate acts is effective only if made with full knowledge of all material facts. When identifiable corporate trust funds are traced into real estate, equity may charge the affected interests in that property with repayment, though it does not necessarily require conveyance of the entire property.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Blue Harbor Realty, a Maine corporation based in Portland, has a three-member board. At a board meeting attended only by president Nolan Pierce and director Evan Cross, the board votes to award Pierce a $60,000 bonus for past services; Cross votes yes, and Pierce's presence is necessary for a quorum. After a later dispute, the corporation seeks to avoid the bonus resolution before any payment is made.

Is the bonus resolution binding on the corporation?

Explanation. The majority opinion states that directors cannot act for the corporation in matters in which they are personally interested, and they cannot vote salaries or similar compensation to themselves when the interested director's presence is necessary to a quorum. Such action is voidable by the corporation without any separate showing that the amount was unreasonable.