Tuesday, September 30, 2008
Poor Lillian Pritchard gave in to depression after her husband's death. Her husband, loving father that he was, tried to warn Lillian of the vipers she had raised. "He'll steal the shirt off your back," Mr. Pritchard warned Lillian, speaking of one of the sons. Lillian did not heed that advice, and she fiddled while the reinsurance brokerof which she was a director, Pritchard & Baird, burned. Her sons, co-owners of the enterprise, gave themselves loans out of the business's coffers and never repaid them. After the company went bankrupt, creditors sought to recover from Mrs. Pritchard's estate.
One might think that the business judgment rule would protect Mrs. Pritchard, but not so where there was no business judgment made. Indeed, the court noted that the Pritchard boys hatched their fraudulent scheme "in the backyard of Lillian's neglect." That's the line that inspired the Limerick:
Francis v. United Jersey Bank
In the backyard of Lilly's neglect
Spawned a fraud that a company wrecked:
Her boys stole the booty
While she breached her duty
Through her failure their fraud to detect.