783, the Supreme Court of South Dakota had under consideration this section, and in construing said section the court said: "The appellant contends that the court's conclusions of law were unsupported by the findings. These conclusions were to the effect that appellant was not entitled to recover; that the alleged contracts growing out of the resolutions allowing salary were illegal and void; that there was a certain sum due the corporation under the accounting; and that the default judgment should be vacated. The appellant is certainly in error in such contention. The law is that, while a director may enter into a binding contract with the corporation, when such contract is in all things fair and equitable, and the corporation is represented by a majority of its directors, each of whom is acting as a free agent and under no controlling influence or restraint on the part of the contracting director, yet, even if there is such majority of free and independent directors acting for the corporation, such contract will not be binding upon the corporation if it is unfair or inequitable; and, furthermore, no matter how fair and equitable the contract may be, it will be void, unless there is a majority of free and independent directors acting for such corporation. It follows that, when a resolution is passed in which one of the directors is interested, if it is passed by the vote of such director, or by the vote of any other director who is under his controlling influence, without which vote or votes there would not have been a majority in favor of said resolution, or if, without the presence of such interested director and such directors as may be under his influence and control, there would not have been left a quorum of the board of directors, then, in either of such cases, such resolution would be absolutely void as against the corporation." by the body is invalid. 10 Cyc. p. 777; Cook on Corporations (7th Ed.) 713a; Van Hook v. Somerville Mfg. Co., 5 N. J. Eq. 159. The rule rests upon the broad principle that it is the duty of each director in acting for the corporation to do so in the best interest of the corporation. His duty to the corporation is first. It is a duty he cannot perform if his own interest is adverse to that of the corporation. So insidious are the promptings of selfinterest, and so great is the danger that it will override duty, when brought into conflict with it, that sound policy requires that such contract should not be enforced or regarded. He occupies the position of a judge passing upon his own case. "So strictly is this principle adhered to that, no question is allowed to be raised as to the fairness or unfairness of the contract so entered into. In such cases, the court will not pause to inquire whether a director or trustee has acted fairly; * * * being interested in the subject-matter, he may not as a trustee or director deal with himself, and thus be subjected to the temptation to advance his own interests." Cases without number might be cited in support of this doctrine. That a man cannot serve two masters is a maxim peculiarly applicable to a director of a corporation. His position is that of a trustee of an express trust. The interest of the corporation is first, and his primary purpose should be to preserve the assets of the corporation for the benefit of the stockholders, instead of dissipating them for his individual interest. Should any other rule obtain, it would be unsafe for any man to invest in such institutions thus controlled by selfish and unscrupulous directors. With all the safeguards that the laws afford for the protection of stockholders, it is not in every instance that the courts are able to protect those who have invested their money in institutions controlled by and under the supervision of directors. The betrayal of the trust confided to them frequently passes by without detection. But what must be said when a director comes into court and admits appropriating $1,423.42 "The law is that, where a salary or compensa- of the funds intrusted to him and seeks to tion is voted to an officer, the resolution is il-justify such action by a resolution passed legal if it is carried by his vote or produced by his influence, where he has a controlling interest. McNulta v. Corn Belt Bank, 164 Ill. 427 [45 N. E. 954, 56 Am. St. Rep. 203]; Cook on Stock and Stockholders. The construction placed upon section 1252, R. L. 1910, by the Supreme Court of South Dakota, while not binding on this court, is persuasive and commends itself to us as sound and wholesome. This construction is the one followed by a great majority of the courts. In the case of Adams v. Burke, 201 Ill. 395, 66 N. E. 235, the Supreme Court of Illinois, speaking of this question, stated the following rule: In the case of Enright v. Heckscher, 240 Fed. 863, 153 C. C. A. 549, Rogers, C. J., speaking for the court, said: by his vote, and without which it could not have been done. The court was correct in holding this purported resolution void. It received