224 P. 435 | Idaho | 1924
— The amended complaint in this action states two causes of action in a single count, but no objection to this misjoinder appears to have been taken by any of the defendants.
One cause of action is against the Modern Packing Company, a domestic corporation, and appellant Henry Jones, Perry Jones, John F. Ilansen and W. P. Guthrie, in their official capacity as trustees of the defendant company. The corporation became defunct for a failure to pay the annual license taxes, and the directors were made parties defendant as provided by C. S., sec. 4790. This cause of action is upon the promissory note set forth in the complaint, executed by defendant corporation to the respondent Nelson, June 10, 1916, in the principal sum of $2,221.75.
Prior to the execution of this note and mortgage a fire had destroyed the company’s packing-house, and appellant had taken a mortgage upon all its real estate, in consideration of his having paid an indebtedness to a creditor of the company, apparently equal in amount to the value of this real estate. About the validity of this transaction no question is raised in this action.
The cause was tried by the court with a jury, which made special findings of fact upon interrogatories submitted, wherein it found that the company was insolvent at the time appellant took this note and chattel mortgage; that the appellant, with the other officers who had control of the company’s affairs at the time of the execution of this instrument, knew that it was insolvent; and the jury found the value of the property included in the chattel mortgage given by appellant to be $1,000.
The court adopted the findings of the jury, and made additional findings to the effect that the company was a
As a conclusion of law from such findings, the court holds that respondent is entitled to judgment against the company, the appellant, Perry Jones, John F. Hansen, and W. P. Guthrie, as trustees, for the principal sum of $3,423.46, and that appellant is personally liable to respondent, and respondent is entitled to judgment against him, for $1,000, the value of such personal property, together with interest, costs and $150 attorney’s fees, making a total of $1,420 for which judgment was entered against appellant.
From this personal judgment against him appellant appeals to this court, and assigns as error: (1) That the complaint does not state facts sufficient to constitute a cause of action; (2) that the evidence does not support the judgment; (3) that the court erred in its conclusion that respondent was entitled to a judgment against appellant in the sum found; (4) that the findings and conclusions do not support the judgment; (5) that it is contradictory, uncertain and indefinite; (6) that the court erred in taxing an attorney’s fee against appellant; (7) that there is no evidence to sustain the judgment, for the reason that there is no showing of fraudulent intent or purpose on the part of the company or its officers or agents.
It will be observed that the controlling question presented by this appeal is whether the president of an insolvent
Appellant argues that the complaint fails to state a cause of action, for the reason that there are no particular facts or representations alleged constituting the collusion or fraud, and cites Wilson v. Baker Clothing Co., 25 Ida. 373, 137 Pac. 896, 50 L. R. A., N. S., 239. This case correctly states the rule of law applicable to the facts there under consideration, but we think it has no application to the facts presented by this record.
Appellant further contends that an insolvent corporation is not prohibited by any law of this state from preferring certain creditors over others in the due course of business, where such preference is not collusively or fraudulently made, and relies upon the same authority and also upon Pettengill v. Blackman, 30 Ida. 241, 164 Pac. 358, wherein it is said that if there is a debt and a transfer of property for an adequate consideration in payment of the same, no collusion or fraud in its legal sense can be predicated upon such transaction.
It is further contended that respondent had been president of this company, and during his incumbency had loaned the money for which this note was in part given, and that he was still a director. It appears, however, that respondent has not taken any part in the company’s affairs for a long time prior to taking this note, or to the execution of the mortgage given appellant. It may be conceded that generally in an action for deceit or fraud the facts constituting the same must be specifically alleged and proven. Blit this rule has no application to the case of an officer of a corporation obtaining a preference for himself by appropriating to his own use the assets of his company, to the injury of its other creditors. Such acts are fraudulent and void in law, irrespective of the intent of such officer.
In Riley v. Callahan, 28 Ida. 525, 155 Pac. 665, it is said that the directors and officers of a corporation hold the funds in trust, and any attempt on their part to divert the
C. S., sec. 4715, prohibits the directors of a corporation from declaring any dividends except from surplus profits, or from withdrawing or paying to any stockholder any part of the capital stock, or reducing the same, except as therein provided. It makes such officers liable in their individual capacity, jointly and severally, to the corporation or any of its creditors, in the event of a dissolution, to the full amount of the capital stock so divided, withdrawn, paid out or reduced.
In Chadwick v. Holm, 31 Ida. 252, 170 Pac. 87, it is held that where with the consent of the stockholders a corporation through its directors transfers all of the corporate property to another corporation, and takes in payment bonds of the latter corporation, and such bonds are allotted among the stockholders in proportion to their shares in the original company, the directors will be liable as tort-feasors for any loss occasioned by the negligence of the directors in delivering to the stockholders their allotment of such bonds. It is held that the statute was enacted for the benefit of creditors, and of those who engage in business with corporations on the assumption that their capital cannot be impaired. In the instant case, the president, who is also the general manager and a director of a corporation, as such officer caused the corporation to enter into a contract with himself in his individual capacity, by which all of the then remaining assets of the corporation were transferred to him to discharge its obligation to him. Even though such obligation is founded on a valid consideration, such as the advancement of money, which appears to be conceded in this case,
As already indicated, the action against the corporation and its trustees, who became liable in their official capacity as such because of the forfeiture of the corporation charter for failure to pay the license fee, is an action upon contract, in this case the promissory note set forth in the complaint. The action against appellant individually is tortious in character, and there being no provision for the recovery of an attorney’s fee in an action of this kind, the finding and holding of the trial court that respondent was entitled to the attorney’s fee of $150 has no support in the record, and cannot be allowed. Appellant in the trial below might have required respondent to elect upon which cause of action he would proceed, or to separately state the two causes of action, but having neglected to do so, we think he waived his right to do so after judgment. However, the fact that the first cause of action is upon a promissory note with an attorney’s fee clause would not extend such provision to the second cause of action, sounding in tort.
Where the president and general manager of a corporation wrongfully converts the assets of his company to his own use by taking a mortgage upon the same and foreclosing such mortgage, and bids in the property at the foreclosure sale, he would ordinarily be liable to injured creditors to the full extent of the price for which such property was sold at the foreclosure sale. In the instant case, however, the question as to the value of this property wrongfully taken by appellant was submitted by special interrogatories to the jury, which found its value to be $1,000. No exception being taken by either party to this finding as to the value of this property, and it having been adopted by
It results from what has been said that respondent’s judgment against appellant should be.affirmed in the amount of $1,000, with interest thereon and costs, as found by the trial court, but the attorney’s fee in the sum of $150 should be stricken therefrom. The cause is remanded, with instructions to enter a judgment in accordance with the views here expressed. Costs to respondent.