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10 Bus. L.J. 444 (July-December 1927)

handle is hein.journals/buslj10 and id is 446 raw text is: THE BUSINESS LAW JOURNAL the customer and the bank may agree on, though illegible and meaningless when dissociated from the model thereof on deposit with the bank. The bank is charged with knowledge of the model of its -customer's signa- ture deposited with it,. and must pay checks when signed by him in ac- cordance therewith. The instruction hereinbefore referred to should not have been given. CORPORATIONS Directors Not Liable for Commis-. sions Paid for Sale of Stock San Leandro Canning Co., Iric. v. Perillo, California District Court of Appeal, 258 Pac. Rep. 670 On November 8, 1920,. the San Leandro Canning Co., Inc., the, plaintiff corporation, had an un- issued capital stock of $1,000,000, divided into 100,000 shares of the par value of $100 each. The di- rectors of this- corporation entered into a plan to purchase the plant of another corporation for $135,- 000, which was to be paid for in the plaintiff's corporate stock, and to sell $150,000 of the treasury stock. Upon application to the corporation department, the cor- poration obtained a permit to do this. The permit, among other things, provided that the compen- sation to be paid for the sale of the stock should not exceed 15 per cent.; that no commission should be paid in connection with any sale made within the state of California except to an agent or broker holding a certificate from the. commissioner of corporations, authorizing him to act as the plain- tiff's agent; that a true copy of the permit should be exhibited and delivered to each prospective sub- scriber before his subscription should be taken. Thereafter stock in the sum of $69,249.61 was sold by seven sales- men, including two directors of the plaintiff corporation, and commis- sions amounting to. $16,193.66 were paid the two directors as com- missions for the sale of the stock. The other salesmen were paid $3,- 358.10. Subsequently the plaintiff brought this action against its di: rectors to recover the money paid out as commissions. The plaintiff contended that the payment of the commissions was unlawful and thab the defendant directors were liable for making unlawful expenditures. This contention was based on al- legations that no one of the sales- men was an agent or broker hold- ing a certificate then in effect from the commissioner of corporations authorizing him to act as plaintiff's agent; that no one of the sales- men exhibited or delivered to any prospective purchaser of, or sub- scriber to, said stock a copy of the commissioner's permit; that the defendants prepared and printed a prospectus, but hn this connection it'was alleged that said prospectus was not filed in the office of the corporation commissioner and that its contents was concealed from said commissioner. It was held that the plaintiff was not entitled to recover the amounts paid to the salesmen as commissions for the reason that while the facts showed that sales of stock were made in an unlawful manner they did not show that the expenditures for commissions were

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