135 P. 822 | Idaho | 1913
This is an appeal from a judgment entered on the pleadings and an order denying intervenor’s motion to vacate and set aside the judgment and permit the intervenor to file an amended complaint in intervention.
The trial court held that this complaint in intervention was not sufficient to entitle intervenor to any relief whatever. The trial judge in his order sustaining a motion for judgment on the pleadings sets forth his reasons for sustaining the motion as follows:
“That said motion of the plaintiff be and the same is hereby sustained because the answer and complaint in intervention of the intervenor contains no allegations of insolvency of the Idaho Smelting & Refining Co., and because the same contains no allegation of fraud, actual or constructive, and because the same contains no allegations of effort on the part of the intervenor to exhaust its legal remedies or that such remedies ¡would be fruitless, and because the same contains no allegations of intervenor’s inability to collect its judgment by pursuing its legal remedies, and because the facts alleged in the said answer and complaint in intervention fail to show a right*744 on the part of intervenor to intervene, and such facts are not sufficient to constitute a defense to plaintiff’s action or a right of action in behalf of intervenor. ’ ’
Counsel for appellant have not devoted much time to the discussion of the questions involved in the court’s ruling which he sets forth as his reasons for sustaining the motion for judgment on the pleadings. The appellant, however, has placed its chief reliance upon the proposition that the bond issue in this ease was in violation of sec. 9, art. 11 of the state constitution, which provides as follows:
“No corporation shall issue stocks or bonds, except for labor done, services performed, or money or property actually received ; and all fictitious increase of stock or indebtedness shall be void. The stock of corporations shall not be increased except in pursuance of general law, nor without the consent of the persons holding a, majority of the stock, first obtained at a meeting, held after at least thirty days’ notice given in pursuance of law.”
Counsel contend that under the foregoing provisions of the Idaho constitution and the like provisions of sec. 183, art. 12 of the constitution of the state of Washington, where the Idaho Smelting & Refining Co. was created and exists, “the bond issue secured by said mortgage or trust deed is absolutely void. ’ ’ Counsel for appellant, in support of this contention, rely chiefly on the following authorities: Farmers’ Loan & Trust Co. v. San Diego Street Car Co., 45 Fed. 518; Nichols v. Waukesha Canning Co., 195 Fed. 812; National Foundry & Pipe Works v. Oconto Water Co., 52 Fed. 29. Respondent, on the other hand, takes issue with appellant on the construction which counsel seek to place on this provision of the constitution and calls our attention to a great many authorities, among which are, 3 Thompson on Corporations, sec. 2301; Memphis etc. Co. v. Dow, 120 U. S. 287, 7 Sup. Ct. 482, 30 L. ed. 595; In re Goldville Mfg. Co., 118 Fed. 892; Wm. Firth Co. v. Loan & Trust Co., 122 Fed. 569, 59 C. C. A. 73; Atlantic Trust Co. v. Woodbridge Canal & Irr. Co., 79 Fed. 842.
It is apparent, however, as may be seen from the foregoing order of the district judge, that the trial court did not base
Again, it is alleged by the intervenor that when the Idaho Smelting & Refining Co. purchased this property from the Panhandle Co., “the Smelting & Refining Co. assumed and agreed to pay and discharge all of the debts of the Panhandle Smelting Co., Ltd., and assume all its liabilities.” If that allegation be true, as we must assume it is for the purposes of this consideration, then it was the duty of the intervenor, if it had either a legal or equitable claim against the Panhandle Co., to take the necessary steps to collect the same from the Smelting & Refining Co. if it could not collect it from the Panhandle Co.
