The Scranton tribune. [volume] (Scranton, Pa.) 1891-1910, 1902-08-13
OPINION IN
JENKINS CASE

| find otherwise. Officers and directors OF
| a corporation are quasi trustees for the
| stockholders. They act In a fiduciary
capacity. There Is any amount Of text
book law bearing upon this question. II
is unnecessary to quote 1t. We find the
principle concisely stated in Bird Coal
and Iron Co. VS.. Humes, 15I Pa. 2TS: "a
director Is n trustee for the entire body
| OF stockholders and he IL bound to man
| age all the business affairs OF the com
pany with a view to promote. not his own
Interests. but the common interests. and
| he cannot directly or indirectly derive
any personal profit or advantage by rea-
| son of his position, distinct from the
other stockholders.
by assuming the office. he undertakes
to give his best judgment In the interest
OF the corporation, In all matters in
which he acts for II untrammeled by any
| hostile interest in himself or others. All
| secret profits derived by him In any deal
ings in regard to the corporate enter
prise must be accounted for to the cor
poratfpn. even though the transaction in
which they were made was of advantage
to the corporation"
We refer also to Sperings App, Il Pa.
II. and Swentzell VS.. Penn Bank, 147 Pa.
| 140.
The consideration of the exception to
the allowance of defendants set-off sug-
gests three questions:
!. Can defendants claim of set-off be
allowed In an action of assumpst? Or.
In other words could the defendant have
maintained an action of assumpst to re-
cover the amount of the claim from the
plaintiff?
.. 1t appearing that the defendant s
claim arises from the fraud or deceit Of
the plaintiff. could not the defendant
waive the tort and proceed against the
plaintiff in assumpsit for ''money had and
received?
q. The transaction which is the basis of
the defendants claim of set-off having
been completed and ended early in 1892
and the present suit not having been
brought until 1899: and the defendant
having made no demand on plaintiff for
anything until the time of the trial be-
fore the referee, does not the statute Of
limitation bar the claim of set-off?
DISCUSSION OF QUESTION.
Our discussion will be confined to the
found that the act of thea plaintiff in
making secret profit at the expense of
the defendant was fraudulent in fact. 1t
was not constructive fraud. What kind
of an action would lie to enforce the de-
fendant's claim under the circumstances?
The general current of authorities indi-
Gates that a plaintiff is not permitted to
declares in assumpsit. 1t must be borne
in mind that in the case at bar the plain
tiff obtained property. consisting of real
estate and shares Of stock in various
companies.
This property belonged in law to the
defendant company, and equity has COM
plete jurisdiction to compel transfer
of the real estate and the stocks to the
party entitled to them. 1t is also clear
that an action of trespass under our pro-
,cedure act would lie: or, under the old
practice, either an action of trover or
case The referee has undertaken to
place value upon the real estate and
stocks and to take. as it were, a short
cut to righteousness in business dealings
by discardng legal forms of actions and
allowing the defendant to set off the
value of the property against the plain
tiff's claim which Is based on con-
tract. 1t is claimed, on account of the
equitable scope of the action of assump-
sit in Pennsylvania. that this may be
done. We do not think the authorities
sustain this position. As an initiatory
refer to Lee VS.. Gibson, IA S. & r. 105,
where Justice Duncan says:
''Since courts of common law cannot
administer equity in the same way courts
of equity can. we have adopted the most
liberal principles in this action. and be-
cause we nave Ho court OIL ClldnceTy, SlS-
tained the action. where one man holds
unjustly the money of another; You may,
in every case, waive the tort. Where the
party has received your money. tres
pass or trover may be converted into
this action. Where the defendant has
turned the article into money, or there
is reasonable evidence that he has, as in
the case of the masquerade ticket. But
where YOU do this you ratify the con-
version; YOU adopt his act. and can re-
cover nothing more than he has received.
In England, not even interest. but here,
the money received with the interest.
man may disaffirm the act alb initio by
reason OF the fraud and bring his special
action and recover his actual damages.
or affirm it. and demand the money; he
may make his. election"
We shall refer to some of the cases
cited by counsel as well as those relied
upon by the referee.
Heck VS.. Shenner, 4 S. & r, 249. The
action was to recover compensation for
services as a housekeeper. The evidence
showed mafeasance on the part of the
plaintiff because she had embeZzled her
property. 1t was held that there
could be no set-off for the value of the
goods embezzed: but defendant was al
lowed to make a defense to the action
on the ground that plaintiff had failed
in her contract to render faithful SER
vice. If this case is authority at ALL it
is authority for the plaintiff. 1t does not !,
help the defendant.
y =
Bethlehem Borough VS.. Perseverance
Fire Co., 81 Pa. AS. The borough brought |
a suit I'm assumpsit against the fire COM
pany for the value of fire engine |
claimed to be unlawfully taken by the |
defendant. Justice Mercur reviews the |
and lays down five PROPOSE |
tions which are law In PENNSYLVANIA: |
"O An action of assumpsit waiving the |
tort could not be maintained against the |
borough for the value of the property. |
(2 Assumpsit can be maintained only |
where there Is contract express or i'm