more consideration than it deserved. Defendant admits that the only authority he had for appropriating this sum of money to himself was by virtue of this resolution. "A director, whose interest in a matter dis[3] It is urged by the defendant that plainqualifies him from voting upon a resolution, tiff has by its acts ratified the resolution concerning it, cannot, according to the better opinion, be counted for the purpose of ascer- passed by defendant and two other directors taining whether a quorum is present when the on the 28th day of January, 1914. The trial vote is taken. A director so disqualified by per- court found that no ratification was ever sonal interest loses, pro hac vice, his character as a director, and so cannot be counted. That made of this illegal act for the reason that is the law of New Jersey. * And it is the matter was never brought to the knowlsupported by the weight of authority in other edge of the corporation until after defendant jurisdictions." had severed his relations with plaintiff. This finding of the court is supported by the evidence. In fact, there is not one word or act of the board of directors that tends in any "All of the directors constituting a quorum degree to warrant the contention of defend. must be qualified to act. If one of the directors ant on this point. The entire transaction whose presence is necessary * * stitute a majority of a quorum is disqualified shows otherwise. As soon as it was disclosby reason of his personal interest, any act done ed that this money had been used by de- In Re Webster Loose Leaf Filing Co. (D. C.) 240 Fed. 779, Davis, D. J., speaking of this question, said: to con fendant in the manner admitted by him, an the law raises no implied promise to pay comaction was immediately instituted to recover pensation to directors, presidents or vice presithis sum. The matter was kept concealed of provision in by-law or order of directors. dents of a private corporation in the absence from plaintiff by defendant so long as he had They are trustees charged with the funds, and charge and control of the books, and not un- cannot recover on a quantum meruit.' The til he surrendered the written evidence of Supreme Court of Pennsylvania in an early case said transaction and severed his relation services of the director become important to went so far as to say on this subject: 'If the with it did the directors have any knowledge the corporation, let him resign and enter into of what had been done. In order to consti- its employment like any other man. If it be tute a ratification, conceding without decid- proper that directors generally should receive compensation, let it be so provided in the oring that it was such an act as could be rati-ganic act which creates the body. Those who fied, the burden of proof was on defendant commit their money to its care will then do it to show that a ratification had been made there is no reason in law or morals for allow with their eyes open. Until this be provided, with full knowledge of all the material facts. ing their property to be taken without their This he has signally failed to do. Gaar, knowledge or consent." Scott & Co. v. Rogers, 46 Okl. 67, 148 Pac. 161; Burton v. Lithic Mfg. Co., 73 Or. 605, 144 Pac. 1151; Camden Land Co. v. Lewis, 101 Me. 78, 63 Atl. 523. It further appears from the record that defendant, when the $800 was allowed him, told the board of directors that he had not received one dollar compensation for his services and money expended in behalf of plaintiff. This occurred on the 26th day of May, 1915. This representation was the inducement that finally moved the plaintiff to allow the $800. We are led to believe, from the disclosures made of that meeting at which this sum was allowed, that, if defendant had made known the fact that he had appropriated $1,423.42 to his own use for the year 1914, his relations with plaintiff would have been severed at an earlier date than they were. [4] Complaint is made by reason of the fact that the court found against defendant on his claim for $1,800 for services rendered The same author, in volume 2, par. 1729, P. 815, speaking of the right of officers to recover on a quantum meruit, says: "The officers stand in the same relation to the in the case of directors, the law will not imply corporation as the directors; consequently, as a promise by a corporation to pay its officers for their usual and ordinary duties, in the ablaws, or any contract or agreement on the subsence of any provision in the charter or byject, but will presume that such services were rendered gratuitously. For example, the law implies no contract to pay the president for serv ices as such and for consulting with and advising other officers and employés of the corporation. No implied promise can be inferred from the fact that the services are beneficial to the corporation; and while, in some relations, a request might be implied from the beneficial character of the service, yet no such inference is authorized in the case of