Clarence v. Watson v. Woodrow C. Button

Watson appeals from a judgment of the District Court for the District of Oregon awarding appellee recovery of $13,945.98 of corporate funds misappropriated by appellant, the former general manager of Highway Freight, Inc. Jurisdiction was based on diversity of citizenship and the substantive law of Oregon governs.

The appellant embezzler contends (A) that the cause of action belonged to the corporation and not to appellee, and therefore the District Court erred in denying his motion to dismiss the complaint. He further contends (B) that if an individual recovery is warranted, the amount of that recovery is too great, and (C) that the District Court erred in failing to give him judgment on a counterclaim based on a note issued by appellee in his favor.

Appellant and appellee owned all the stock in Highway Freight, Inc., an Oregon corporation. Appellant was the general manager. In July of 1954 all of the stock was sold to third parties. Appellant secured as part of the sale an agreement from the purchasers to release and discharge him from any claims and demands existing against him in favor of the corporation. After this sale appellee discovered the misappropriation. Appellant…