It also appears that at the time of the sale and transfer from the Panhandle Smelting Co. to the Idaho Smelting & Refining Co., that the property was mortgaged to the Fidelity National Bank, and that this mortgage was assumed by the Smelting and Refining Co. as a part of the purchase price, and that the bond issue, among other things, was used to pay off or secure this pre-existing loan. Now, we express no
It is alleged that the Panhandle Co. was insolvent at the time of the transfer. It is nowhere alleged, however, that the Idaho Smelting & Befining Co. was or has been at any time insolvent or unable to pay all its debts and obligations. It was necessary for intervenor to show this fact in order to maintain an action in intervention. (Hollins v. Brierfield Coal & Iron Co., 150 U. S. 371, 14 Sup. Ct. 127, 37 L. ed. 1113.) It is true that it appears from the pleadings herein that these bonds had been outstanding for several years and that no interest had been paid thereon. This, as a matter of proof, would be a circumstance tending to show insolvency, but such fact, standing alone, does not establish the insolvency of an individual or corporation which fails to pay interest on outstanding obligations, and for the purpose of considering and passing upon the pleadings a court would not be justified in seizing upon such a single isolated circumstance and drawing the legal conclusion therefrom that the corporation was insolvent. (Phipps v. Harding, 70 Fed. 468, 17 C. C. A. 203, 30 L. R. A. 513; 3 Clark & Marshall on Corporations, vol. 3, p. 2370.) It would be an unsafe and dangerous rule to announce that every person who does not meet his obligations as they fall due is insolvent. That kind of a doctrine would place a large number of perfectly solvent and responsible persons at the mercy of anyone who might want to ruin their business and credit by securing the appointment of a receiver to take charge of their business and property. Many men and corporations as well have plenty of property and assets to meet all obligations, and yet it is not in such condition that they can realize ready cash on it as their debts and obligations fall due.
The suggestion that the property covered by this trust deed is liable for the debt due intervenor under the provisions of see. 15, art. 11, of the constitution, does not receive any support from the allegations of the complaint in intervention. There is no suggestion in the pleadings that the debt pleaded was “contracted or incurred in the operation, use or enjoyment” of any franchise or privilege accorded to the corporation under the constitution or statute of this state. The allegations do not bring the claim within the decision of this court in Seymour v. Boise R. R. Co., ante, p. 7, 132 Pac. 427. On the other hand, Cooper v. Utah Light & Ry. Co., 35 Utah, 570, 136 Am. St. 1075, 102 Pac. 202, completely answers appellant’s contention on this phase of the case.
The contention made that the intervenor had no right of intervention is not well taken. It so happens that it failed to state a cause of action or any ground entitling it to relief and for that reason had no standing in the case. If, however, the facts which it omitted to plead, as hereinbefore indicated, had existed and been set forth in its complaint, it would clearly have come within the provisions of the statute (sec. 4111) and have been entitled to intervene. Any third party
Finally, it is argued by counsel for appellant that the court erred in denying the motion of intervenor to vacate and set aside the judgment and allow it to file an amended complaint in intervention. The showing made in support of this motion afforded more reason for denying it than for granting it. It appears by affidavit of one of the attorneys “that it was his intention, in the event of the plaintiff’s motion for judgment on the pleadings being granted, to immediately ask leave of the court to file an amended complaint in intervention to meet the grounds and objections upon which the court’s decision granting said motion might be based; .... that he desired to have the opinion of the court upon the points raised before applying for leave to amend, and that, relying upon his belief that he would be given notice of the decision before further action was taken by the court, he did not give notice, in advance of the decision, of his intention to ask for leave to amend in the event of an adverse decision.” We do not take it that counsel who made this showing intended to trifle with the court, but a moment’s reflection would satisfy anyone that such a course of conduct would have the effect of merely presenting moot questions to a court and seeking to get the court’s opinion of certain questions in advance of the trial of a case. Such a practice is unauthorized, and no attorney has a right to assume that a court, after passing upon a motion for judgment on the pleadings and granting the motion and the relief sought by the motion, is going to forthwith vacate and set aside such order and allow the parties to reform their pleadings and make up new issues in the case where no one is taken by surprise or unawares. If a litigant proposes to stand upon his pleading and argue a motion which goes to the very vitals of the issues, he must then abide the results. If he has amendments to propose, he ought to make them without taking the' time of the court and his adversary in arguing sham pleadings or such pleadings as do not cover
The court did not err in denying the application to set aside the judgment and allow the intervenor to file an amended complaint.
The judgment should ,be affirmed, and it is so ordered. Costs awarded in favor of respondent.