Daily Kennebec journal., 1905-12-30
RECENT REScRlPrs-
Decisions Handed Down in York and
Somerset Cases,


camden Land Co.. in Ea. VS.
Annie +. Lewis. Admx. ct ais. Re
script by Savage, J.
l. y bill in equity which charpes n,
that certain real estate was bought for
the rlaintiH corporation by its presi-
cent, ana was paid for in whole or In
part WIN It's funds. or with the pro-
ceeds OF its stock unlawfully issued and
SOLD, and not properly accounted for.
anu tnat us president fraudulently
caused the real estate to he conveyed
10 ms son, one of the defendants
through whom several other defend
ants, but not all the defendants. have
legal or equitable titles. which they
should convey to the plaintiff, ca that
part OF the above defendants. and two
other defendants, have unlawfully re-
ceived stock in the plaintiff corporation.
winch they should account for to it. and
80 that still another defendant has un-
lawfully received and sold the stock of
the plalntl1f, in part, at least, other
than mat mentioned in the preceding
class, for the proceeds of which he
should account to it, is bad for multi
fariouSneSS.
,. An enforcible trust is lands pur-
chased by the president of a corpor-
alton with his own money. or with
money which he supposed belonged to
hiin was not created in this case for
the benefit of the corporation, though
II mad authorized him to act for it i'm
the purchase of real estate, and though
he may nave intended ultimately TO
sell the land to the corporation
.. Promoters of corpora ton stand
IN fiduciary relation to the corpor-
alton and to it's subscribers for stock
and to those who it is expected will
afterwards buy stock frcm the corpor-
alton. If they undertake to sell their
own property to the corporation they
are bound to disclose the whole truth
respecting it. If they fail to do this
or If they receive secret profits out of
the transaction, the corporation NAV
elect to avoid the purchase or it NAV
hold the promoters accountable for the
secret profits.
A. Treasury stock in a corporation
which is issued to trustees whose duty
Is immediately to return it to the cor
poration is still treasury stock
D. Directors of Il corporation have no
authority to act for the corporation in
matters in which they themselves are
interested.
.. Directors of a corporation cannot
vote salaries to themselves. Nor can
they vote salary to one of their num-
Der as president, at a meeting where his
presence is necessary to a quorum.
I. The president of a corpora ton has
no implied authority to sell its treasury
stock. Nor, in the absence of a valid
vote Of quorum of disinterested di-
rectors can he cause treasury stock to
be issued to himself in payment of the
corporations debt to him.
.. The unauthorized issue of treas
ury stock to the president in such a
case conveys no rights to him as
against the corporation. He is re-
garded as holding the stock in trust for
the corporation, and if he sells it, the
proceeds in his hands are impressed
with the same trust, and may be fol-
lowed into his estate. SO long as dis
tiTguiShabe.
9. An officer of a corporation. en-
ployed on salary. to sell it's stock for
the benefit Of the corporation. cannot
charge it to himself. or account for it at
an arbitrary price, when sold. and
truly account for the whole price re-
ceiTed. The whole amount received
belongs to the corporation, and in his
hands is trust money, which the cor
poratlon may follow.
10. A vote of stockholders that all
acts of the directors and officers be
hereby ratified and approved is held
not to be effective. i'll this case, to
not tfy- I,n, no,
ing of salaries by directors to them
selves, or the unauthorized and illegal
issue cf treasury stock by the president
to himself, when it does not appear tnat
the stockholders generally had any
knowledge Of the transactions. KnOwl-
edge by stockholders of such trans
actions is not to be presumed.
II. When trust funds of a personal
character have been changed into real
estate. they can be followed, and the
rights of the cestui que trust can be
| maintained, if the rights Of third
parties have not interviewed.
l.. In this case it is held that the
proceeds of treasury stock unlawfully
issued to the president of the plaintiff
corporation and sold by him, and the
proceeds of treasury stock lawfully
issued and sold by him SO far as not
accounted for, are traced $4,000 into the
Sycamore farm, and $1,000 into the
| Sherman farm, mentioned in the bills.
and are charges upon those farms re-
spectively, so far as concerns the inter-
csts of such defendants as have no
other or greater rights than William D.
Lewis would have had had he pur-
chased those farms in his own name.
Is. The bill relating to the Sagamore
farm will be sustained against Walter
| Z. Lewis, with costs. but equity re-
| quires that it be retained for the sum-
| moning in of the other defendants,
| named in the bill relating to the Sher-
| man farm. and for further proceedings
and decree. The bill relating to the
Sherman farm will be sustained with
costs against Annie F. Lewis Jessie
| Lewis, Walter f. Lewis. Dexter w.
| Lewis, Edison Lewis and Lenora l..
jackson. The multifarious bill will be
| dismissed with a single bill of costs.