gratuitous services performed by a person in the line of his legal duty. It is a corrollary of the main proposition that officers cannot appropriate the corporate funds in payment of their services without proper authority." The foregoing text is supported by a great the company as president and manager for weight of authority and is peculiarly applithe year 1915. This sum was sought on the cable to the facts in this case. Hence it foltheory that, although there was no contract lows that there was no error in the action of with defendant for compensation for his the trial court in refusing to allow defendservices, plaintiff would be liable for the rea-ant any sum for his services. The pleadings sonable value thereof. This contention is of defendant did not bring him within any without merit. In order to sustain this con- provisions that constitute an exception to tention, it was necessary for defendant to al- the foregoing rule, and neither did the evilege and prove that it was provided, either dence. The alleged counterclaim did not by the charter or by-laws, that the president state facts sufficient to warrant any evidence and manager of plaintiff was to be compen- being admitted thereunder. sated for his services. Neither the charter nor by-laws were offered in evidence, and the presumption is, in the absence of a showing to the contrary, that they contained no such provision. Thompson, in his valuable work on Corporations (volume 2, par. 1717, p. 802), states the law on this question as follows: "As a general rule, directors are not entitled to compensation or salary for official services rendered unless such salary or other compensation is provided for in the charter or by-laws; or unless there is an express resolution or agreement adopted or made by the board of directors acting as such. In the absence of such a provision or agreement, and except as otherwise shown, a director, and a president, secretary or treasurer, when a stockholder or director, cannot recover pay for official services. In concluding an opinion on this subject one of the judges of the West Virginia court said: "The author It is urged that the court committed error in permitting evidence to be introduced of a certain conversation had between defendant and Rutherford relative to the fact that defendant was not to charge any sum for his services as president and manager of plaintiff, and that said statement induced Rutherford to subscribe for stock in the company. This entire conversation was immaterial and did not affect the rights of plaintiff and defendant either way. If defendant was entitled to any compensation, it was by virtue of the charter, by-laws, or some legal resolution passed by the board of directors. The action of the board of directors in allowing defendant $800 was a gratuitous gift, as plaintiff was neither legally or morally bound to allow defendant any sum whatso Geo. S. Ramsey, of Muskogee, G. Earl Shaffer, of Tulsa, Wm. H. England, of Ponca City, Edgar A. De Meules, of Tulsa, Malcolm E. Rosser, of Muskogee, Villard Martin, of Tulsa, and J. Berry King, of Muskogee, for plaintiff in error. John J. Hildreth, of Guthrie, Ezra Branine and Harry W. Hart, both of Newton, Kan., and Chas. E. Branine and Harold R. Branine, both of Hutchinson, Kan., for defendants in error. HARDY, J. Elmer L. Branine and Mary E. Branine commenced an action on the 18th day of January, 1917, against the Northwestern Oil & Gas Company to cancel and (Supreme Court of Oklahoma. Oct. 8, 1918.) remove as a cloud upon their title a certain (Syllabus by the Court.) 1. MINES AND MINERALS 58, 77-LEASECONSIDERATION-CASH BONUS-VALIDITY. Where a cash bonus of $160 was paid for an oil and gas lease which provided that lessee should commence the drilling of a well within 12 months from the date thereof or pay a quarterly rental of $40, and further provided that the lessee might at any time upon the payment of a further sum of $2 and as accrued liabilities surrender the leased premises and terminate all future liabilities under the lease, held, that the cash bonus supports each and all the covenants in the lease; and held, further, that the presence of a surrender clause in said lease did not render the same void for want of mutuality nor confer on the lessor the right to terminate said lease at will. (Additional Syllabus by Editorial Staff.) 