Francis v. United Jersey Bank

Facts

Pritchard & Baird Intermediaries Corp. was in the business of acting as a reinsurance broker. Lillian Pritchard had inherited a 48 percent interest in Pritchard & Baird from her husband. She was the largest single shareholder and a director. The remaining shares were owned by her sons, Charles and William, who also served as directors. Contrary to the industry custom of segregating funds, Pritchard & Baird commingled the funds of reinsurers and ceding companies with its own funds. All monies were deposited in a single account. Charles, Sr. began the practice of withdrawing the funds from the commingled account. Mrs. Pritchard was no active in the business of Pritchard & Baird and knew virtually nothing of its corporate affairs. She briefly visited the corporate offices and never read or obtained the annual financial statements. She was unfamiliar with the rudiments of reinsurance and made no effort to assure that the policies and practices of the corporation. After her husband died, she became incapacitated and was bedridden for a six-month.