76 Neb. 88 | Neb. | 1906
On the 16th day of February, 1903, the defendant in error herein obtained a judgment in the district court for Douglas county against Charles Shiverick & Company, and against the individual members of that firm, for $6,997.60, the amount then due from the judgment debtors upon a promissory'note. Later an execution was issped upon the judgment, which was returned nulla bona. The defendant in error, appellee, hereinafter called plaintiff, then instituted this action in the district court for Douglas county against the Baker Furniture Company, contending that the latter is liable for the payment of said indebtedness, as the successor in business of the judgment debtor Charles Shiv-erick & Company; that it assumed and agreed to pay the debts of said copartnership, and took over to itself, without consideration and in fraud of creditors, the assets of said debtor company, which is insolvent.
In October, 1899, and for ten years prior thereto, Arthur S. Shiverick and Ella C. Shiverick were engaged in the retail furniture business in the city of Omaha, conducting
The corporation was organized, and 499 shares of the stock were issued ■ to the Shivericks, and one share to Baker, who paid nothing therefor. And, as agreed previously, 384 shares issued to the Shivericks were assigned, to Baker. • The property of the copartnership was turned over by proper; conveyances to the corporation, and the business conducted under the management of Charles Shiverick in the same manner and for the same purposes as was the copartnership. By thé incorporation and the agreements leading to it, the Shiverick copartnership was relieved of all indebtedness, except the note due to the plaintiff, and the $1,100 of the merchandise indebtedness. The corporation undertook no business other than that previously conducted by the copartnership, nor did they acquire any property other than that received from the copartnership. The evidence adduced shows that Avhen the corporation was organized the Shivericks and Baker considered the property of the company, which was turned over to the corporation, of the value of about $25,000, and that the capital stock of the corporation was worth one-half its face value. The findings and judgment of the lower court were for plaintiff, and the Baker Furniture Company have filed their petition in error in this court, alleging that the findings and judgment of the court are contrary to the evidence, and contrary to law. The evidence above referred to clearly supports the allegations of fact alleged in the petition,- and this leaves us to determine whether or not the findings and judgment of the lower court are contrary to law.
This plaintiff in error maintains that, as the corporation did not by express contract assume the payment of the co-
There was some conflict of evidence as to the value of the property, but as it is not shown that the property was consumed in the payment of the debts of the partnership firm, we cannot see what difference it makes whether the property was worth $15,000, as claimed by the plaintiff in error, or a greater sum, as claimed by defendant in error.
Joseph L. Baker in the court below filed a petition for intervention, alleging that at the time of incorporation the Shivericks deceived him as to the value pf the property ; that he had no knowledge of the indebtedness owing to the plaintiff; that he was, when the suit was instituted, the owner of all the stock of the corporation, except ten shares assigned to other persons that they might act as directors. A demurrer to this petition was sustained. This ruling of the court the intervener alleges is error, in his separate petition in error herein filed. Intervener did not allege fraud as against the plaintiff, and his petition stated no defense to the plaintiff’s cause of action, nor any reasons why he should be made a party to the suit. The liability of the corporation existed the instant of its creation ; the stockholders knew of the liability owing to plaintiff, and assignees of stock cannot interpose as a defense to plaintiff’s action that the stockholders were guilty of deceit or fraud in the sale of such stock.
There is no error in the record, and we recommend that the judgment of the court be affirmed.
■ By the Court: For the reasons appearing in the foregoing opinion, the judgment of the district court is
Affirmed.
