86 Neb. 389 | Neb. | 1910
This is an action in equity to reach the alleged assets of Charles ghiverick & Company, a partnership, and to charge the defendant, a corporation, with a partnership debt. The defendant prevailed, and the plaintiff appeals.
This case has been heretofore considered on a petition in error. Baker Furniture Co. v. Hall, 76 Neb. 88, 93. On that hearing we did not try the cause anew, but found that the evidence did not sustain the judgment of the district court and remanded the cause for further proceedings. The case is now before us upon appeal and will be tried de novo.
In 1870 Charles Shiverick founded the Shiverick furniture business in Omaha. In 1889 Arthurs Shiverick became interested in that business. Subsequently, the exact date not being shown, it passed into the hands of Arthur Shiverick and Ella C. Shiverick, and they transacted business under the firm name of Charles Shiverick & Company. In 1892 the plaintiff loaned to Charles Shiverick & Company $6,000, and received as evidence of that debt the promissory note of Charles Shiverick & Company and Arthur Shiverick, payable two- years from date. In 1893 the partnership suffered, a loss by fire. About that time business depression diminished its sales, and subsequently it became seriously involved financially. In October, 1899, in addition to plaintiff’s claim, the firm owed Joseph L. Baker $5,700, the First National Bank of Omaha $34,000, various relatives $27,000, and for merchandise over $6,000. The evidence is conflicting concerning the value of the firm’s assets. Arthur Shiverick, a witness hostile to the defendant, testifies the assets were worth $27,000 cash, but we think, making due allowance for taxes subsequently canceled, and for shrinkage in the value of book accounts and bills receivable, the firm’s? property was not worth to exceed $25,000, and probably it would not have sold for that amount at forced sale. The value of the good will of the business is not included in this estimate. Baker was pressing the Shivericks for money, and was told by Arthur Shiverick that, if the firm’s debts were satisfied, its business could be managed so as to return a great profit. Shiverick also said he could secure the. release of his relatives’ claims; for $5,000 the bank would satisfy $24,000 of the firm’s obligations and take the notes of 'the Shivericks for the remaining $10,000
While these negotiations were being carried on, and until after the deal had been consummated, the plaintiff was in Europe. He learned the latter part of 1899 that the corporation had been formed, but testifies he did not know until 1902 that Baker, and not the Shivericks, controlled the corporation. Mr. Hall also testifies that Arthur Shiveriek said the new concern was making money and would pay Hall’s note. Plaintiff is a lawyer engaged in the practice of his profession, and in 1899, and for some time thereafter, was a member of the firm of Hall & Mc-Culloch. This firm had rendered the Shivericks professional services and had not been paid therefor. Baker was not apprised of that fact when he entered into the contract with Shiveriek and the bank. There is no entry in the Shivericks’ books to indicate the debt to Hall. The books had never been balanced and Arthur Shiveriek informed Baker they -were not correct; but Shiveriek stated that the debts of said firm were all described in his written statement made to Baker and the bank at the time of the reorganization. The obligation to Hall is not referred to in that statement.
Up to May 1, 1901, Baker advanced to the Shivericks for their private use about $1,200. The Shivericks did not pay the bank any interest accruing upon their notes for $10,000, and in 1900 it brought suits and recovered several judgments in the county court and in the district court for Douglas county against them. Thereafter the bank garnished the Shiveriek Furniture Company. Hall & McCulloch represented the Shivericks in said litigation and about that time took from Arthur Shiveriek an assignment of his salary due and to become due, collected his earnings for some months, and repaid the greater part to him. Baker in the meantime had loaned the corporation considerable money and had indorsed its notes. About the 15th of June, 1901, Baker purchased all of the bank’s judgments against the Shivericks, amounting, with
Counsel for the plaintiff argue that the Shiverick Furniture Company was a mere continuation of the partnership of Charles Shiverick & Company; that there Avas no consideration for' the transfer of the assets of the part
The third and fourth propositions are not strongly urged and cannot be maintained. There is a statement in the contract that the Shivericks “will and shall be absolutely freed from all indebtedness to all parties, except on said notes to said bank, aggregating ten thousand dollars -($10,000), and such other notes and evidences of indebtedness as it now holds, and except an indebtedness of said Ella Shiverick to said Baker not exceeding one thousand dpllars ($1,000) which she may hereafter owe to him for moneys which he may advance on her behalf.” This statement, however, should be construed in the light of the representations made by the Shivericks, the undoubted understanding of Baker based on those representations, and with regard to the parties named in the agreement. Baker never intended to agree, and did not agree, to pay any debts, or that the corporation, when formed, should pay any debts except those specifically mentioned in the contract. Mr. Hall testifies that Arthur Shiverick said the corporation would pay Hall’s note, but Shiverick did not have authority to bind the defendant by that statement, and it has never agreed to assume that debt.