2. MINES AND MINERALS 58-MUTUALITY -"OPTION." oil and gas lease, the pertinent parts of which are as follows: "Agreement, made and entered into the 3d day of Aug., A. D. 1915, by and between Elmer L. Branine & Mary E. Branine, his wife, of Hunnewell, Okl., parties of the first part, lessors, and Northwestern Oil & Gas Co., party of the second part, lessee, witnesseth: "That the said parties of the first part for and in consideration of the sum of one dollar to them in hand well and truly paid by the said party of the second part, the receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained on the part of the party of the second part to be paid, kept and performed, has granted, demised, leased and let and by these presents do grant, demise, lease and let unto the said second part -, their heirs, executors, administrators, successors or assigns, for the sole and only purpose of mining and operating for oil and gas, and of laying pipe lines, and of building tanks, powers. stations and structures thereon to produce and of land situate in the county of Kay, state of take care of said products, all that certain tract Oklahoma, described as follows, to wit: It is the very essence of an option contract that it is not mutual; for the optionee pays his money or performs his promise for the "The southeast quarter (4) of sec. fifteen right of electing whether he will require performance by the other party, and the optionor section 15, township 29, range 1 and containing (15), township (29) north, range (1) west of relinquishes his right of choice for the consid-160 acres, more or less. It is agreed that this eration received by him. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Option.] 3. MINES AND MINERALS 731⁄2-OIL LEASE -"UNLESS LEASE." Under an "unless lease," the lessee of oil lands, so long as he pays the rentals in the manner provided, has an option to continue the lease in force, and it is subject to termination at his will, which privilege he may exercise by a failure to pay the stipulated rental, in which event the lease automatically terminates. The lessor has no right to terminate the lease while the lessee complies with its terms. 4. MINES AND MINERALS 731⁄2-OIL LEASE -"OR LEASE." Under an "or lease," the payment of rentals by the lessee of oil lands, according to the lease is not necessary to keep it alive from time to time, nor does failure to pay automatically terminate the contract, as under an "unless lease." He may, however, terminate the lease at any time by exercising the right contained in the surrender clause and paying the rentals due. Error from District Court, Kay County; W. M. Bowles, Judge. lease shall remain in force for a term of five years from this date and as long thereafter as oil and gas, or either of them, is produced from said land by the party of the second part, their heirs, administrators, executors, successors or assigns. "The party of the second part hereby agrees to complete a well on said premises within one year from the date hereof, or to pay at the rate of forty ($40.00) dollars for each additional three months such completion is delayed from the time above mentioned for the full completion of such well until a well is completed; and it is agreed that the completion of such well shall be and operate as a full liquidation of all rent under this provision during the remainder of the term of this lease. * "The party of the second part. its successors or assigns, shall have the right at any time. on the payment of two dollars to the party of the first part, their heirs or assigns, to surrender this lease for cancellation after which all payments and liabilities thereafter to accrue under and by virtue of its terms shall cease and determine; provided, this surrender clause and the option therein reserved to the lessee shall cease and become absolutely inoperative immediately and concurrently with the institution of any suit in any court of law or equity by the lessee to enforce this lease, or any of its terms, or to recover possession of the leased land, or any part thereof, against or from Action by Elmer L. Branine and another against the Northwestern Oil & Gas Company. Judgment for plaintiffs, and defendthe lessors their heirs, executors, administraant brings error. Reversed and remanded. tors, successors or assigns, or any person or persons. All covenants or agreements herein set forth between the parties hereto shall extend to their successors, heirs, executors, administrators and assigns." It appears from the agreed statement of facts that $160 was paid to plaintiffs at the time of the execution of said lease, and that all of the rentals were tendered by the lessee before the date they were payable, in strict conformity with the terms of the lease, but that said tenders were refused by plaintiffs. [1] It is agreed that the sole question presented is whether the presence of a surrender clause in the lease, whereby the lessee might, on the payment to lessors of the sum of $2, surrender said lease and relieve itself from any further liability thereunder, render the lease unilateral and voidable for want of mutuality and conferred a corresponding right on the lessors to terminate said lease at will, and to refuse to accept rentals when tendered, though tendered in strict conformity with the terms of the lease. Plaintiffs rely on the case of Brown v. Wilson, 160 Pac. 94, L. R. A. 1917B, 1184, and concede that, if the decision in that case does not govern here, the judgment of the trial court in plaintiff's favor, canceling the lease, should be reversed and the cause remanded. At the time the lease was executed, it was not certainly known whether oil and gas, or