170 Pa. 354 | Pa. | 1895
Opinion by
J. Morton Brown & Company owned and operated the Wood-stock Mills, a woolen factory in Norristown. On August 3, 1893, being financially embarrassed, they confessed a judgment to William Johnston for $151,847.73, in trust for certain creditors, among them the following, for the sums specified:
John M. Kennedy, $1,000; William Johnston, $3,617.53; C. A. Furbush, $14,199.41; William A. Flanagan, $26,058.63; M. A. Furbush, $1,800; M. A. Furbush, representing the M'. A. Furbush Machine Co., $2,974.45; George L. Schofield, $250.
Judgment was entered and execution issued same day, and levy made upon all the personal property on the mill premises. The property consisted of raw materials and partly manufactured goods. Afterwards, on the same day, Brown & Company assigned to Andrew Flanagan for benefit of creditors. This assignment included the mill property and other real estate.
The sheriff made sale of the personal property on August 15, 1893, for the price of $7,659.51, to John J. MeCloskey, one of defendants, who afterwards sold at a profit. On October 12, 1893, the assignee sold the mill property to the same purchaser for the'sum of $600, subject to two • mortgages, aggregating $35,000. On October 25,1893, MeCloskey made a declaration of trust, in which he declared he held the mill property in trust for Flanagan, Johnston, M. A. Furbush and George L. Schofield, as their interest might appear, and under their direction
William A. Flanagan, 2097 shares; William Johnston, 824 shares; David S. Brown, 533 shares; Crosby M. Brown, 75 shares; George L. Schofield, 20 shares; Murrill A. Furbush, 201 shares ; total 3,750 shares.
The articles of association set forth that $25,000 of the subscribed capital is to be paid in cash, and the remaining $50,000 is represented by the Woodstock mill property, subject to the mortgages; the last named stock to be nonassessable, and to be issued to the parties subscribing, as follows:
William A. Flanagan, 1398 shares; William Johnston, 550 shares; David S. Brown, 355 shares; Crosby M. Brown, 50 shares; George L. Schofield, 12 shares; Murrill A. Furbush, 135 shares ; total, 2500 shares.
While all the stock has been thus allotted, none of it has been issued.
It will be noticed, that while the plaintiff’s name appears in the list of beneficiaries in the trust judgment along with Johnston, Furbush, Flanagan and Schofield, it does not appear in the list of those to whom stock is allotted; he says in his bill it ought to be there, and for these reasons:
That he, Flanagan, William Johnston and C. A. Furbush, before the sale of the personal property on 13th of August, 1893, they being among the largest creditors, agreed to form a syndicate to buy in the personal property, and also the real estate, when it should be sold ; that afterwards, but about the date of the sale of the personal property, M. A. Furbush and George L. Schofield were admitted as members, parties to the same operation. That he attended the sale of the personal property, and saw a large quantity of his own wool in the original packages, which he had delivered to the insolvent partners, sold, yet refrained from bidding, although this and other prop
After a full hearing, the master finds, that the real understanding or agreement between the members of the syndicate, as to the terms on which Kennedy should participate, was not in all respects as averred in the bill; that the interest is not correctly averred, nor the time when Kennedy was to come into the enjoyment of it; while all the witnesses on that subject admit there was some sort of agreement by which Kennedy was to participate, no two of them concur as to the exact terms of it, yet some of the same witnesses join in a sworn denial, by their answers, of any agreement at all with Kennedy. The master comes, however, to this conclusion:
“ McCloskey testifies that on October 12, 1893, he purchased the mill property as the representative of Murrill A. Furbush, Johnston, Flanagan, Schofield and C. A. Furbush, and that the question of Kennedy’s interest was something to be settled on, but that on the 25th of August, 1893, it was agreed by all parties that Kennedy should come into the combination after the others got fifty per cent of their claims out of the personal and real estate; that after that Kennedy was to come in on an equal footing.
“ Owing to McCloskey’s relations to all the parties, he being in communication with each of them directly, the master is of the opinion that the agreement was as he states it; and the master finds as a fact that the agreement was that Kennedy was to be regarded as a co-adventurer with the other members of the syndicate, and entitled to share in the profits resulting from the purchase of the personal property and of the real estate*360 upon an equal footing, after the others had realized from the entire adventure fifty per cent of their claims against J. Morton Brown & Company, which amounted to about $47,000 in the aggregate.” '
The bill avers the agreement was that MoCloskey should buy the property for the joint use of all the parties, and hold the same in trust for them; that it was then agreed a stock company with a capital of $80,000 should be formed, in which Kennedy should be allotted $3,300 of stock.
