141 A. 298 | Pa. | 1928
Argued January 5, 1928. Plaintiff recovered damages for wrongful levy and sale of its property under an execution issued by defendant against John E. Quinn. The circumstances leading up to the sale are these. Quinn, engaged in the manufacture of stockings, had borrowed money from Gottschall to continue the business, and had secured through a bailment lease from the Lehigh Silk Hosiery Company the machinery in question. Quinn owed Gottschall for money advanced, $7,800, and the Lehigh Hosiery Company, $2,500. Since business was not prospering, he sold it to Lurker for $3,000. Lurker paid $2,500 down, and out of this Quinn paid Gottschall $1,500 and $500 on the machinery. The reductions made the amount due Gottschall, $6,300, and for the machinery, $2,000. Quinn later cleared the title to the machinery by using his own funds and the final payment of $500 that Lurker owed him. Lurker, having taken possession of the business, two months later organized a corporation called the Summit Hosiery Company. To that company title to the machinery and all its effects was transferred, and the stock of the company, 4,600 shares, was issued to Lurker, Gallen, Shea, and about twelve other persons; Quinn was given a small block of stock. Lurker became president of the company and Quinn was made secretary, treasurer, and manager, at a salary of $30 a week. The company, having taken over the lease, paid the rent, carried on the business, and made and sold stockings for several months. Signs bearing the new name were put on the plant walls, stairway and on the office door, and remained there until after the sheriff's sale. Telephones, bill-heads, letter-heads and advertisements were *467 all in the name of the Summit Company. The questions of the good faith of the sale and of the adequacy of the price at which Quinn sold the machinery were submitted to the jury, and they found a verdict for plaintiff.
Gottschall brought suit against Quinn, and obtained judgment for want of an affidavit of defense. When execution was issued, the machinery was seized. Plaintiff tried to institute interpleader proceedings, but, because of its inability to obtain a bond, that proceeding was abandoned. The present suit to recover damages for an abuse of process then followed. The basis of the action is the employment of process for an unlawful object, in doing an act clearly outside the authority conveyed by the express terms of the writ: Mayer v. Walter,
Despite the jury's finding that the price paid for the machinery by Lurker was adequate, and that there was no actual fraud, appellant asserts that there was fraud in law of such a gravity as to prevent recovery. It is urged that since Quinn was made general manager, secretary and treasurer of the new company, and placed in charge of its business, having been before the formation of the new corporation sole owner of the business, he was to all outward appearances since incorporation the owner of the business and the machinery. Defendant submits the legal proposition that an individual cannot *468
lawfully dispose of his assets to a corporation to the prejudice of creditors, even though no actual fraud is intended, where he is substantially the owner of all the stock of the company. As stated in Delphia Knitting Mills Co. v. Richards,
There being no fraud in fact, the composition of the new company and the effort to show good faith in the transfer have an important, if not a conclusive, bearing. Here the persons who comprised the new company were strangers to the indebtedness of Quinn and his interests; they were independent of Quinn and clearly negatived the idea of identity of persons as vendor and vendee. This being so, there is no reason why the company should not employ the debtor as the manager, or salesman, to conduct the business after the sale has been properly made. There could be no further question if *469 the property had been moved to another house; that it was not is immaterial. Change of possession does not necessarily mean removal of the property. There may be a change of possession in the change of ownership of the land where the property is located.
When Lurker purchased the property, he took actual possession. When the new company was organized, and the machinery was resold to it, the company's name was placed on the doors, windows, letter-heads, bill-heads and in the telephone book. These acts completed the change so far as the evidences of ownership are concerned. It had the same effect as if the machinery had been taken away, transferred to Lurker, and brought back to the same place. The law does not require vain things to be done.
If a corporation purchases property, it is subject to
The same law with regard to change of possession as an individual would be: The Pennsylvania Knitting Mills Co. of Reading v. Bibb Manufacturing Co.,
The view expressed is not in conflict with the recent cases of Wendell v. Smith,
Some mention has been made of the Bulk Sales Act of 1919, P. L. 262. As the appellant did not proceed within the time required by that act, he is in no position to complain.
Judgment of the court below is affirmed.