either of them, would be found upon the premises, and the development thereof would naturally be attended with the hazards incident to the development of unproven territory. Should a failure result, the loss would be borne wholly by the lessee, while, on the contrary, should development prove successful, the lessor, without having run any risk incident to the exploration, would receive a substantial part of the proceeds from the oil and gas produced therefrom. With this situation in the minds of the parties, it was one of the stipulations in the lease that if a well should not be commenced within 12 months from the date thereof the lessee should have the right to delay operations by paying to the lessors $40 per quarter. The lease itself is couched in plain and unambiguous language, and there is no claim made of any fraud, deception, or unfair dealing by the lessee in procuring it. There is no legal impediment shown which would prevent the parties from entering into any contract which they saw fit, nor from expressing it in language of their own choice, and under these circumstances it is the duty of the court to give effect to the meaning and intention of the parties as expressed in the language of the contract, and the court has no right to make a contract for the parties different from that actually entered into by them. Section 949, Rev. L. 1910; Cohn v. Clark, 48 Okl. 500, 150 Pac. 467, L. R. A. 1916B, 686. [2] It is contended by plaintiffs that the drill or pay, and therefore they have the right to terminate same because of the presence of the surrender clause therein. Just here we believe it will be helpful to inquire what is the status of the parties under the contract, and what are their respective rights and liabilities. Plaintiffs claim that the oftrepeated doctrine, that "contracts which are unperformed that are optional as to one party are also optional as to the other," applies. Is the contract in question one of the character to which this rule is properly applicable? The mere fact that it may constitute an option is not sufficient to bring it within the operation of this rule, for it is of the very essence of an option contract that they are not mutual, for the optionee pays his money or performs his promise for the right of electing whether he will require performance by the other party, and the optionor relinquishes his right of choice for the consideration received by him. Brick Co. v. Bailey, 76 Kan. 42, 90 Pac. 803, 12 L. R. A. (N. S.) 745; Poe v. Ulrey, 233 Ill. 57, 84 N. E. 46. The rule urged only has application to contracts that are wholly executory and unperformed, in that they consist of mutual promises, each the consideration of the other, and where it is optional with one of the parties whether he will perform his promises, in which cases it is also optional with the other. 9 Cyc. 327; 13 C. J. 331, § 179; Lindlay et al. v. Raydure (D. C.) 239 Fed. 928. The lease herein involved was not wholly executory and unperformed. So far as the lessors were concerned, the lease was wholly executed, and by its terms there was granted to the lessee an estate in possession, which vested immediately on its execution and delivery, under which lessees had the right, according to the terms of the lease, for a period of five years to make exploration on the leased premises. Frank Oil Co. v. Belleview Oil Co., 29 Okl. 719, 119 Pac. 260, 43 L. R. A. (N. S.) 487; Brennan et al. v. Hunter et al., 172 Pac. 49. Nor was the lease wholly executory as to the lessee. The consideration of $160 had been paid to and accepted by the lessors at the time of its execution, and four successive quarterly payments had been tendered by the lessee in strict conformity with the terms of the lease. There was therefore part performance by the les see. The fact that the lease conferred upon the lessee the option of drilling or paying or taking advantage of the surrender clause and terminating the lease did not render same void for lack of mutuality. Options in leases granting to the lessee the privilege of purchasing the leased premises are valid, and such an option has been recognized in this state. Jones v. Moncrief-Cook Co., 25 Okl. 856, 108 Pac. 403. And no good reason can exist why an option to terminate a lease of the character here involved, when upheld. Lindlay v. Raydure (D. C.) 239 Fed. | the lease should become null and void, unless 928. In fact, leases of this character have been before this court in a number of cases, and their validity has been recognized. Burress et al. v. Diem et ux., 23 Okl. 776, 101 Pac. 1116; Cohn v. Clark, 48 Okl. 500, 150 Pac. 467, L. R. A. 1916B, 686; McKee v. Grimm, 157 Pac. 308. The decision in Brown v. Wilson held that the $1 paid upon the execution of the lease supported only the first term or the period in which a well should be commenced, and supported no other condition of the lease. When this construction was placed upon the contract therein involved, it logically followed that the remaining conditions of the lease were