Mosser, Successor Trustee, et al. v. Darrow, Former Trustee, et al. (341 U.S. 267)
U.S. Supreme Court · decided May 7, 1951 · Supreme Court Database (Spaeth)
- Citation
- 341 U.S. 267 · 71 S. Ct. 680
- Decided
- May 7, 1951
- Term
- October Term 1950
- Vote
- 7–1
- Majority author
- Justice Jackson (R.H.)
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Liberal
Opinion excerpt
Mr. Justice Jackson delivered the opinion of the Court. The principal question here concerns personal liability of a reorganization trustee who, although making no personal profit, permitted key employees to profit from trading in securities of the debtors’ subsidiaries. Upon a long record, controlling facts have been found with little disagreement.- In 1935, the United States District Court appointed respondent Darrow as reorganization trustee for two common-law trusts. These had functioned as holding companies and their principal assets were the securities of twenty-seven underlying companies, each of which owned improved real estate and had its own debt and capital structure. Both the subsidiary companies and the two trusts had been promoted by Jacob Kulp and Myrtle Johnson, who thoroughly knew the inside of the business and were acquainted with many of the investors. The tangled financial history leading to the reorganization is not important to our issue. Darrow employed Kulp and Miss Johnson to assist in his trusteeship. That they were competent and useful is undenied. Kulp managed the physical properties while Miss Johnson supervised the office, had complete charge of all records of income, expenditures and properties of both debtors and all underlying companies. Darrow decided upon a policy of buying in bonds of the subsidiaries for retirement, where they were…
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