The following opinion on rehearing was filed March 7, 1907. Judgment of affirmance vacated and judgment of district court reversed:
This is a suit in the nature of a creditor’s bill to charge the Baker Furniture Company with the payment of a debt due from Arthur Shiverick and Ella C. Shiverick, as the Shiverick Furniture Company, to one R. S. Hall. The
The facts underlying this controversy, briefly stated, are as follows: In the month of October, 1899, Arthur Shiv-erick and Ella 0. Shiverick were, and for many years theretofore had been, conducting a general retail furniture business in the city of Omaha, as copartners, under the firm name and style of Charles Shiverick & Company. At the date mentioned the partnership was indebted to the intervener, Joseph L. Baker, in the sum of $5,700 for borrowed money. The Shivericks at that time represented to Baker that the firm was financially embarrassed; that its assets consisted of a stock of furniture, worth from $12,000 to $15,000, and certain real estate situated in the city of Omaha, of the value of about $7,000; that the obligations of the partnership consisted of $27,000 owing to certain of their relatives; $84,000 to the First National Bank of Omaha, and $6,100 to persons and firms from whom the partnership had bought goods. It was proposed to Baker to form a corporation to be properly financed by him for the purpose of taking over and . conducting the business; that such a business could be conducted with great profit; and it was represented to Baker that the relatives of Shivericks would forgive the debt due them. The First National Bank was thereupon consulted, and it w;as ascertained that that institution, in consideration of a cash payment of $5,000, and the execution of new notes to the amount of $10,000 by Arthur Shiv-erick, and-Ella C. Shiverick, secured by a mortgage upon certain lands owned by Ella C. Shiverick at San Antonio, Texas, would forgive the balance of its indebtedness. Thereupon Baker and the bank required the Shivericks to make a written statement of the indebtedness of the firm, so that provision-could be made to liquidate the same and thus start the business, which was to be taken over
It now appears that Richard S. Hall, the plaintiff in the court below, had loaned $6,000 to Arthur Shiverick and Ella C. Shiverick, a number of years before the date of the organization of the' corporation, and at that time he held their note for that amount. Hall had theretofore been counsel for the Shiverieks, and was advised of the facts relating to the formation of the corporation, at the time, or within a few days after, the transaction occurred. Hall’s note was not included by the Shiverieks in the statement of their indebtedness made to Baker and the bank, and Baker knew nothing about the matter until more than two and one-half years thereafter. Hall testified on the
At the January, 1903, meeting of the stockholders of the Shiverick Furniture Company its articles of incorporation were amended, and the name of the corporation was changed from Shiverick Furniture Company to Baker Furniture Company. On the 23d day of July, of that year, Hall instituted this suit against the Baker Furniture Company, and recovered judgment as above stated. It seems clear that the transaction in question herein was not fraudulent as to the creditors of the Shiverick Furniture Company. Indeed, Baker and the bank insisted that all claims against the partnership should be adjusted and settled, and that was one of the conditions on which Baker agreed to become one of the incorporators. It appears that Hall, knowing all about the transaction at or about the time it occurred, failed to inform Baker of the existence
“Equity will not compel the creditor of a corporation to waive his right to enforce his claim against the visible and tangible property of the corporation,. and to run the chances of following and recovering the value of shares of stock after they are placed upon the market.”
This possibly might depend upon the circumstances in the case. If the court could do complete equity by impounding the shares of stock held by the Shivericks, there would seem to be no necessity of interfering with the property of the corporation. The corporation itself would, of course, be a proper party to such proceedings in equity, and a court of equity should, in view of all the circumstances in the case, frame its decree so as to do equity to the parties and to make its relief effective.
Since the plaintiff Baker acted in good faith in the
In our former opinion that fact seems to have been assumed, but we now think the assumption was not warranted by the evidence. An examination of the record discloses that Baker contributed to the new enterprise his own claim of $5,700; $5,000 in cash paid to the First Na
The fact that Baker became the owner of the shares of capital stock issued to the Shivericks, and reorganized the corporation under the name of the Baker Furniture Company, is strenuously urged as a reason for affirming the judgment of the trial court. It must be remembered, however, that the Shiverick stock was purchased by Baker at a judicial sale; and the rule is well settled that by such purchase he incurred no liability for the debts of either the partnership or the corporation. Armour v. Bement’s Sons, 123 Fed. 56, 62 C. C. A. 142; Fernschild v. Yuengling Brewing Co., 154 N. Y. 667; Allen v. North Des Moines M. E. Church, 127 Ia. 96; Smith v. Chicago & N. W. R. Co., 18 Wis. 21; Vilas v. Milwaukee & P. du C. R. Co., 17 Wis.
The evidence contained in the record is not sufficient to support the judgment of the district court. Our former judgment is vacated, and the judgment of the district court reversed and the cause remanded for further proceedings, not inconsistent with this opinion.
REVERSED.
The following opinion on motion for rehearing was filed October 3, 1907. Rehearing denied:
In the former opinion the following language was used: “If the Baker Furniture Company is liable to the plaintiff at all, it is made so because the transaction was merely a continuation of the old partnership of Charles Shiverick & Company.”
This language is not strictly accurate, and from the briefs upon the motion for rehearing it appears that it has led to a misunderstanding of the views of .the court. From other portions of the opinion it is made clear that any interest that the members of the original firm of Charles Shiverick & Company had in the partnership property at the time this action ivas begun could be reached in this action to satisfy the existing claim of Hall against the copartnership of Charles Shiverick & Company. The plaintiff was entitled to subject the interests of the members of the former copartnership in the copartnership property to the payment of his claim, whether that interest was represented by shares of stock or otherwise, and after notice of plaintiff’s claim the defendant Baker could not deal directly with the Shiverieks for the purchase of their interests, if such transaction would result in enabling the Shiverieks to hinder or delay the plaintiff in collecting his claim out of the interests of the former copartnership in the property.
OVERRULED.
Rehearing denied. See opinion, p. 101, post,