Wilbur v. Hough

Opinion — Rhodes

By the Court, Rhodes, J.:

It is alleged in the complaint that the Peoples’ Steam Navigation Company executed to the plaintiffs two promissory notes; that they remain due and unpaid; that the defendants became stockholders of said corporation—or “members of the said corporation,” as the complaint states —and that the defendants are liable to pay the plaintiffs a specified sum of money as their proportion of the indebtedness of the corporation. The defendants’ demurrer having been overruled, they answered, setting up the fact that at the time when the notes were made the plaintiffs were “the duly elected, qualified and acting trustees of said Peoples’ Steam Navigation Company.” The cause was submitted upon the pleadings, and judgment was rendered for the plaintiffs.

The case comes fully within the doctrine of San Diego v. San Diego and Los Angeles Railroad Company (44 Cal. 112), that the law will not permit one who acts in a fiduciary capacity to deal with himself in his individual capacity; and that express contracts thus made are contrary to public policy and void. The rule is not only sustainable on principle, but is supported by abundant authority.

Judgment reversed and cause remanded.

Concurrence — McKinstry

McKinstry, J., concurring:

I concur in the judgment. The plaintiffs could not by executing promissory note's as trustees of the corporation to themselves as individuals,' create evidence which would prima facie establish an indebtedness against the coporation, and against each stockholder.

Mr. Justice Niles did not express an opinion.