Sweet v. Lang

Decision Date14 August 1926
Docket NumberNo. 7206,7207.,7206
Citation14 F.2d 762
PartiesSWEET v. LANG et al. SAME v. NORTHWESTERN MUT. LIFE INS. CO. et al.
CourtU.S. Court of Appeals — Eighth Circuit

H. V. Mercer, of Minneapolis, Minn. (E. J. Lien, of Minneapolis, Minn., on the brief), for plaintiff in error and appellant.

Claude Krause, of Minneapolis, Minn. (J. O. P. Wheelwright, of Minneapolis, Minn., on the brief), for defendants in error except Pure Oil Co. and Horace M. Libby, and for appellee Northwestern Life Ins. Co.

William W. Bartlett, Marshall Bartlett, and George E. Dyer, all of Minneapolis, Minn., for defendant in error Pure Oil Co.

Frank W. Booth, of Minneapolis, Minn., for defendant in error Horace M. Libby.

M. H. Boutelle and Le Roy Bowen, both of Minneapolis, Minn., for Alvin H. Poehler, Eugenia L. Poehler, and Henry Poehler.

Before LEWIS, Circuit Judge, and FARIS and PHILLIPS, District Judges.

LEWIS, Circuit Judge.

These cases were argued and submitted together. The first numbered cause is at law, the second in equity. They rest in large part on the same facts. We will dispose of them seriatim.

On October 7, 1921, the District Court appointed plaintiff in error receiver of H. Poehler Company, a Minnesota corporation. The appointment was made in a judgment creditor's suit. Thereafter the receiver brought a large number of actions against merchants, tradesmen, professional men, and others, charging in each case that Alvin H. Poehler, president of the corporation, had wrongfully and without authority paid off his personal indebtedness to each defendant by giving the corporation's check or checks, that each defendant knew the facts and should be held to have received the moneys of the corporation for its use and benefit, and is thus liable to the receiver as for money had and received. None of the complaints allege that the corporation was insolvent when the payments were made.

The answers allege that for many years prior to the appointment of the receiver it had been the custom and practice of Alvin H. Poehler to pay his personal indebtedness with checks of the corporation, that this was done at all times with the express knowledge and consent of the corporation and of all of its officers, directors, and stockholders, and that all its directors and stockholders ratified, consented to, and acquiesced in the payments. The answers further allege that all payments were made and received in good faith and at times when the corporation was solvent.

There being some forty actions of the kind noted, they were by order of court on motion of the receiver's counsel consolidated; and on motion of several defendants, which was unopposed, the court appointed Charles B. Elliott, an experienced and learned member of the bar, as auditor (Ex parte Peterson, 253 U. S. 300, 40 S. Ct. 543, 64 L. Ed. 919), "to make a preliminary investigation as to the facts; to hear the witnesses; report on the issues of fact involved in the pleadings herein, setting out his conclusion as to the facts involved that are not disputed, and make and file a report in the office of the clerk of this court with a view to simplifying the issues for the jury; but not finally to determine any of the issues in the action, the final determination of all issues of fact to be made by the jury on the trial; that such auditor shall have power to compel the attendance of and administer oaths to witnesses; that said auditor is hereby instructed to report upon the issues of fact and separate those items of fact which are in dispute from those as to which there is no real dispute and also to report therewith a transcript of the evidence on which the specific claims are rested; that said auditor is hereby directed to form a judgment and express an opinion upon such of the facts as he finds to be in dispute, but said report of said auditor shall be prima facie evidence only of the facts which he reports, that he is hereby specifically authorized:

"(1) To compel an examination of the books and accounts of the H. Poehler Company and of the personal account of Alvin H. Poehler with said company and the evidence of all parties bearing upon the issues in the pleadings herein."

After hearing much testimony, which the auditor certified with his report, he therefrom found:

"(1) That the H. Poehler Company was duly organized under the laws of the state of Minnesota on or about January 2, 1893, to conduct a grain commission business, that it began said business on January 2, 1893, and thereafter continuously conducted the same as a going concern until the time of the receivership thereof, to wit, on or about October 7, 1921, and that during all of the said time its principal office and place of business was in the city of Minneapolis, county of Hennepin, and state of Minnesota.

