Court Opinion

ID: 6882518
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:19:20.248781+00
Date Added: 2024-06-11T16:05:37.501196
License: Public Domain

L. HAND, Circuit Judge
(concurring).
There is of course no doubt that a fiduciary must restore to the estate all gains to which he may become entitled, -arising out of any transactions between himself and a firm of which he is a member or in which he is interested in any other way. There is equally no doubt that he is liable for all losses which such transactions may cause his estate, and as to these his liability is not limited by his proportionate interest in the firm assets or profits; he is liable in solido. But in the ease at bar brokerage fees on the charter-parties would have been due whoever procured them, and their payment therefore caused no loss to the debtor that it would not have had to bear anyway. Conceivably Sexton’s allowance as receiver ought not to have been so - high because the bulk of his services were in procuring the charter-parties, but that is a separate question. Judge Augustus N. Hand and I do not, however, think that a disposition of the case demands a decision whether he could in any event have been held liable for Kellogg’s half of the fees, or whether his liability did not extend beyond his own half; and we prefer to leave that question open without indicating any opinion on it either way.
This we can do because if Sexton could be held for the full amount, we agree with Judge Clark that it would be too severe a penalty to exact from him, considering that he could never have collected more than one half the fees. If on the other hand he can be held only for his own share and not for his partner’s, the result is the same ; for there can be no question that he was Kellogg’s partner when the fees were earned and as such he then became entitled to one half of them. His subsequent assignment of that half to Kellogg did not affect *712his liability to the estate. As soon as the fees were earned the law imposed upon his behalf a constructive trust which compelled him to hold them for the estate’s benefit; he .could no more transfer his interest in them than he could transfer any other asset of the estate, and he remained liable after he had done so. For these reasons we concur in affirming the order.