688
THE GREEN BAG
erly expended them, and that all moneys received by directors of the companies in transactions where the company should have benefited, are recoverable, and doubt less will be recovered. It is an elementary principle that all persons who stand in a fiduciary relation to others must account for all the profits made upon money in their hands, by reason of such relation, and that agents, guardians, directors of corporations, officers of municipal corporations, and all other persons clothed with a fiduciary character, are subject to this rule. (Perry on Trusts, jd Edition, Section 430). Our courts of law generally treat the directors as agents. Courts of equity, however, treat them as trustees and hold them to a strict account for any breach of the trust relation. For all practical purposes, they are trustees, when called upon in equity to account for their official conduct. Bosworth v. Allen, 158 N.Y., 155. It was held by the late Presiding Justice Van Brunt, in the case of Beers v. The New York Life Insurance Company, reported in the 66th of Hun, that the company had no right to pay the retiring president a salary for the remainder of his life, at the rate of $37. 500. in consideration of advice and counsel that he might render, and it will be not at all surprising if the vast sums paid to some of these presidents in excess of what anv man could legitimately earn in any such position, are recoverable. There certainly must be some point at which appropriation of funds of a quasi philan thropic institution, in the form of salaries, amounts to sequestration, to use the least offensive term applicable. It is only a question of where the line of cleavage comes between fair and generous compensation, and fraudulent appropriation. In addition to the civil liability that these directors will have to face, is there a penal liability that can be enforced? This is the question that is being asked at this particu lar time. That question must, of course, be determined by the penal statutes of this
state. In order to constitute embezzlement, the accused must occupy a clearly defined fiduciary relation, and the property improp erly disposed of must belong to his princi pal and come to the possession of the accused by reason of such employment; embezzlement has been defined as a criminal breach of trust, although the same author ities are careful to point out that even' breach of trust is not embezzlement. The penal statutes of this state, however, have included embezzlement in the provi sions which relate to larceny, and Section 528 of the Penal Code, in defining larceny reads as follows: "A person who, with the intent to de prive or defraud the true owner of his property or of the use and benefit thereof. or to appropriate the same to the use of the taker, or any other person, either "i. Takes from the possession of the true owner or of any other person; or obtains from such possession by color or aid of fraudulent or false representations or pre tense ... or appropriates to his own use or that of any person other than the true owner, any money, personal property, thing in action, evidence of debt or contract, or writing of value of any kind, or "2. Having in his possession, custody or control as a bailee, servant, attorney, agent, clerk, trustee or officer of any person, asso ciation or corporation, or as a public officer, or as a person authorized by agreement or by patent, either to hold or take such posses sion, custody, or control, any money, prop erty, evidence of debt or contract, writing of value of any nature, or thing in action or possession, appropriates the same to his own use or that of any other person other than the true owner or person entitled to the benefit thereof, steals such property and is guilty of larceny." Formerly there was much difficulty in bringing the crime of embezzlement within the inclusion of the larceny provision, but the present form of the statute quoted would seem to clearly accomplish that.
