132 N.Y.S. 76 | N.Y. App. Div. | 1911
Action for an accounting by a corporation against its former president. The plaintiff, a domestic corporation, was organized in July, 1904, for the purpose of dealing in building materials, and from the time of its incorporation until June, 1907, the defendant was its president and the owner of one-half its capital stock. He also was the active manager of all its affairs. The other half of the capital stock was owned by one Foster, who was. the treasurer of the company. Two shares, however, were nominally held by one Kingsley for the purpose of qualifying him to act as a director. The board of directors consisted of the defendant, Foster and Kingsley, none of whom, except the defendant, took any active part in the management of the corporate business. Foster and Kingsley attended the directors’ meetings, but ■ outside of that only occasionally went to the' office or had anything to do with the business.
It seems that in May, 1906, the defendant, deeming it necessary for the economical and proper management of the corporation’s business, purchased with its funds a small automobile, for which he paid $800, and freight charges amounting to some
The rule seems to be well settled that an agreement made by an officer of a corporation with himself by which he derives a benefit is voidable at the option of the corporation (Skinner v. Smith, 134 N. Y. 240; Davids v. Davids, 135 App. Div. 206), and this rule seems to be applicable irrespective of whether the agreement was fan to the corporation or not. (Munson v. S., G. & C. R. R. Co., 103 N. Y. 58; Jacobson v.
It is suggested that the corporation itself was a separate entity and, therefore, the rights of defendant and Foster ought not to be considered. Theoretically this may be true, but when a court of equity is endeavoring to- adjust the rights between
It follows that the judgment appealed from should be reversed and a new trial ordered before another referee, with costs to appellant to abide event of the action. The disposition thus made of the judgment renders it unnecessary to pass upon the order appealed from.
Ingraham,. P. J., Laughlin, Miller and Dowling, JJ., concurred. •
Judgment reversed and new trial ordered before another referee, costs to appellant to abide event. Order to be settled on notice.