Sometime about June 1942, the defendant gave plaintiff a check for $1,045 for plaintiff's share in accordance with their aforesaid "private" agreement. The check, upon plaintiff's insistence, was made out to the order of cash and was dishonored by defendant. Plaintiff admitted on the witness stand that his reason for wanting the check made in this manner was because he desired to avoid the payment of income tax on this deal. The conclusion is inescapable that another factor was the plaintiff's realization that this was an unorthodox deal and his desire to keep the payments to him as clandestine as possible.
In this action the plaintiff is suing for an accounting by the defendant and he asserts that the arrangement with the defendant was made with the knowledge and approval of his (plaintiff's) superior, a Mr. Petrie, who has since deceased. Mr. Cosgrove, the Vice President of the Crosley Corporation, and Mr. Petrie's superior, testified (by deposition) that it was the Company's duty and wish to treat all distributors alike and that plaintiff was employed for this purpose and that it was strictly against the Company's rules for anyone to make any such secret profits, and when he learned of the deal between plaintiff and defendant he immediately discharged the plaintiff. The Court does not consider the plaintiff's testimony on that point worthy of credence and has therefore found as a fact that the profit sharing agreement was without the knowledge and consent of the plaintiff's employer.
Enough has been said to indicate the moral caliber of the plaintiff (and for that matter, that of the defendant). Obviously the Court should not assist the plaintiff to profit in this unconscionable transaction.
"A bargain for private advantage by a trustee, executor, administrator, guardian, agent, partner, or other fiduciary, in consideration of performing or promising to perform his duty as such fiduciary, or in consideration of refraining from performing or of promising to refrain from performing his duty, or any bargain that tends to induce a violation of a fiduciary's duty as such, is illegal except when effectively consented to by the beneficiary or principal of the fiduciary." Restatement of the Law of Contracts, Sec. 570.
"Unless otherwise agreed, an agent is subject to a duty to the principal not to use or to communicate information confidentially given him during the course of or on account of his agency or in violation of his duties as agent, in competition with or to the injury of his principal, on his own account or on behalf of another, although such information does not relate to the transaction in which he is then employed, unless the information is a matter of general knowledge." Restatement of the Law of Agency, Sec. 395; and:
"A bargain by an agent, even though acting as such without compensation, to receive without his principal's consent compensation for the performance of his agency is invalid." Williston on Contracts, Sec. 1737, Page 4905.
The cases are numerous which sustain the above cited principles: Wolfe v. International Re-Insurance Corporation, 2 Cir., 1934, 73 F.2d 267; Reilly v. Beekman, 2 Cir., 1928, 24 F.2d 791; Pennsylvania R. Co. v. Flanigan, 1886, 112 Pa. 558, 4 A. 364; Quell v. Boyajian, 1926, 90 Pa.Super. 386; Everhart v. Searle, 1872, 71 Pa. 256; Atlee v. Fink, 1881, 75 Mo. 100, 42 Am.Rep. 385; Auerbach v. Curie, 1907, 119 App.Div. 175, 104 N.Y.S. 233.
Accordingly, I state the following
Conclusions of Law
1. An employee may not receive a secret profit at the expense of those whom he is employed to serve.
2.An employee is not entitled to receive any compensation for the performance of his duties other than that paid to him by his employer, except upon clear proof of the employer's consent, either express or implied.
3. The contract between plaintiff and defendant is a contract for an illegal profit to which plaintiff was not entitled and the contract is therefore unenforceable.
4. Plaintiff's complaint must be dismissed.
5. Each party shall bear his own costs.
An order may be submitted in accordance with this opinion.
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