without consideration. The decision in that case was also based upon the ground that lessees had made default in the payment of rentals according to the terms of the contract, and that the lessor had the right, under the forfeiture clause, to declare the lease at an end. It is urged that that portion of the opinion holding that the surrender clause rendered the lease unilateral and subject to be terminated at the option of the lessee was in conflict with previous decisions of this court. If it be kept in mind that the $1 paid upon the execution of the lease was held not to support any condition of the lease other than the boring period, there would be no conflict. A number of cases decided by this court have presented for consideration leases wherein were contained a surrender clause, and prior to Brown v. Wilson in every instance leases have been upheld. [3] Before reviewing the opinions upon this point, it is well to observe a general distinction between the different kinds of leases which are in common use in this state. Most of them naturally fall in two classes, commonly designated as the "or lease" and the "unless lease," and leases belonging to these respective classes possess such marked distinctions in the rights and liabilities of the parties thereunder that these distinctions should not be lost sight of. Under what is known as the "unless lease," the lessee, so long as he pays the rentals in the manner provided, has an option to continue the lease in force. Frank Oil Co. v. Belleview Oil Co., 29 Okl. 719, 119 Pac. 260, 43 L. R. A. (N. S.) 487; Deming Inv. Co. v. Lanham, 36 Okl. 773, 130 Pac. 260, 44 L. R. A. (N. S.) 50. Such a lease is subject to termination at the will of the lessee, which privilege may be exercised by a mere failure to pay the stipulated rental at the time due, upon the happening of which the lease automatically terminates and the lessor cannot maintain an action against the lessee for rentals. But even in an "unless lease" the lessor has not the right to terminate the lease as long as the lessee complies with its terms. In Frank Oil Co. v. Belleview Oil & Gas Co., supra, the lease provided that if no well the lessee should pay $80 for each year thereafter such completion was delayed. It was held that this provision did not bind the lessee to pay any rent for the land or for delay in commencing operation, but that said lease amounted to an option preventing the lessor after receiving the consideration for any period from leasing to another, and that lessee had the option to keep the lease alive by making the payments in accordance with the terms of the lease. In Deming Inv. Co. v. Lanham, supra, the court held that the lessor in an "unless lease" could not recover rentals thereunder, and in this case the court reiterated the doctrine that the lessee had the option by paying the rentals to keep the lease alive. The lease in the last-cited case contained a surrender clause. If, under these leases, the lessee had the option, as the court clearly said he had, to keep the lease alive by paying the prescribed rentals, certainly the lessor could not terminate same at will, for the existence of the option by the lessee is inconsistent with and negatives the existence of this right on the part of the lessor. [4] On the other hand, under the "or lease," even when containing a surrender clause, the payment of rentals by the lessee, according to the terms of the lease, is not necessary to keep it alive from time to time, nor does the failure to pay automatically terminate the contract, as under the "unless lease," and where the lessee makes default in the payment of rentals the lessor may waive the forfeiture clause and may sue and recover rentals due according to the terms of the lease. Burress v. Diem, supra; Cohn v. Clark, supra; McKee v. Grimm, supra. The lessee, however, may terminate the lease at any time by availing himself of the right to do so contained in the surrender clause and by paying all the accrued rentals due at the time of surrender. Cohn v. Clark, supra; Burress v. Diem, supra. It is a contradiction to say that the lessor in an "or lease" may waive his right to declare a forfeiture for nonpayment of rentals and sue for and recover such rentals until a surrender is made in accordance with the surrender clause, and then say that the presence of this clause renders the lease void for want of mutuality. If the lease was void for this cause, the right upon the part of the lessor to sue for rentals would not exist. In the three cases cited when this court sustained a recovery by the lessor, the validity and binding force of these contracts was recognized, for a recovery could not be upheld upon any other theory, while the court has refused to compel the execution of a lease containing a surrender clause in conformity with an agreement to do so. Superior Oil & Gas Co. v. Mehlin, 25 Okl. 809, 108 Pac. 545, 138 Am. St. Rep. 942; Hill Oil & Gas Co. v. White, 53 Okl. 748, 157 Pac. 710. And has also refused specific perform |