Court Opinion

ID: 5224276
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:41:06.629303+00
Date Added: 2024-06-11T08:27:33.949664
License: Public Domain

Scott, J. (dissenting):
This appeal from the final judgment brings up nothing for review by this court, except such questions as are involved in the proceedings since an affirmance of the interlocutory judgment, and the only question which seems to call for consideration is as to the amounts for which plaintiff ¡should have judgment against the defendants Bouker.
The action is brought in equity to compel the defendants to account for certain secret profits realized by: them from a contract into which the plaintiff was induced to ¡enter.
The decision upon which the interlocutory ¡decree was based finds that the defendant Kelly was a director and vice-president, and the defendants Bouker were directors of the plaintiff; that Kelly individually held a contract with - a California Corporation under which he was entitled to purchase asphalt at a *695certain price; that on June 3, 1902, said Kelly entered into a contract with plaintiff for the sale to it of said asphalt at a much higher price than that at which he could purchase the same from the California corporation; that the making of this contract was authorized by the votes of the defendants William Kelly and De Witt C. Bouker, Jr.; that at the time said last-mentioned contract was made the fact that Kelly had a contract with the California corporation was kept a secret from plaintiff and was known only to said Kelly and John A. Bouker, the then president of the plaintiff; that subsequently and on July 29, 1902, the said Kelly executed two contracts by one of which he assigned to De Witt 0. Bouker, Jr., and by the other of which he assigned to John A. Bouker and Andrew A. Bouker a one-quarter interest in the profits to he derived from his contract with the California corporation, which, of course, meant one-quarter of the profits to he derived from his contract with plaintiff; that when these assignments were made the defendants Bouker were directors of plaintiff and accepted the assignment with full knowledge of the fiduciary relations of said Kelly to plaintiff, and the nature of the contract from which said profits were to be derived, and that in accepting said assignments and the payment of the money thereunder they acted unconscionably and inconsistently with their duty as trustees of plaintiff, and in violation of their trust.
It appears from the report of the referee appointed by the interlocutory decree that the defendant Kelly realized as profits from the contract with plaintiff the sum of $23,161.56, of which he paid to the defendants Andrew A. Bouker and De Witt C. Bouker, Jr., each, the sum of $5,270.43. The final decree awards judgment against all three defendants for the whole profit realized by Kelly, and the question raised by the appeal of the defendants Bouker is whether they should be mulcted for anything more than the several amounts which they received.
It is insisted by the respondent that when an interlocutory judgment determines and directs the final judgment to which a party is entitled; the final judgment must follow the interlocutory judgment. This is undoubtedly the rule, when the interlocutory decree is clear and unambiguous. (Reilly v. *696Freeman, 109 App. Div. 4; affd., 184 N. Y. 610.) In the present case the interlocutory decree, if it does not specifically provide for a separate judgment against each defendant for the share of the profits received by him, is at least open to that construction. It provides: “Ordered and. adjudged that the defendants be, and they hereby are, and each of them is, required to account to the plaintiff, before a referee to be herein appointed, for the profits received by them, and each and either of them, upon sales of asphalt made to the plaintiff under a certain contract dated June 3d, 1902, made and executed between the plaintiff and said defendant, William Kelly, and of all and every the trust property, issues and profits which may have come to the hands óf the defendants or either of them, or any other person or persons, to the use or order of them; and it is * * ""
“Further ordered and adjudged that on the coming in of said referee’s report, and the confirmation óf the same, the plaintiff recover from the defendants, and each of them, the sum that may be found due to it upon such accounting, and that a final judgment be thereupon entered accordingly in favor of the plaintiff and against the defendants for the sum or sums so found due, together with the costs and disbursements to be taxed and entered in said final judgment in favor of the plaintiff and against said defendants, and that the plaintiff have execution therefor.”
If the interlocutory judgment be ambiguous as to the form of final judgment to be entered, it is our duty to construe it in the light of the decision made by the court and the character of the litigation. (Spier v. Hyde, 47 Misc. Rep. 443.) There is a well-recognized distinction between an action in equity against a director of a corporation for an accounting with respect to property of a corporation that has actually come into its hands and an action at law for damages sustained by the corporation in consequence of his willful or negligent acts falling within the terms misfeasance or non-feasance. (People v. Equitable Life Assurance Society, 124 App. Div. 714, 733.) The present action is clearly of the first ■ class. It is true that the complaint charges all the defendants with having conspired for the purpose of cheating and defrauding plaintiff by *697inducing the contract between Kelly and the California corporation, and the later contract between Kelly and the plaintiff, but the decision fails to find that any such conspiracy existed, and indeed negatives its existence by a finding that when Kelly entered into the contract with plaintiff the existence of Kelly’s contract with the California corporation was kept a secret, and was known only to Kelly and John A. Bouker, the necessary inference being that it was then unknown to the appellants. The only case made against the appellants by the decision is that they accepted from Kelly a portion of the secret and illegal profits realized by him with knowledge of his fiduciary relation to-the plaintiff, and of the source of such profits. The measure of their liability in such a case is well settled, and is thus stated by a leading authority: “Where directors are charged in equity to account for the appropriation of corporate funds, or for profits improperly received by them, they are liable only severally to account for their own receipts.” (Morawetz Corp. [2d ed.] 535, note; Parker v. McKenna, L. R. 10 Ch. App. 96; General Exchange Bank v. Horner, L. R. 9 Eq. Cas. 480; Woodbury Heights Land Co. v. Loudenslager, 43 Atl. Rep. [N. J.] 671; Hunter v. Hunter, 30 Mo. 445; Franklin Ins. Co. v. Jenkins, 3 Wend. 130, 134; People v. Equitable Life Assurance Society, supra.) A separate judgment against each of the appellants Bouker for the amount of profits actually received by him is the proper judgment to be entered in a. case like the present, and would not be inconsistent with the interlocutory decree.
The judgment appealed from should, therefore, be modified accordingly, and as modified affirmed, without costs in this court to either party.
Laughlin, J., concurred.
Judgment affirmed, with costs.