DEFALCATION

Definition of DEFALCATION in Black's Law Dictionary 4th Edition – Legal dictionary – Glossary of legal terms.

Definition of DEFALCATION

The act of a defaulter; misappropriation of trust funds or money held in any fiduciary capacity; failure to properly account for such funds. Usually spoken of officers of corporations or public officials. In re Butts, D.C.N.Y., 120 F. 970; Crawford v. Burke, 201 Ill. 581, 66 N.E. 833.

Also set-off. The diminution of a debt or claim, by deducting from it a smaller claim held by the debtor or payor. Iron Works v. Cuppey, 41 Iowa, 104; Houk v. Foley, 2 Pen. & W., Pa., 250; McDonald v. Lee, 12 La. 435.

Colloquially, perhaps, the worn "defalcation" ordinarily implies some moral dereliction. As used in the Bankruptcy Act, it may demand some portion of misconduct, but it is not synonymous with "embezzlement." The act of a receiver in a mortgage foreclosure suit in withdrawing and spending an amount allowed him by an order passing his intermediate account without waiting for the time for appeal to expire or consulting plaintiff as to whether it Intended to appeal, is a "defalcation". Central Hanover Bank & Trust Co. v. Herbst, C.C.A.X.Y., 93 F.2d 510, 511, 512, 114 A.L.R. 769.

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That's the definition of DEFALCATION in Black's Law Dictionary 4th Edition – Legal dictionary – Glossary of legal terms. Courtesy of Cekhukum.com.

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