PRINCIPAL AND AGENT-WHETHER PRINCIPAL CONSTRUCTIVE TRUSTEE OF MONEY SECURED BY FRAUD FROM THIRD PERSON TO MAKE UP EMBEZZLED FUNDS

Authors

Dickson M. Saunders, University of Michigan Law SchoolFollow

Abstract

Taggart embezzled from his principal, defendant American National Insurance Company, $1,000 received from Miss Mortensen for a deferred life annuity. Subsequently, in a transaction with plaintiff, wholly outside the scope of his general receiving agency for the insurance company, Taggart secured $1,200 through fraud. From this Taggart then replaced the $1,000 due his principal. In suit by plaintiff to recover, Taggart defaulted; liability of the insurance company is based upon the theory that $1,000 has been traced into its hands, and because of Taggart's fraud, this sum became impressed with a constructive trust in favor of the plaintiff. Held, insurance company not liable; in accepting the $1,000, which its agent had procured through an independent fraud, as discharge of an antecedent claim, the insurance company is a bona fide purchaser for value, cutting off the constructive trust impressed upon the agent. Blumberg v. Taggart, (Minn. 1942) 5 N. W. (2d) 388.

Recommended Citation

Dickson M. Saunders, PRINCIPAL AND AGENT-WHETHER PRINCIPAL CONSTRUCTIVE TRUSTEE OF MONEY SECURED BY FRAUD FROM THIRD PERSON TO MAKE UP EMBEZZLED FUNDS, 41 Mich. L. Rev. 1184 (1943).
Available at: https://repository.law.umich.edu/mlr/vol41/iss6/15