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Burg v. Horn

United States Court of Appeals for the Second Circuit
380 F.2d 897 (1967)


Lillian Burg (plaintiff) and George and Max Horn (defendants) each owned one-third of the shares and were directors of Darand Realty Corp. (Darand). Before the incorporation of Darand, the Horns were engaged in produce and real estate businesses and had already acquired several low-rent buildings in Brooklyn. The Horns urged Burg to join the real-estate industry, and as a result, the three of them founded Darand. The Horns managed Darand’s properties. The parties had no discussion or agreement that the Horns would offer all low-rent properties they found to Darand. Over the years, Darand bought three buildings and sold one. The Horns bought nine buildings themselves without presenting these opportunities to Darand. The Horns allegedly used Darand's funds in making these purchases. Burg alleged that the Horns’ individual acquisitions of the nine buildings were usurpations of Darand’s corporate opportunities. Burg sued for an accounting for rent receipts and expenditures of Darand and imposition of a constructive trust on the buildings that were allegedly corporate opportunities. The trial court found for Burg on the accounting claim, but declined to hold that those acquisitions were Darand’s corporate opportunities. The court reasoned that there was no agreement that all low-rent buildings found by the Horns should be offered to Darand and that Burg was aware of at least some of the Horns’ acquisitions. Burg appealed.

Rule of Law


Holding and Reasoning (Lumbard, J.)

Dissent (Hays, J.)

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