106 Neb. 786 | Neb. | 1921
This is an action in equity, somewhat in the nature of an accounting, brought by F. B. Baylor, trustee for certain creditors of Robert W. Johnston, against. Henry J. Hall, Lindell Service Company, a corporation, and Robert W. Johnston. The action, in so far as it affected the defendant Johnston, was based upon certain accounts due and owing by Johnston to the creditors represented by the trustee. The action, in so far as it sought to charge defendants Hall and the Lindell Service’ Company with liability for the debts of Johnston, was based upon certain contracts, reference to which will hereafter .be made. After the action was commenced other creditors- of Johnston were permitted to intervene, charging substantially the. same, facts as alleged by the plaintiff, and joining the plaintiff in the relief prayed. The trial court found the issues in favor of the plaintiff and the interveners, as against the defendant Johnston, and rendered a judgment against him for the amount found to be ;due the
A brief reference to the circumstances leading up to the making of the contracts will serve to a better understanding of the precise point in controversy. It appears that for some years prior to August 1, 1916, Robert W. Johnston had conducted the Lindell Hotel in the city of Lincoln, Nebraska, and had become indebted in considerable sums to various creditors. At that time he held the title to the hotel property in his own name, but it was incumbered by a mortgage for approximately the purchase price. He was in arrears with the interest payment, and the mortgagees were considering taking steps to repossess themselves of the property. Negotiations were entered into between Hall and Johnston which resulted in a contract between the parties dated August 1, 1916, by the terms of which they agreed to organize a corporation to be known as the Lindell Service Company, to succeed Johnston in the proprietorship of the Lindell Hotel. Arrangements were perfected by which Johnston was to deed the hotel property back to the original owners, and they in turn were to lease the premises to the Lindell Service Company for a period of ten years, no rent to be paid for the first year. Under the agreement Hall was to pay into the treasury of the corporation $5,100, and was to receive therefor 51 shares of the capital stock. Johnston was to transfer to the corporation the provisions on hand, purchased for the operation of the hotel, and also to turn over to the corporation a café owned by him at Capital Beach, a pleasure resort near Lincoln, for which he was to receive 49 shares of the stock in the corporation. Johnston further agreed to assign one. share of his stock to an employee designated by Hall.
audit of the books then disclosed that Johnston’s debts on August 1, 1916, amounted to approximately $33,000. Other complications arose in the affairs of the corporation, and Johnston, who had managed the hotel, took em-. ployment elsewhere. At this stage of the business affairs of the corporation, Hall and Johnston entered into another contract of date April 11, 1917. The provisions of this contract which bear upon the present controversy are paragraphs one, five, and six, and are as follows :
“1. That said Robert W. Johnston will assign to the first party (Henry J. Hall) forty-eight (48) shares of the capital stock in . the Lindell Service Company, a corporation of Lincoln, Nebraska; will assign to said Lindell Service Company all unpaid bills and accounts receivable, now due the Lindell Hotel under the former management*790 of Robert W. Johnston, to be nsed in the liquidation of the indebtedness of the said Lindell Hotel, existing on and prior to August 1, 1916.”
“5. First party (Hall) further agrees that the Lindell Service Company, at a meeting of its stockholders, will authorize,the making of a contract by said Lindell Service Company, a corporation, to. assume and pay that certain indebtedness of Robert W. Johnston, described in a certain written agreement between Henry J. Hall and Robert W. Johnston, to incorporate the Lindell Service Company, dated August 1, 1916, pursuant to the terms of said written contract, as more fully set forth in said contract.
“6. First party further agrees that neither he, the said Henry J. Hall, nor the Lindell Service Company, will make any claims against the said Robert W. Johnston on •account of advances made by said Lindell Service Company, in payment of the indebtedness of said Robert W. Johnston, incurred and existing prior to August 1, 1916.”
Johnston complied with the terms of ' the contract. Hall took no steps to have the provisions of ■ paragraph five of the contract carried out, but continued to operate the hotel until June 1, 1917, at which time he sold all the corporate property including the lease, realizing' therefor, net, $7,480. With this sum he paid his note of $5,100, given for borrowed money to pay for his shares of stock, •and used the balance' in paying indebtedness of the Lin-dell Service Company. None of the accounts assigned to the Lindell Service Company under the provisions of paragraph one were collected.
The plaintiff, as well as the interveners, state that the whole question presented by the record turns upon the interpretation to be given to paragraph one of the contract of April 11, 1917. It is their contention that the contract requires that the 48 shares of stock assigned to Hall should be used by him in liquidation of Johnston’s debts contracted prior to August 1, 1916, and it is argued that, inasmuch as "Hall has converted the assets'of "the
Applying these general principles to the contract in question, it seems clear to us that the clause, “to be used in the liquidation of the indebtedness of the said Lindell Hotel, existing on and prior to August 1, 1916,” refers only to its nearest antecedent, namely, that the accounts assigned should be so used. By paragraph five of the contract, Hall agrees that he will have the stockholders of the Lindell Service Company authorize the' corporation to make a contract to assume and pay Johnston’s indebted
The judgment of the lower court is reversed, and .the cause is remanded to enter judgment in favor of '.the plaintiff and interveners for nominal damage's, and for costs.
Reversed.