Moulton v. Field

Citations

• 179 F. 673
• 103 C.C.A. 77
• 1910 U.S. App. LEXIS 4688

Syllabus

<p>1. Corporations (§ 317*) — Officers—Liability fob Misappropriation of Funds.</p> <p>Defendant was president of a mutual life insurance company, the general manager of which had a contract giving him sole control and management for 25 years on a percentage basis, subject to the charter and by-laws. He also controlled the election of directors through proxies. When the contract had still four years to run, he became incapacitated and sold the contract to another, receiving $125,000 therefor. Defendant, being a party to the scheme by which the directors approved the transfer, increased all of their salaries, and on the same day bought from the new manager with funds of the company a list of the members of another insolvent company with which he had been connected paying him, $200,000 therefor, with which he paid the $125,000 to the retiring manager, retaining the remainder. Such list was of no direct financial benefit to the company. Held, that the entire transaction was a fraud upon the company and a betrayal of trust on the part of defendant as an officer which rendered him liable to the company for the $200,000, so fraudulently taken from its funds.</p> <p>[Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 1401-1415; Dee. Dig. § 317.*]</p> <p>2. Corporations (§ 317*) — Officers—Sale of Official Positions.</p> <p>A contract between a mutual insurance company and its general manager, by which he was to receive for a term of years a percentage on the business done, was one for personal services which he could not transfer to another, and on his becoming incapacitated the value of the unexpired term, if any, belonged to the company, and the action of the officers and directors in permitting him to sell and transfer it to another for a large sum received for his own use was a violation of their duty of good faith toward the company and a betrayal of their trust.</p> <p>[Ed. Note. — For other eases, see Corporations, Cent. Dig. §§ 1401-1415; Dec. Dig. § 317.