177 Iowa 39 | Iowa | 1916
One branch of the controversy involved in this suit was before this court on appeal and was decided on June 3, 1913, in favor of the plaintiff. See Farnsworth v. Muscatine Produce & Pure Ice Co., 161 Iowa 170. That was an action brought by the plaintiff on the 20th day of January, 1911, against the Muscatine Produce & Pure Ice Company, a corporation of which this defendant was president, to recover an amount alleged to be due on account of fraud practiced by the corporation in procuring from the plaintiff $1,000 in exchange for stock in the corporation, which was alleged to be worthless. In that case, the court below dismissed plaintiff’s petition. On appeal, the case was reversed, and the lower court directed to enter judgment for the plaintiff against the corporation for the amount of her claim. In that case, she contended also that she was entitled to an equitable lien upon the property of the debtor corporation for the . amount of her claim, it appearing that the property had been transferred to a new corporation formed by the stockholders of the old corporation, in which all the stockholders of the old corporation became stockholders in the new corporation. This court, upon that hearing, said:
“Plaintiff asks that her claim be established as a preferred claim, but we think, under the circumstances, we would not be justified in going farther than to- hold that the contract of sale of the stock should be rescinded, and that judgment be entered against the defendant, the old corporation, for $1,000, with six per cent interest.”
In a supplemental opinion filed on the 26th day of September, 1913, 177 Iowa 20, this court further said:
“Cause is remanded, with direction to the district court
When the case reached the lower court again, judgment was entered, on January 5, 1914, against the defendant corporation, in favor of the plaintiff for the amount of her claim. An amendment was filed in that ease, October 30, 1913, making all parties interested, parties to the proceeding, and asking that she have an equitable lien established in her favor for the amount of her claim, against the property in the hands of the new corporation. A substituted amendment to the petition was filed, February 23, 1914. A hearing was had upon this supplemental petition, and decree' entered in favor of defendant, dismissing plaintiff’s petition in so far as she asked for a lien upon the property of the old corporation in the hands of the new. From this, an appeal was taken to this court; and, on the 29th day of June, 1916, this court filed its opinion, reversing the lower court and ordering a decree in favor of the plaintiff, establishing an equitable lien on the property of the old corporation in the hands of the new corporation, for the full amount of her claim, for which judgment had been entered against the old corporation.
On the 30th day of October, 1913, on the same day on which plaintiff filed her amendment to her petition, herein-before referred to, she filed a petition in this cause, in which she asks personal judgment against the defendant, Henry Umlandt, for the amount of her claim so established against the old corporation. In this petition, she alleges that she and her husband purchased stock in the Muscatine Produce & Pure lee Company; that they were induced to do so by the fraudulent representations of the company; that the defendant herein was president of the company at the time; and she asks that
Irt this case, it was not contended that the defendant, with the other stockholders, did not agree to pay the debts of the corporation. It affirmatively appears that he did, and that this was the consideration moving to the receiver for this property, and was so reported by the receiver. That this was one of the debts of the corporation at the time, cannot be seriously questioned. The contention of the defendant is that he did not agree to pay this particular debt; that he called on the receiver to make out a list of claims against the estate in his hands; that the receiver made out a list (which has not
It must be borne in mind that no notice was given to creditors of the appointment of this receiver, nor were they called upon to file a proof of their claims with the receiver. The sale was made without notice to creditors, and was made with the understanding that the purchasers at that sale should pay the debts of the corporation. The receiver had taken possession of all the assets of the concern. He held it in trust for the payment of the debts of the concern, including plaintiff’s. Defendant knew of plaintiff’s claim, although the-receiver may not have had such knowledge. It does not appear that any claims were filed with the receiver by the-holders of the claims. The receiver proceedings were disposed of in a summary way, with the consent and acquiescence of all the stockholders, including this defendant.
It has been affirmatively established that plaintiff was, at the time, a creditor of that corporation, and entitled to judgment against it for the amount of her claim. She has obtained judgment against it. She has established her claim. The only question, then, which can be mooted is: Did this defendant, in consideration of the sale of the corporate property to him, agree to pay this debt? We think the receiver would hardly have made his report, as he did, and procured an order of discharge, if he had not understood, at least, that all the debts of the corporation were to be paid by the purchaser of the corporate property. He so reported to the court, and, on this
The defendant testifies, in answer to the following questions, as follows:
“Q. Mr. Umlandt, who bought the property at receiver’s sale? A. Mr. Warner. Q. For whom? A. For myself. Q. You bought in at that sale all the property of every kind? A. Yes, sir. Q. The business and the personal property and the real property? A. Yes. Q.. And subsequent to that time, there was another corporation organized, and the business has. been run by that other corporation since? A. It was run as a partnership. Q. And then subsequently as a corporation? A. Yes, sir. Q. And when you arranged to buy in that property at receiver’s sale, you also arranged to pay all the debts of the corporation? A. Yes, sir. Q. And all the debts were paid except this one, this particular claim of Mrs. Farnsworth’s? A. We didn’t owe that. Q. Everything else was paid? A. Yes, sir.” On this point he further testified: “My understanding was that Mr. Hill, the receiver, at the time, got the bookkeeper to make up a schedule and which we looked over to see what it was, so we knew where the indebtedness of the company was. I don’t know where the list is. Plaintiff’s claim was not on the list. Q. Did you agree with Mr. Hill, the receiver, or anyone else, to pay the claim of Mrs. Farnsworth in consideration of the property to you? A. No, sir. Q. Now you may state what claims you were to pay in consideration of this property. A. The current obligations of the company and the indebtedness in the bank. There was a list in the hands of the receiver of the bills that the company owed, and notes in the bank. The property was finally deeded to me. There were others associated to form a company. ’ ’
Clarence Opelt testified that he was employed by the receiver to make out a list or schedule of claims; that he
“You said in your direct examination, in fixing up the balance to pay for this property, the Farnsworth claim was not mentioned at all? A. No, sir. Q. Mr. Umlandt was to pay whatever the company owed, and not anything the company did not owe, is that true? A. Yes, sir. Mr. Umlandt was to pay all the debts of the company. ’ ’
He qualifies this, however, by saying that Mr. Umlandt agreed to pay the debts that appeared upon the schedule of property, prepared by the receiver. He was then asked this question:
“You did not hear any — can you name any particular claim that was talked about there at all? A. No, only the debts — what we owed.”
