Hammond's Appeal

• Decision Date: 07 January 1889
• Parties: APPEAL OF WM. J. HAMMOND. [ASSIGNED ESTATE OF THE McTIGHE ELEC. L. & M. Co.]
• Court: Pennsylvania Supreme Court

123 Pa. 503

APPEAL OF WM. J. HAMMOND.

[ASSIGNED ESTATE OF THE McTIGHE ELEC. L. & M. Co.]

Supreme Court of Pennsylvania.

Argued November 6, 1888.

Decided January 7, 1889.

Before PAXSON, GREEN, CLARK, WILLIAMS and HAND, JJ.; GORDON, C. J., and STERRETT, J., absent.

FROM THE DECREE OF THE COURT OF COMMON PLEAS NO. 1 OF ALLEGHENY COUNTY.

No. 229 October Term 1888, Sup. Ct.; court below, No. 407 June Term 1886, C. P. No. 1.

COPYRIGHT MATERIAL OMITTED

Mr. J. W. Kirker, for the appellant:

The case of Hill v. Frazier, 22 Pa. 320, was very different from the case at bar. Not only when the claims were bought up, but at the time of the bringing of the suit and at its trial, Eldred, the equitable plaintiff in that case, was the treasurer of the company; and it was well said that as he was the confidential agent and trustee of the company, he could not create other relations which would put him in an attitude of hostility to his principal or cestui que trust. "But had that relation been dissolved, either by operation of law or the act of the parties, before the purchase of the claim, this rule would not have applied, since the reason of it would then have had no existence." The reasoning of this court in Hill v. Frazier, distinguishing Craig's App., 92 Pa. 396, applies with equal force to distinguish Hill v. Frazier from this case. Germantown Pass. Ry Co. v. Fitler, 60 Pa. 124, is also to be distinguished. In that case, although the corporation had made a voluntary assignment, it still remained in possession of all its property and assets and continued to exercise its corporate franchises and to conduct its business as before.

Mr. A. V. D. Watterson (with him Mr. S. M. Raymond), for the appellees:

"One who is charged with the duty of paying debts, cannot make a speculation by buying them for his own use, whether he does it with his own money or not. That the officers of a corporation are held to the same rules of good faith which govern other agents, is proved by Middletown etc. Turnpike R. Co. v. Watson, 1 R. 330; and Kimmell v. Geeting, decided at the present term. The treasurer's purchase, therefore, of Frazier's debt against the company, was an extinguishment of it:" Hill v. Frazier, 22 Pa. 320. This case in all its essentials is on all fours with the case at bar, and no matter whether the corporation was dissolved by the assignment or not, the same reason remains for the existence of the rule: Germantown Pass. Ry. Co. v. Fitler, 60 Pa. 124.

OPINION, MR. JUSTICE WILLIAMS:

The McTighe Electric Light and Manufacturing Company was a corporation organized in 1883. The appellant was a stockholder, a director, and the treasurer of the corporation. In March, 1886, being unable to meet its obligations, the company made an assignment to Steel for the benefit of its creditors. The assignee accepted the trust, entered upon his duties, and during 1886 sold the entire plant and assets of the corporation. The proceeds of the sale were brought into court for distribution.

After the assignment to Steel, and after the assignee's sale, Hammond bought several small debts of the corporation at a discount. They amounted in the aggregate to $1,136.17, and were presented to the auditor for allowance. The auditor refused them participation in the fund, because Hammond had been prior to the assignment the treasurer of the corporation, and held that his purchase of these debts was, under the rule laid down in Hill v. Frazier, 22 Pa. 320, an extinguishment of them. The several assignments of error relate to this ruling, which was concurred in by the court below.

The facts in Hill v. Frazier were, that Eldred was the treasurer of a corporation actually...