Brief Fact Summary
Defendant Bell was employed by Acoustic Products Company, a Delaware corporation chartered to deal in musical equipment, to negotiate a deal with Reynolds and W.R. Reynolds & Co. for a patent held by De Forest Company. De Forest was in receivership and Reynolds was in control of the company under contract. Acoustic needed the patent to carry out its business. Bell failed in negotiating a deal, but Bell with the assistance of Biddle was offered participation in the acquisition of De Forest. Acoustic tried to raise capital to acquire a minority interest in De Forest, but was unable. The directors of Acoustic agreed to buy the shares individually and made a large profit. The trustee of Acoustic in bankruptcy brought suit against the acquiring individuals for the profits. The District Court dismissed the complaint and the plaintiff appeals.

Rule of Law and Holding
That a corporation is financially unable to take advantage of a corporate opportunity does not free the agent to take such opportunity. A fiduciary may make no profit for himself out of a violation of duty and anyone who assists in the fiduciary's dereliction is likewise liable to account for the profit so made. The court reversed the dismissal.

Topics
Fiduciary Duties & Shareholder Litigation

Subtopics
Duty of Loyalty
Expropriation of Corporate Opportunities