He then, on re-direct examination, said that the debts referred to were those upon the schedule, and no others. On further cross-examination, he testified as follows:
“Q. Again I will ask you to tell a single word that was said by anyone there with reference to the debts that were going to be paid by the company. Tell us what was said. A. The debts were not discussed at all. We were going to pay the debts, that was all. Q. That was all? A. Yes, sir.”
On further re-direct examination, his attention was again called to this schedule. He again asserted that, when he spoke of all the debts, he meant the debts on that schedule list, although he says no particular debts were discussed, and he re-asserts that Umlandt did not agree to pay any debts that were not on this schedule.
Dr. Klein, a stockholder, testified: “There were two
Other witnesses testified to this list, and to defendant’s agreement to pay what was on the list, and that this list did not include plaintiff’s claim. Dr. Beveridge called; testified that he was a stockholder in the Muscatine Produce & Pure Ice Company, -and was present at meetings of the stockholders about the time of the sale made by the receiver. He had a schedule or list of the liabilities of the company. The purchasers agreed to pay only the listed debts: He was asked this question:
“And in making your preparations to get the property, to go ahead with the company, you did discuss the question that all the debts of the corporation should be paid, in a general way, before you got any schedule at all, didn’t you? A. Yes, sir. Q. Then afterwards, the receiver brought in a schedule, didn’t he? A. Yes, sir. There was nothing said in any conversation about where Mrs. Farnsworth would get her money if the court held it was a just debt. We knew she had a claim and was pressing it. There was no arrangement made about paying any perfectly legitimate claim that might have been overlooked in making this schedule, no talk as to who would pay a legitimate claim that afterward came up.
The receiver testified, in answer to the following questions:
“Q. How did you come to give a deed for the property without getting paid for it? A. Because I got a consideration for it. Q. What was the consideration? A. Because he satisfied me that the debts of the concern, at that time, would be paid. Q.. Yes, by whom? A. By him and his associates. Q. You made a deed of the corporation property to Mr. Umlandt, didn’t you? A. Yes, sir. Q. Now when you gave him that deed he didn’t give you the money, did he? I will ask you whether he gave you any money or not ? A. Why, I think he did. He gave me part of it, not all of it.”
He was asked this question:
“Did Mr. Umlandt, at any time, agree to pay for that property more than the $47,800 he bid for it at the sale ? A. Yes, sir. Q. What more? A. Why, he agreed to liquidate all debts of the old concern that were debts at the time.”
B. M. Warner testified for the defendant:
“I am attorney and I was attorney in the ease of Bessie Farnsworth V. Muscatine Produce & Pure Ice Company; represented the corporation, the stockholders and the officers, who were made parties defendant at the beginning of the suit. I was the attorney for Mr. Umlandt up to the time it was dismissed as to.him. I was attorney for the corporation at the time the receiver was appointed, and for its officers, and, I think, nearly all the stockholders. I continued to represent the defendant and these stockholders up to the time of the sale by the receiver. As to the arrangement to pay for the property, there were several meetings, nearly all of them at my office. It was said there that, in case outside parties would not buy the property for enough to pay its debts, then
Upon the final submission of the cause to the jury, the jury returned a verdict for the plaintiff for the full amount of her claim, and answered the following special interrogatories in her favor:
‘ ‘ 1. Was the plaintiff, at the time of the purchase of the property of the corporation by the defendant, entitled to recover from such corporation the consideration paid for the stock in question? A. Yes. 2. Did the defendant agree to pay the indebtedness, if any, owing by such corporation to the plaintiff? A. Yes.”
The court, on motion of the defendant, set aside the verdict, on the ground that the evidence was insufficient to warrant the verdict, and that the verdict was contrary to the. evidence, and from this, the plaintiff appeals.
We cannot escape the conclusion that it was the intention of these parties, including this defendant, to pay the debts of the corporation; that they agreed to pay all the legitimate debts of the corporation. It cannot be denied that this defendant and the other stockholders were then under an impression that plaintiff would not be able to establish her claim against the old corporation, or against its funds. The list which was used was a list made from the books of the corporation. Plaintiff’s list was not a book affair — a suit for damages, of which defendants had knowledge, and which they all conceded would be, if established, a claim against the property which they received — and we cannot but feel from this whole record, assuming these parties to be reasonably honest in their dealing with the court and the receiver, that they intended to pay, and promised to pay, and undertook to pay, all the debts of the corporation, but not this claim, specifically, because they were of the opinion that this particular claim could not be established as a claim against the corporation. This defendant and the other stockholders agreed to pay all the debts of the corporation. They made a list, however, of the claims that appeared upon their books, and omitted this claim only because it did not appear upon the books. Such a list may have existed. We have no doubt it did exist, but we do not believe that this defendant intended to purchase all the assets out of which plaintiff’s claim could be paid, and then deny her the right to the satisfaction of her claim out of the property of her judgment debtor, by the methods pursued in N this case.
However that may be, we are satisfied that the record discloses such affirmative proof in support of plaintiff’s claim that the jury were justified in returning the verdict that they