"(2) That, upon the organization of said corporation, its sole stockholders, officers, and directors were Henry Poehler, George Duvigneaud, Charles Poehler, and Alvin H. Poehler, said individuals holding the following offices in said corporation, to wit: President, Henry Poehler; vice president, George A. Duvigneaud; secretary, Charles Poehler; treasurer, Alvin H. Poehler.

"(3) That said George A. Duvigneaud died January 31, 1911, and said Henry Poehler died July 18, 1912, and that thereupon the said Alvin H. Poehler became president and continued in that capacity until the receivership herein. That, from the time of its organization until said receivership, said Alvin H. Poehler was an officer of said corporation in one capacity or another.

"(4) That, throughout the entire period from its organization until said receivership, substantially all of the stock of said corporation was held and owned from time to time, and in slightly varying amounts, by said original stockholders and members of the families of said original stockholders.

"(5) That from the time of its organization until the time of said receivership it was the custom and practice between said H. Poehler Company and all of its directors, officers, stockholders, employees, and some of the members of the Poehler family, who were neither stockholders nor employees, to maintain personal accounts of said individuals with said corporation, and to pay personal bills of said individuals by checks of said corporation, that, as to the principal stockholders and officers, substantially all, if not all, of their personal bills, including bills for their family and household expenses, were continuously paid by such corporation checks, and that this was true throughout said period as to the said Alvin H. Poehler."

"(11) That for much longer periods than the six years immediately preceding the receivership herein the personal bills and accounts of said Alvin H. Poehler with each of the various defendants herein had been paid by corporate checks of said corporation and such payments regularly entered in the books of said corporation according to the practice hereinbefore mentioned.

"(12) That said H. Poehler Company and all of its officers, directors, and stockholders throughout the entire period from its organization until said receivership permitted such accounts to be maintained and such payments of personal bills to be made by corporation checks, without making any objections thereto nor any demand upon any of the recipients of the checks for a return of such payments, or any of them, and took no steps to repudiate or disaffirm such payments, or any of them.

"(13) That the maintenance of said open accounts and the payment of personal bills of such individuals, including Alvin H. Poehler, was known to, authorized, acquiesced in, approved, and ratified by the said H. Poehler Company, and by all of its officers, directors, and stockholders.

"(14) That during the entire period of its organization to and including the time of the appointment of the receiver, said H. Poehler Company was solvent.

"(15) That during the times herein mentioned there has been a custom and practice in the city of Minneapolis among retail merchants and other business concerns, including the defendants herein, to receive and accept corporation checks in payment of the personal bills of the officers, directors, and stockholders of the corporation.

"(16) That the payments for which plaintiff seeks recovery herein, except those made to the First National Bank of Le Sueur and the Union Investment Company, with respect to which special findings are made in foregoing paragraphs 7, 8, and 9, were made to the respective defendants in payment of personal bills of Alvin H. Poehler by the checks of the H. Poehler Company under and pursuant to the customs, practices, and methods of doing business, and regularly entered in the books of the H. Poehler Company, as found and set forth in the preceding findings herein.

"(17) That, in receiving and accepting the checks of the H. Poehler Company in payment of the personal bills of Alvin H. Poehler, for the recovery of which these actions are brought, the respective defendants made no investigation to ascertain the right and authority to make said payments by the check of the H. Poehler Company, but acted in reliance upon the established practices of said company and said Alvin H. Poehler in that respect, and the custom and practice among retail merchants and others, as hereinbefore found, and by reason thereof, and of the facts stipulated in the record herein, I find that the defendants received and accepted said checks, and all thereof, in each instance, in good faith."

The parties then stipulated that trial by jury be waived, and that the consolidated cause be submitted to the court upon the transcript of evidence reported by the auditor. Counsel for plaintiffs filed objections to the auditor's findings, and moved that his report be not approved, but the court, on consideration of the proof, made findings of fact, the same in substance as found by the auditor, including a finding that the corporation was solvent during the entire period of...

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    ...Platt v. Francis, 247 Mo. 296; 21 R. C. L., pp. 919, 921, 930, 931; Atherton v. Beaman, 256 F. 871, cited with approval in Sweet v. Lang, 14 F.2d 762. Plaintiffs expressly ratified the issuance of all the checks except the two in question. They were all issued at the same time, at the same ......
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