Legal Question in Business Law in Mississippi

Recovery of unpaid salary and liability as officer of company

My husband worked for a company that is incorporated. He was the vice president. He was also given 25 shares of company stock. This was given in exchange for his good credit rating & standing in the community. Two years later the owner of the company informed him that unless he invested $100,000.00 into the company to bring up cash flow, he would have to leave. Since he had already agreed to defer some of his earned commissions to help with cash flow, he did not put up the money. Each month he has presented them with a bill for $15,500.00 owed him in commissions (which the company has received payment for). Now they tell him they are not going to pay it. As an officer of the company he signed bank notes for equipment, etc. What is his liability there? Can he sell his shares of stock to a third party? Can he sue for breach of contract? He just wants his money. If he sues & the company goes bankrupt, if he still has the company stock, is he liable for 1/4 of the debt and the bank notes? We are willing to give the stock back to the company in return for the $15,500 owed, but the best the owner will do is say he will take his name off the bank notes in return for the stock & forgiveness of the debt. We said no. Thank you.

Asked on 6/03/05, 10:37 am

1 Answer from Attorneys

Albert Pettigrew Law Offices Ph 228-875-8736

Re: Recovery of unpaid salary and liability as officer of company

If you husband signed the debt only as an agent for the oompany, he is not liable for it and as a stockholder he is not liable for the company's debt. He can normally sell his shares unless they were restricted at time of issuance. As to the commissions, your statements indicate there has been a breach of contract. However, there probably has to be some writing signed by an officer, agent, or employee of the company that at least indirectly is evidence of the agreement and you generally have 3 years from the date of the breach to initiate a law suit and one year to initiate a law suit for suit on any misrepresentation or employment agreement.

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Answered on 6/04/05, 6:04 am

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