CORPORATIONS-OFFICERS AND DIRECTORS--"CORPORATE OPPORTUNITIES" DOCTRINE

Plaintiff corporation brought a bill in equity for an accounting of profits arising from an alleged breach of fiduciary duty by defendant, a former officer and director. The alleged breach consisted of defendant's action in procuring a contract for the manufacture of a saw sharpening machine for the X corporation, wholly owned by him, without disclosing such facts to his associate directors of plaintiff corporation. Plaintiff corporation was engaged in the manufacture of polishing machines, while the X corporation manufactured lawn mowers. At the time of the contract, defendant "knew that ... [plaintiff corporation] desired to enlarge its field of manufacture to include anything which it was equipped to make, and ... [it] was equipped to manufacture this saw sharpener." From a final decree confirming the master's report in favor of the plaintiff corporation, defendant appealed.

Held, affirmed. In obtaining the contract without disclosing the facts to his associate directors, the defendant, although not acting in bad faith, failed to recognize his fiduciary obligation and became liable for the profits of his wholly owned corporation resulting therefrom. Production Machine Co. v. Howe, (Mass. 1951) 99 N.E. (2d) 32.