The Mount Holly news. [volume] (Mount Holly, Burlington Co., N.J.) 1891-1942, 1919-07-22

CTS OOLHpdIly IeSdl STATUS, ana II
physical and financial condition Their,
in enumerated in detail, and thu
Black was the holder of at least fifty
five per cent. of the capital stock, an
that he was in position to acquir
more and was willing to sell it to tn
1 Bell Companies. By the First" SEE
ton Black agrees to sell and the Be
Companies agree to purchase, on O
before August l, 1917, fifty-fve pc
cent. or HOO shares, for $1,000, pro
vided and upon condition
! (A) THAT the Farmers Telephon
Company shall have duly released, il
I writing, so much of the territory sub
licensed to it by the respective Bel
Companies under the sub-licens'
agreement or agreements now in fore
between the Farmers Telephone Com
pany and the Bell Companies as i
within the proposed United States
army cantonment, and its environs
contemplated to be established 0,
which may hereafter be established a
or near Wrightstown, New Jersey
and that said Farmers Telephon,
Company shall have formally consent
ed, in writing, to the furnishing by
the Bell Companies, or either or botl
of them, of telephone service within
the territory so released, and has re,
leased and discharged the Bell Com
panies severally from any further OBJ
legations under or by virtue of sale
sub-license agreement or agreements
with respect to the territory so re
leased, except so far as said territory
thereby shall become a part of the
territory operated by the Bell Com
panies, and said Farmers Telephone
Company shall have agreed in writ
ing, to the use by the Bell Companies
or either or both of them of the poles
lines, plant and equipment of the
Farmers Telephone Company within
the territory so released at the usual
rental or attachment charges there
fore" And
(B) that the authorization of the
Board of Public Utility Commission
ers to the transfer be obtained. By
the Second" section the Bell Com
panies agree, provided the HOO shares
have been delivered and transferred
according to the terms set forth in the
"First" section and "the provisos OF
said section have been fully met and
complied with" to purchase the re-
naming shares within one year at $50
per share, if procurable. In the
Third" section Black covenants, war
rants and guarantees the representa-
lions made in the recital of the con-
tract, and further that cd during
any time or period affected by this
agreement no dividend shall be de-
clared or paid, nor any distribution OF
capital or surplus made or attempted
to be made by the Farmers Telephone
Company" By the Fourth" section
the Bell Companies agree to pay
Black $4,000 if he shall have within
one year delivered all the stock at $50
per share, "and all the provisions and
conditions of this agreement shall
have been carried out and complied
with" or SIS a share if more than SO
per cent, or $40 per share if more
than rs per cent, or IS per share if
more than IS per cent. of the stock
shall have been delivered and trans
ferred. At the time that Black exc
cuted these agreements he had, OF
course, everything fixed for the ratifi-
cation of the release by the Farmers
Telephone Company. The directors
We're then mere dummies" to whom
he presented it on July IL, and they
without any foreknowledge of it, OF
of the part it played in the stock
sales agreement of which they knew
nothing, although they suspected
Black was profiting heavily, perfunct-
orily confirmed it. The $4,000 goal
was blocked by Dr. Keely's unyielding
- M AhA I'D
amounting to $28,635 was paid to
Black when he delivered up 1909
shares.
We need look no further than the
written agreements for proofs plen-
airy that the bonus was paid in part
for the release and in part for the con-
troll of the company. The main thing
the Bell Companies sought, bargained
for, and got through Blacks conduct
was the surrender by the Farmers
Company of its exclusive right in the
camp, for which they paid him in
stead of the company but, neverthe-
less, in conscience, to the use of the
company, S28, $685. The contract of
July 2 leave no doubt of this. In the
Fourth" section it is repeated that
the moneys were to be paid only in
the event that, among other things,
"all the provisions and conditions of
this agreement shall have been car
ried out and complied with" and the
most prominent of these is the provi-
sion relating. to the release. The
other consideration for the bonus was
the control of the company. A secret
profit realized by director from an
undertaking to deliver the corporate
control of his company, enures to the
corporation. Fletcher Cyclopedia,
Corporations, Vol. 4, sec. 2321; 2
Thompson on Corporations sec. 1887;
Mcclure VS.. Law, 161 N. Y, 70;
Heineman VS.. Marshall, lit Mo. App.
SAG; Porter VS.. Heeley 244 Pa. APT. In
either aspects of the case Black is
Compliments counsel char
acterize the transaction as bribery of
the president to sell eslt the company
and they may be right, but it is not
necessary to resort to such harsh de-
in order to call him to ac-
count. 1t is enough that it appears,
as it does Enthusiastically, that Black,
while president of the company, and
in fiduciary relation to it and the body
of stockholders, clandestinely dealt
with corporate assets for his private
gain. The established policy of the
law is that a trustee shall not make
a penny piece of personal profit out
of his trust, and the rule, based upon
this Statutory policy, is memorable, and
the courts tolerate not the least en-
croachment, whatever the circum-
stances may be. The duty of fiduci-
airy first and all the time is to his
trust. 1t is not only foremost, but
his self-interest must be entirely elm
mated. 1t would be a difficult task to
find in the books a principle more uni
formly upheld and vigorously enforced
than the one that trustee shall not
enrich himself by the use of his trust
The authorities are collected in 2
Thompson on Corporation, sec. 1888
ct sea-; Fletcher Cyclopedia, Corpora
tons, vol. 4, Sec 1908, ct seq; Kelsey
VS.. New England ST. Ry Co. 81 N. j.
Eq. TAP; Barry VS.. Moeller, SO N. j
Eq 483; Goodbody vs.. Delaney 80 N
]. Eq. 140; Comm. T. l. & Tr. Co. VS.
Settler, 227 Pa. 40
1t is claimed and not denied that
the terms of the contract of June %
whereby Camp Dix was released, were
highly advantageous to the Farmers
Telephone Company and it is there
fore urged on behalf of Black that he
is not liable for the profits because
forsooth, they were not made at the
expense of the company. This beg;
the question. 1t may be assumed that
the bargain was beneficial to the
Farmers Company. The testimony i:
to that effect. 1t would have the cos
the company $4,000 to install the tele
phone system at the cantonment, anC
it was questionable whether the reve
nues would have justified the outlay
and it was also an open question
whether the traffic arrangement undel
the contract would not be the NOR,
profitable of the two schemes. Blu