Oppenheimer v. Carabaya Rubber & Navigation Co.

This action by the trustee in bankruptcy of Frank Squier is brought to recover the amount of a promissory note executed by the defendant corporation to the order of itself, and indorsed by it. This note came into the possession of plaintiff among other assets of said Squier, who died soon after the appointment of his trustee in bankruptcy. The defense to the note consists- of what are apparently merely formal denials designed to put plaintiff to his proofs. - The defendant, however, sets up in various forms an equitable counterclaim by way of set-off to whatever sum may be found to be due-upon the note.

The facts upon which these counterclaims rest are alleged to be-the following: That from the time of the organization of defendant-in August, 1904, and until July 14, 1908, the said Frank Squier was-treasurer of defendant and took an active, leading and influential part: in its management,-and was implicitly trusted, by said defendant, its-stockholders, and officers. That said defendant was the owner of and-entitled to certain properties in the Republic of Peru, consisting, inter alla, of certain rubber forest concessions. That in 1905 defendant and' its stockholders and directors determined to sell said properties, and: to that end the defendant in 1906 created said Squier its attorney in fact to sell said properties. That in the year 1906 one Turner, -without disclosing for whom he was acting, proposed to purchase said properties for ¿1,400 sterling in cash, and a like amount in stock of a company thereafter to be formed. That defendant accepted this proposition not knowing, what was the fact, that said purchase was made by said Turner as the agent of and for the benefit of said Squier.. That thereupon said Squier, still being treasurer of defendant, made: an agreement in England with one Sir George Newnes for the creation of an English company to take over the properties of defendant,, together with other properties, and that any profits, after paying the agreed purchase price for said properties, should be divided equally between said Sir George Newnes and said Squier. It is further alleged that this agreement was carried out, that a corporation known as the “Inambari Para Rubber Estates, Limited,” was organized^, which undertook to pay to defendant the price at which said defendant had agreed to sell its properties to said Turner, and to divide a. large sum in cash and stock between the said Sir George Newnes and said Squier. It is said that a considerable part of this profit, alleged to be upwards of $48,000, has already been paid to said Squier, and that more remains due. The contention, of course, is that Squier, having been intrusted with the sale of the property as defendant’s agent,, could not lawfully become the secret purchaser thereof, and that, having done so, defendant is entitled to the benefit of his operations-This action was begun in July, 1909, and in December, 1910, defend^ ant was permitted to set up the above-mentioned equitable counterclaim in an amended answer. In the meantime, on March 4, 1910, the defendant began an action in the High Court of Justice, Chancery Division, in England, against the Inambari Company, Sir George Newnes, Albert Edward Turner (Squier’s agent), and plaintiff as trustees in bankruptcy of said Squier. The action is founded upon