Brief Fact Summary. Louis Wolfson, Elkin Gerbert, Joseph Kosow, and Marshal Staub, (Plaintiffs), seek indemnification by Merritt – Chapman & Scott Corp., (Defendant), against expenses incurred in a criminal action. Both parties move for summary judgment.
Synopsis of Rule of Law. Corporate officers are entitled to partial indemnification if successful on a count of an indictment, which is an independent criminal charge even if unsuccessful on another related count.
Beyond that, its larger purpose is to encourage capable men to serve as corporate directors, secure in the knowledge that expenses incurred by them in upholding their honesty and integrity as directors will be borne by the corporation they serve'.View Full Point of Law
Issue. Whether a corporate officer is entitled to indemnification in the absence of vindication by a finding or concession of innocence.
Held. Yes. A corporate officer is entitled to indemnification to the extent of success in defense of any claim, issue, or matter.
Discussion. Claimants are entitled to partial indemnification if successful on a count of indictment even if unsuccessful on another related count. Wolfson and Gerbert were both convicted and sentenced on charges of perjury and filing a false annual report. These convictions establish that both were judged to be derelict in the performance of their duty, as director or officer and they are therefore not entitled to indemnification against expenses incurred in connection with those counts.