70 Wash. 235 | Wash. | 1912
The facts in this case are complicated and difficult of statement and we shall not attempt to recite them all, contenting ourselves with only such a review of them as is necessarily involved in the discussion of the conclusions we have reached. Respondents commenced the action to obtain a conveyance of a certain forty acres on Oreas island, valuable as containing a deposit of lime rock. The title to this forty was, prior to December, 1904, in M. H. Walter, and was on that day, through error in the description, conveyed to the Oreas Lime Company in exchange for another piece known as lot one. The following November, Walter and Soderberg organized the Puget Sound Portland Cement Company, for the purpose of developing lime deposits on Oreas island, including the forty acres in suit, Soderberg having previously purchased from Walter an undivided one-half interest in certain properties owned by Walter, and which were supposed to cover by their legal description the lime quarry, which the parties intended to operate in the name of the corporation subsequently organized. Soderberg and Walter then conveyed their interest in these lands to the corporation in exchange for its stock, and the corporation then proceeded to open up the ledge of lime rock on this forty, supposing it had title to the same, and expended in this work $14,000. In December, 1905, Walter discovered that a mistake had been made in conveying this forty to the Oreas Lime Company and, without informing Soderberg, entered into negotiations with the Oreas Lime Company to have the mistake corrected. The result of these negotiations was a conveyance by the Oreas Lime Company to A. C. McRae, who
At the time of the first transaction between Soderberg, Walter and the Oreas Lime Company, as part consideration of the lands conveyed, two notes of $10,000 each were given by the Oreas Lime Company to Walter, secured by a mortgage on the lands, the mortgage containing conditions as to when and under what circumstances relative to the production of lime from the lands purchased the notes should be payable. These notes had passed into the hands of McRae under a settlement of a suit founded upon the promoter’s contract with Soderberg and Walter. Payment of these notes was refused by the Oreas Lime Company, it claiming that the conditions in the mortgage under which the notes were payable had not l'ipened. Subsequently the notes were used in negotiation between the Oreas Lime Company and Walter and McRae whereby the title to the forty passed to McRae. Shortly after, McRae went east and does not again appear upon the scene for about two years. The Puget Sound Company in the meantime continued its operations upon this forty, Soderberg not having been apprised of any of the facts surrounding the discovery of the error in conveying the forty, nor the negotiations between Walter, McRae and the Oreas Lime Company whereby title to the forty passed to McRae. When Soderberg and Walter organized the Puget Sound Company, they borrowed $10,000 from the Scandinavian-American Bank of Seattle, pledging the stock of the company as collateral. This note was taken up by Soderberg, the stock delivered to him, and he commenced suit against Walter for contribution on the note, resulting in judgment and an assignment from Walter of his half of the stock in satisfaction of the judgment. This Puget Sound Company was subsequently dissolved by the secretary of state for nonpayment of license fees. Its property has since been in the possession of Soderberg, who has paid the taxes
We have not attempted to state all the facts entering into these transactions. There are others which throw side lights on the relations between the parties, and the attempts of Walter and McRae to possess themselves of the property in issue without the knowledge of Soderberg. Respondents’ theory, which was adopted by the court below, is that McRae occupied such a fiduciary relation to the company that he. could not use the information or knowledge he obtained adversely to the interest of the company and seek to set up an adverse title in himself, but that he should be held as trustee for the company. In attempting to realize upon the notes he secured in settlement of his controversy with Soderberg and Walter, McRae was justified in seeking to obtain, in satisfaction of his claim against the Oreas Lime Company, as favorable a settlement as he could. The law, however, will not protect him when in his endeavor to do so he secretly acquires property which he seeks to use against the interest of the company to whose interest he had pledged his good faith. It is apparent that the Oreas Lime Company was claiming no rights to this forty under the conveyance from Walter. Subsequent to the time it had procured a survey and learned of the error in description, it had held itself only as the legal holder of the title for the rightful owner. Under this situation, McRae, who had united his interest with that of the company in the effort to so promote its interest as to make its property valuable, could not act adversely to that interest in the obtaining of this title, and seek to assert it adversely to the company whose interest he was bound to protect. The law casts a jealous eye upon one standing in the relation of McRae. It requires, so long as he maintained his fiduciary relation with the company, that he should in
Some question is raised as to the form of the action, appellant contending that, under the authority of State ex rel. Preston Mill Co. v. Howell, 67 Wash. 377, 121 Pac. 861, the Puget Sound Company has not been dissolved and it only could maintain this action. Its attempt to do so, however, would be useless, because of its failure to pay its license tax. We can find no question involved in the Howell case properly an issue in this suit. No question is raised by the corporation itself as to the effect of the act of the secretary of state in entering the order of dissolution on February 23, 1910. Nor is the corporation here seeking to reinstate itself by offering to pay arrears of license. So far as the dissolution of the corporation is concerned, it must be so regarded until, in some appropriate proceedings, it is decreed otherwise. Under Rem. & Bal. Code, § 3715d, upon the dissolution of a corporation, its trustees hold its property for the benefit of its stockholders and creditors. Under this statute, we have no doubt the trustees could maintain proceedings to acquire such possession. The only trustee of this corporation who is now a stockholder, or was at the time of its dissolution, is Soderberg. Under these circumstances, we find no objection to the power of the court to enter the decree appealed from.
Neither do we think the Pacific Coast Company has any standing as claimant of Walter’s stock in the Puget Sound Company. This stock was never in the possession nor under the control of Walter from the time it was given to the Scandinavian-American Bank as collateral to the $10,000 loan. When Soderberg paid the loan, he took the stock and held it until Walter transferred it to him in satisfaction of the judgment in the action by Soderberg against Walter for
It is next contended by appellant that, even though his contention as to the ownership of the forty should be denied, he is still entitled to be reimbursed the price he paid for it. This contention must, we think, be sustained. Otherwise the Puget Sound Company or Soderberg would have both the forty and the tract known as lot one which was exchanged for the forty. It also would result in the Puget Sound Company retaining the benefit of its settlement of the suit brought by McRae, and deprive McRae of what was given to him in the same compromise. It is not claimed there was any fraud in this settlement, and McRae, though he loses the title to the forty, is entitled to retain the benefit of his compromise, whereby he obtained the two $10,000 notes which were the basis of the settlement with the Oreas Lime Company, whereby he obtained $2,000 in cash, notes aggregating $8,000, and the deed to the forty. It is, we think, clear from the testimony of Mr. Dally, president of the Oreas Lime Company, that, while he intended to insist upon the performance of the conditions of the mortgage securing these two notes, in any attempt to enforce their collection, he was satisfied that his company had obtained full value for them, and that one of these notes was charged against the forty in the settlement with McRae. The entry on the books of the company on July 30, the date of this settlement, shows bills payable debit, and real estate account credit, to the amount of $10,000, by the transfer of the forty to McRae in lieu of one of the notes. This entry concludes “per instructions of Mr. Walter,” and respondents urge that this evidences a fraudulent purpose on the part of Walter to make the entry read differently from the transaction.
Mount, Ellis, Chadwick, and Fullerton, JJ., concur.