20 Cal. App. 2d 436 | Cal. Ct. App. | 1937
We have this day filed an opinion in case No. S. C. 37 (ante, p. 423 [67 Pac. (2d) 152]), which involves questions presented in litigation out of which this appeal arises. While reference may be had to that case for a more complete statement of the facts, those involved in the appeal now before us, in brief, are as follows:
On April 15, 1931, and for several months prior thereto, respondent corporation had as its board of directors Messrs. Luton, Crowe, Woodward, Ball, Harriss, Seamans, Breslin and Cruiekshank. Of these, Luton was president, Crowe, Woodward and Harriss were vice-presidents, Cruiekshank was secretary-treasurer, and Harriss was general manager. For some time prior to the date last mentioned, considerable dissension existed between Crowe, Woodward, Harriss and Ball, on the one hand, and Luton and Cruiekshank on the other, regarding corporate policies. From the record it appears that directors Ball, Woodward, Crowe and Harriss were desirous of getting directors Luton and Cruiekshank “out of the picture”. After conferences among the first-named group, an approach was made to Luton and Cruickshank by Ball with a view to obtaining their preferred and common stock in exchange for certain trust deed securities belonging to plaintiff corporation and transferred to Ball by
Although the appeal comes to us on a bill of exceptions containing thirteen specifications of error, and appellant has not pointed out in his brief nor called to our attention the particular finding or findings claimed to have no support in the evidence and the particulars in which such finding is not supported by the evidence, and notwithstanding that it is not our duty to investigate the questions as to the sufficiency of the evidence, we have nevertheless read the record to determine in our own minds whether the findings are supported by substantial evidence. Assuming the sufficiency of appellant’s brief in presenting the specifications urged in the bill of exceptions, this appeal presents, as suggested by appellant, three inquiries: (1) Was appellant acting in these transactions as the agent of plaintiff corporation? (2) Did appellant purchase these shares from Luton, Cruickshank, Lyon, and Ferguson with the funds of the corporation? (3) Was the receipt and retention of these 1,000 shares of common stock by appellant a secret profit to him as a director of plaintiff corporation?
As to the first question, we are of the opinion that there is in the record substantial evidence warranting the trial court in finding that appellant was acting in these trans
The record also indicates that when appellant filed his income tax return, in answering the question therein contained, “state how property was acquired”, appellant wrote the words, “For cash or in payment of services rendered by myself.” There was no claim made in appellant’s income tax return that he had purchased certain assets from respondent corporation and resold them for a profit of $2,500. This, and other evidence which we find in the record, amply supports the finding of the trial court that appellant was the agent of the corporation.
The directors of a corporation hold a fiduciary relation to the stockholders, and have been entrusted by them with the management of the corporate property for the common benefit and advantage of each and every stockholder; and by their acceptance of this office they preclude themselves from doing any act or engaging in any transaction in which their private interest will conflict with the duty they owe to the stockholders and from making use of their power or the corporate property for their own advantage. (Wickersham v. Crittenden, 93 Cal. 17, 29 [288 Pac. 788]; Schwab v. Schwab-Wilson Machine Corp., 13 Cal. App. (2d) 1 [55 Pac. (2d) 1268] ; Kahle v. Stephens, 214 Cal. 89, 93 [4 Pac. (2d) 145].) Where a director does not attempt to unite his
The second question, as to whether appellant pur- I chased the 1,000 shares of common stock with the funds of \ the respondent corporation, is best answered with a quotation from appellant’s testimony in the trial court, as follows: “As far as this 1,000 shares of stock of Angelus Securities Corporation is concerned, I gave no money or property for it.”
With reference to the third query, we are of the I opinion that the trial court was justified in finding that the \ receipt and retention of the 1,000 shares of common stock by appellant constituted a secret profit to him as a director of plaintiff corporation, for the reason that there is in the record substantial evidence from which the court below could conclude that the entire transaction was concealed from di- , rector Breslin, who was the owner of preferred and common ■ stock; that it was also concealed from director Seamans, who was the holder of preferred and common stock; while it further appears that though there was a board meeting on April ¡ 15, 1931, immediately following the consummation of the transaction, the matter was not brought before the board. I In our opinion, under the facts of this case, there rested upon appellant, as a director of respondent corporation, the duty to inform the corporation of this transaction; and had he done
• Por the foregoing reasons, the judgment appealed from should be, and it is, affirmed.
York, Acting P. J., and Doran, J., concurred.
A petition by respondent to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on June 17, 1937.