Therefore, there is this variance between the averments of the bill and the fact as found by the master. Kennedy was not to immediately participate in the profits of the syndicate, but only after the others had received fifty cents on the dollar of their claims; these amounted to $47,000; fifty per cent of this, after deducting $26.24, Kennedy’s share of the $600 purchase money of the real estate, also their cash contributions to the capital stock, and other disbursements would be $26,250; deducting from this the $17,000 profit already received from the personal property would leave $9,250, yet to be paid them, out of profits of the woolen mill, when Kennedy would be entitled to the delivery of 164 shares of the stock of the Woodstock Mills Company.
The learned judge of the court below dissented from the master’s finding of facts and conclusions of law. He was of opinion the Woodstock Mills Company could not be made a party defendant, as suggested by the master, because it was a stranger to any alleged contract or agreement. We think this objection lacks real merit; every shareholder of the company was a party to the answer to the bill, which averred they were about to form a company and take a conveyance of the property ; after the bill was filed they did take a conveyance, and organized the Woodstock Mills Company; it was the identical party defendant which assumed a corporate form under a corporate name, pending litigation ; equity is not so dull as to permit the substance of an issue to elude its grasp by a mere change of name. We think the suggestion of the master to make the Woodstock Mills Companjr a party to the decree a proper one, and necessary to the administration of equity between the real parties to the issue, of whom it was one.
As a further reason for dismissing the bill, the court is of
The plaintiff averred a contract by which he was to share in the operations of the syndicate, and in consequence he was lured into inaction as an individual for the protection of his own interests'; that defendants had-thereby largely profited in the past, and would greatly profit in the future; that by the contract he was to share in these profits along with others, in proportion to his debt against the bankrupt firm. The necessary conclusion from his averment is that he was to come immediately into the possession of his proportion. The master finds this last to be a mistake, but every one of the other averments substantially true. The only variance is, Kennedy was not to get his share of stock until his coadventurers had been paid fifty per cent of their claims out of the profits. If the answer of defendants had admitted the facts to be as the master finds, and had only denied that the period for Kennedy’s participation had yet arrived, because the profits had not yet reached fifty per cent of their claims, and a statement of an account of profits had sustained the answer in this last particular, plaintiff’s bill would, without doubt, have been dismissed at his costs. But, while the proof fails to sustain the bill as to the time plaintiff was to have his stock delivered to him, it amply sustains it in all other particulars; there is, therefore, not such substantial variance as calls for the dismissal of the bill. Pleaders in equity are no longer held to the strict technical rules which formerly were sufficient to control decrees, but often failed to accomplish equity: Bispham’s Equity, sec. 381. The undoubted rule is that every averment of the bill necessary to entitle the plaintiff to the relief sought must be stated. The relief sought here was for a decree directing an allotment of stock to plaintiff, in sum of $3,300, on the averment that defendants denied his right thereto, and if the same passed to others he would have no adequate remedy at law. The proof showed plaintiff’s right to.what he claimed, and from the attitude and denial of defendants that right was in peril. This was sufficient to move the chancellor in his behalf, although the decree might not be framed in exact accordance with his prayer, because of an immaterial variation between the averments of a part of the contract and the proof.
But we do not adopt his decree in full. We do not think it necessary to turn the management of the property over to a receiver, until the defendants have been paid profits equal to fifty per cent of their claims; none of the stock has yet been issued: no full account of the profits, up to the date of filing his report by the master, was taken. He did find their debts amounted to $47,000, that they had made a profit of $17,000 on the sale of personal property; but they had made cash contributions for interest on mortgages and taxes, and paid $600 cash in purchase money, leaving still unpaid them of the fifty per cent $9,250. Whether any profits had been made by the defendants, or the Woodstock Mills Company, other than the $17,000 on the personal property, he did not inquire or determine. We therefore modify the decree suggested by him thus: 1. The proper officers of the said Woodstock Mills Company are hereby directed to mark and allot on the stock book of said company 164 shares of the capital stock to John M. Kennedy. 2. The said officers are directed to issue and deliver a certificate for said 164 shares in his — Kennedy’s—name to the prothonotary of the court of common pleas of Montgomery county, to be by him safely kept until the said court dfiects him to deliver it to said John M. Kennedy. 3. That on application of said John M. Kennedy, now or hereafter, without further pleadings this cause shall be referred to the same master, or in case of his inability to act to some other, to state an account of said Woodstock Mills Company, to determine whether the profits have equaled the sum of $9,250, the balance of the fifty per cent yet due to defendants, and if it be found they equal or exceed said sum, then the said prothonotary, on direction of the court, shall deliver to said Kennedy said certificate; otherwise shall hold the same until other accounting determines that said profits equal or exceed said balance.
Further: Nothing in this decree shall be taken as hindering an amicable settlement of the matters at variance between the parties, or an agreement between them to deliver said certificates to John M. Kennedy, without an account, or the surrender of the same by him to said company.