164 P. 878 | Utah | 1917
The plaintiff brought this action as a creditor of the defendant Pioneer Nurseries Company, hereinafter styled “company,” against said company and against one Sidney Tuttle as a stockholder and mortgagee of said company. The pleadings are very voluminous, and, in view that there is no question raised with respect thereto, we refrain from setting them forth either in form or substance. Moreover, in the findings of the court, to which we shall hereinafter refer, the issues
The court, on a preliminary hearing, set aside the foreclosure sale and appointed a receiver to take charge of and to sell the mortgaged premises. The receiver was, however, unable to sell the property, and the court, upon the final hearing of the case, reinstated said sale, discharged the receiver, and denied the plaintiff the relief prayed for. There was also a complaint in intervention, but the same was ultimately dismissed and requires no further attention. The court, on the final hearing, in addition to the findings on some informal matters, in substance, found that, prior to the 5th day of July, 1913, said company was the owner of a certain nursery farm in Salt Lake County of the value of “between $10,000 and $12,000,” and that said farm, ever since said 5th day of July., 1913, had been, and at the time of the hearing was, the property of said Sidney Tuttle, subject, however, to a certain mortgage for $4,000 made and delivered by said company to one Hosmer; that said company, at the time of the hearing, was “practically” without assets of any kind; that the plainT tiff had recovered a judgment against said company for the sum of $1,248.17, together with $200 attorney’s fees, and costs, which is in full force, and that there are no other creditors of said company; that the defendant Sidney Tuttle, at all times mentioned in plaintiff’s complaint, was a minority stockholder of said company; that at a certain meeting
The district court made the following conclusions of law:
“The plaintiff J. M. Callahan is not entitled to maintain this action against the defendants, and is not- entitled to any*545 of tbe relief demanded in ber complaint as against tbe de-' fendants.
“Tbe defendant Pioneer Nurseries Company and tbe defendant Sidney Tuttle are entitled to a judgment in their favor against tbe said plaintiff upon all tbe issues joined in this cause, and to a judgment against tbe said plaintiff for their costs in this action in tbe sum of $.”
Judgment was entered accordingly. The plaintiff appeals from the judgment, and her principal assignments are .that tbe district court erred in finding the facts as before stated and that it also erred in its application of the law to tbe facts.
Tbe evidence is somewhat voluminous, and nothing could' be gained by setting it forth here. It must suffice to say that on some of the issues or features of the case the evidence is in conflict, yet a careful reading of the evidence convinces us, and, as we believe, would convince any disinterested person, that the findings are not only amply supported by the evidence, but, in our judgment, they are in accordance with the great weight of the evidence. Indeed, judging from the record alone, we can conceive of no good reason why the court appointed a receiver, except that it attempted to real-' ize all that it was possible to realize out of the property.' Time, however, showed that all had been realized upon the foreclosure sale that could be realized, and therefore the court’s action in reinstating the sale could not have prejudiced any one.
Now as to the law: Appellant’s counsel in his brief vigorously contends that the so-called trust fund doctrine should control in this case, and that the district court erred in refusing to apply that doctrine thereto. Counsel also insists that this court should now recede from its former holdings upon that subject, as hereinafter indicated, and should adopt the trust fund theory. We herewith give counsel’s contention in that regard in his own words. He says:
“Appellant contends: First, that this court should adopt the logical and just rule that the property of an insolvent corporation, as soon as it becomes apparent that it cannot continue its business, becomes a trust fund in the hands of*546 tbe directors or stockholders, where they combine to control (Ervin v. O. R. & N. Co. [C. C.] 27 Fed. 625, 631), for payment of all its general creditors, without preference; second, that, if this court deems itself so fettered by former decisions that it cannot meet the needs of modern commercial development and the concomitant growth of high finance, it should then carefully scrutinize the good faith of Sidney Tuttle in taking the mortgages. ’’
This court, in a number of cases, has refused to apply the trust fund doctrine to corporations, but has held that a corporation, with certain exceptions stated in the opinions filed in said cases, may prefer one or more of its creditors over others, if the preferred debt be an honest one and the parties in all things have acted in good faith, to the same extent that an individual debtor may prefer his creditors. In Weyeth H. & M. Co. v. James-Spencer-B. Co., 15 Utah 110, at page 124, 47 Pac. 604, at page 608, this court, speaking through Mr. Justice Bartch, after a thorough discussion of the doctrine of preference and the so-called trust fund theory, states the law in the following words:
“The doctrine that an insolvent corporation may make an assignment of all its property for the purpose of paying its just debts, and prefer one creditor or class of creditors over others, the same as it might do if it were a natural, instead of an artificial, person, when none of its officers or agents are preferred; must, in the absence of charter and statutory provision to the contrary, be regarded as the settled law of this country, and, like the rule in the case of an individual debtor, has been so thoroughly incorporated in our system of jurisprudence that it cannot be overthrown, except by legislative enactment.”
The foregoing case was followed in the case of Burnham, etc. Co. v. McCornick, 18 Utah 42, 55 Pac. 77, and in the more recent case of Commercial Nat. Bank v. Page & Brinton, 45 Utah 27, 142 Pac. 714.
■ The defendant Sidney Tuttle does not come within the exceptions stated in the foregoing quotations, nor, under the evidence, is there any doubt that Mr. Tuttle’s claim was an honest one, and that, neither in giving the mortgage by the corporation, nor in receiving it by Mr. Tuttle, was there any intention to hinder or delay any creditor of the company,
In view of the findings of the court, all of which, as we have pointed out, are in accordance with the evidence, and in view of the foregoing decisions of this court, it could sub-serve no good purpose for us to review the numerous cases cited by appellant’s counsel. It is sufficient to say in that regard that counsel’s theories and the cases cited by him are all predicated upon actual or constructive fraud. There, however, was neither actual nor constructive fraud in the transactions between the company and Mr. Tuttle, and hence neither counsel’s theories nor his cases have any application.
In our opinion both the findings of fact and the judgment are right and should prevail.
The judgment therefore is affirmed, with costs to respondents.