The first and second propositions will be considered together. This is an action in equity, and mere forms will be disregarded. If the evidence discloses that the Shivericks and Mr. Baker entered into a scheme to hinder, delay or defraud the partnership creditors, or any of them, in collecting the partnership debts, and that the Shiverick Furniture Company has been used as a mere cloak to cover and- carry out that design, or if there was no consideration for the transfer of the partnership assets, the plaintiff should recover. On the other hand, if the transaction was honest, upon a sufficient consideration, and within the poAver of the parties to laAvfully consummate,
Notwithstanding the earnest, almost violent, argument of learned counsel, we adhere to our former opinion that the corporation was not a mere successor of the partnership so as to become liable for the latter’s debts. It is true that the -purpose of the parties was to permit the Shivericks to continue in business; that the corporation succeeded to that business and received all of the partnership, assets. It is equally true that the Shivericks did not continue,and it was not intended they should continue, in business alone. It is also a fact that Joseph Baker’s money satisfied the greater part of the firm’s outstanding debts for merchandise, dispelled $34,000 of the firm’s indebtedness, and gave the Shivericks an improved standing in the financial world. From the moment that Joseph Baker parted with his $10,000 it was impossible for the Shivericks to place him in his former situation. Had the Shivericks merely incorporated, and without consideration transferred the partnership assets to the corporation, the levy of an execution by a partnership creditor upon those assets, or the recovery of a- judgment against the corportion by a like creditor and its satisfaction by process of law, would prejudice no person. And this fact of a substantial consideration moving from a third party
Counsel also cite Wilson v. Æolian Co., 72 N. Y. Supp. 150, but in that case one corporation absorbed the assets of another. The court say those assets constituted a trust fund for the payment of corporate creditors, could be traced into the possession of the corporate successor, and it be held liable therefor. In the instant case the assets were partnership property.
In Ætna Ins. Co. v. Bank of Wilcox, 48 Neb. 544, it is held that a partnership does not hold its property in trust' for its creditors. The members of a partnership may be sued for its debt, and all of their property not exempt seized to satisfy the judgment; but when corporate assets are dissipated a judgment against it is valueless. That fact renders Wilson v. Æolian Co., supra, and many of the cases cited by counsel, valueless in the case at bar.
Our former opinion recognizes plaintiff’s right to seize the Shivericks’ interest in the corporate property, or any interest they may have in the corporation, and concedes his right to inquire into the proceedings instituted and methods pursued by Baker whereby the Shivericks were divested of that interest. The proof before us is conclusive that the Shivericks’ interest in the corporation has been lawfully extinguished. Counsel for plaintiff argue that Baker paid but a nominal sum, $800, for an assignment of the bank’s judgments aggregating $12,000; but we do not recall any evidence to support that assertion, nor is the fact material. The judgments represented an
We have not forgotten that this action is against the corporation, and not Mr. Baker individually; but he owns all of the corporate stock, and we cannot and ought not to shut our eyes to that fact. Home Fire Ins. Co. v. Barber, 67 Neb. 644, 665. We are under obligations to counsel for the respective parties for their written and oral presentation of the facts and the law. We have requested briefs and arguments upon features of the case not mentioned in this opinion, and counsel have responded cheerfully and diligently. Upon final consultation we concluded those propositions do not control and should not influence the case. Upon mature consideration we hold that the law of the case as announced in our former opinion is correct and rules the present appeal.
The evidence produced upon the last trial does not
Affirmed.