[G.R. No. 14617. February 18, 1920.

R. Y. HANLON, Plaintiff-Appellee,
v.
JOHN W. HAUSSERMANN and A. W. BEAM, Defendants-Appellants. GEORGE C. SELLNER, intervener.

FACTS:

In 1911 the milling plant of Benguet Consolidated Mining Company was completely destroyed by high
waters. The company was thereafter without working capital, and without credit, and therefore unable
to rebuild the plant. In a contract of November 5, 1913 Hanlon, Sellner, Haussermann, and Beam, agreed
to collaborate in the flotation of the project which seeks to rehabilitate said Mining Company. The
parties agreed to raise money on the said project within six months by obtaining subscriptions to shares
of the mining company. It was expressly stipulated that the failure of one to perform within the
stipulated period would discharge the others. Hanlon defaulted in his part. Under the contract,
Hausserman and Beam and Sellner were discharged from their obligations. Thereafter, Hausserman and
Beam considered themselves released from the said contract, and presented a new plan for the
rehabilitation of the company. The new plan adopted succeeded in raising the price of the stock of the
company and made large profits. Hanlon now brought action to compel Hausserman and Beam to
account for his share in the profits which he claimed Hausserman and Beam obtained by virtue of their
contract.
ISSUE: Are Hausserman and Beam accountable to Hanlon as a fiduciary for the profits?

RULING: No. After the termination of an agency, partnership, or joint adventure, the party who stood in
a fiduciary relation to another is free to act in his own interest with respect to the Art. 1807 139 same
subject matter provided he has done nothing during the continuance of the relation to lay a foundation
for an undue advantage to himself. To act as fiduciary of another does not necessarily imply the creation
of a permanent disability in the fiduciary to act for himself in regard to the same subject matter.

In reversing the trial courts decision the court cited its previous ruling in the case of Lind v. Webber thus:

"We further find that the law is well established that the relation between joint adventurers is fiduciary
in its character and the utmost good faith is required of the trustee, to whom the deal or property may
be intrusted, and such trustee will be held strictly to account to his coadventurers, and that he will not
be permitted, by reason of the possession of the property or profits whichever the case may be to enjoy
an unfair advantage, or have any greater rights in the property by reason of the fact that he is in
possession of the property or profits as trustee, than his co-adventurers are entitled to. The mere fact
that he is intrusted with the rights of his co-adventurers imposes upon him the sacred duty of guarding
their rights equally with his own, and he is required to account strictly to his co-adventurers, and, if he is
recreant to his trust, any rights they may be denied are recoverable."

Hence, the action of Hanlon was denied.