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July 07, 2008
Limerick of the Week: General Automotive v. Singer
What a week! I am moving offices while teaching, and we have a sewage leak in our house which prevents us from using the water. I am thus doubly homeless. Thank goodness for my colleague and local hero, Ivan Bodensteiner, who loaned us his lovely house for the weekend!! Meanwhile, I've just snuck onto a neighboring computer to post this Limerick, but I may not post much else this week.
The Singer case is a great one for illustrating the value placed on the duty of loyalty. Singer was a key employee of the General Automotive Manufactuing Company. In many ways, he was an ideal employee. He was an expert machinist and he brought business to the company. When things were slow, he anticipated work that the company could do for jobs coming in later on, and he fronted the company his own money to pay for the parts thus produced.
Singer's contract called for him to work 5 1/2 days a week for the company and to devote all of his professional energies to the company. But Singer developed a sideline, acting as a broker and sending out jobs to other manufacturing plants when General Automotive could not do the job, either because it was not equipped to do the work or because it was already working at capacity. There is no doubt that, if the facts are as stated in the opinion, General Automotive benefitted from the good will generated from Singer's sideline. Still, it sued him for breach of fiduciary duty. It could have sued him for breach of contract, of course, but there would have been no contractual damages. Under the law of fiduciaries, however, Singer was forced to disgorge his profits, a clear windfall for General Automotive.
General Automotive Manufacturing Co. v. Singer
Singer used great perspecuity
In usurping his boss's opportunity
But he failed to disclose;
Since that's a duty he owes,
He now must disgorge the gratuity.
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