See Hayes v. Schweikart's Upholstering Co., 55 Tenn. App. 442, 462, 402 S.W.2d 472, 482 (Tenn.Ct.App. 1965) cert. denied, (Tenn. Apr. 18, 1966) (directors and officers); Central Bus Lines, Inc. v. Hamilton National Bank, 34 Tenn. App. 480, 484, 239 S.W.2d 583, 585 (Tenn.Ct.App.) cert. denied, (Tenn. Mar. 3, 1951) (officers); Gillespie v. Branham, 47 Tenn. App. 234, 337 S.W.2d 689 (Tenn.Ct.App.) cert. denied, (Tenn. Dec. 12, 1959) (officer and majority shareholder); Johns v. Caldwell, 601 S.W.2d 37, 41 (Tenn.Ct.App.) cert. denied, (Tenn.
It is well-settled that dominant or controlling shareholders who exercise control over a corporation are fiduciaries. Pepper v. Litton, 308 U.S. 295, 306, 60 S.Ct. 238, 84 L.Ed. 281; Southern Pacific Co. v. Bogert, 250 U.S. 483, 39 S. St. 533, 63 L.Ed. 1099; Seagrave Corp. v. Mount, 6 Cir., 212 F.2d 389; Dale v. Thomas H. Temple Company, 186 Tenn. 69, 208 S.W.2d 344. Some authorities hold that transactions between persons in control and the corporation are illegal and may be set aside irrespective of the fairness thereof. Gillespie v. Branham, 47 Tenn. App. 234, 337 S.W.2d 689, cert. denied by the Supreme Court of Tennessee on December 12, 1959; Attalla Iron Ore Company v. Virginia Iron, Coal Coke Co., 111 Tenn. 527, 77 S.W. 774. If the transaction is regarded merely as one subject to "close scrutiny," in our judgment, it cannot withstand the light of day. Stripping P B of its cash and marketable securities and requiring it to borrow money so that the Comer Group could finance their controlling shares certainly operated to the prejudice of P B and its minority shareholders.
First, trustees owe a fiduciary duty to the beneficiaries of the trust. Blackburn v. Blackburn, 63 S.W.3d 338 (Tenn. Ct. App. 2001) (citing Gillespie v. Branham, 337 S.W.2d 689, 691 (Tenn. Ct. App. 1959)). Although neither Newport nor Symetra were trustees, the Plan granted the Administrator of the Plan the authority to select fiduciaries and nonfiduciaries who could provide the Plan with professional services.
1986) (constructive trusts); Central Bus Lines, 34 Tenn.App. at 486, 239 S.W.2d at 585-86. See generally Gillespie v. Branham, 47 Tenn. App. 234, 337 S.W.2d 689 (1959). Claim No. 2
" They also rely on the maxim as laid down by Chancellor Gibson that: "No man bound to act for another in any matter can, as to that matter, act for himself"; and on the recent case of Gillespie v. Branham, 47 Tenn, App. 234, 337 S.W.2d 689, wherein very learned quotations were quoted from Judge Cardozo in a New York case and Judge Caruthers in Tisdale v. Tisdale, 34 Tenn. 596. All of these authorities and the reasoning embody the same principle as that quoted from Judge Cooper, above. There are literally thousands of cases probably from every jurisdiction in the United States holding to this same very sound legal principle, which prohibit the purchase of trust property by the Trustee, not on the basis that they depend upon fraud but to avoid the possibility of fraud, and the idea that a Trustee must not put himself in a position where his private profit will oppose the interest of the estate. This very sound principle though is subject to numerous exceptions, one of which is set forth in the Court of Appeals' opinion in American Bank Trust Co. v. Lebanon Bank Trust Co., 28 Tenn. App. 618, 192 S.W.2d 245, and is the case upon which the Chancellor pitched his conclusion.
From the early days of Tennessee jurisprudence, the duty of a fiduciary has been certain. As this Court noted in Gillespie v.Branham, 337 S.W.2d 689 (Tenn.Ct.App. 1959): No statement of the general rule can excel in strength and clarity the statement of Judge Caruthers on our Supreme Court (1855) when considering the duty that a trustee owed to the beneficiaries when dealing with trust property.
They are not permitted to deal with the corporation or its assets for their own private gain and cannot deal for themselves and for the corporation at one and the same time. . . . If they do so act in violation of their trust they must account for any profits made by use of corporate assets.Central Bus Lines v. Hamilton Nat'l Bank, 34 Tenn. App. 480, 239 S.W.2d 583, 585 (1951); accord Gillespie v. Branham, 47 Tenn. App. 234, 337 S.W.2d 689, 691-92 (1959). This fiduciary duty also prohibits officers from engaging in a competing business to the detriment of their corporation.
They are not permitted to deal with the corporation or its assets for their own private gain and cannot deal for themselves and for the corporation at one and the same time . . . . If they do so act in violation of their trust they must account for any profits made by use of corporate assets. Central Bus Lines v. Hamilton Nat'l Bank, 239 S.W.2d 583, 585 (Tenn.App. 1951); accord Gillespie v. Branham, 337 S.W.2d 689, 691-92 (Tenn.App. 1959). This fiduciary duty also prohibits officers from engaging in a competing business to the detriment of their corporation.
" Vol. 19 Am.Jur. (2nd) p. 679, Corporations, Sec. 1272. The foregoing statement of a principle of law is in accord with the decisions of our Supreme Court in Gillespie v. Branham, 47 Tenn. App. 234, 337 S.W.2d 689; Central Bus Lines v. Hamilton National Bank, 34 Tenn. App. 480, 239 S.W.2d 583; Dale v. Thomas H. Temple Co., supra; Steward Mfg. Co. v. Steward, 109 Tenn. 288, 70 S.W. 808. Counsel for the defendants vigorously insist that neither of the defendants committed any act which was unlawful, wrongful, or that violated the rights of the plaintiffs.