Arizona Association of Credit Men v. Associated Indemnity Corp., Civil 3469

• Decision Date: 31 December 1934
• Docket Number: Civil 3469
• Citation: 44 Ariz. 548,39 P.2d 626
• Parties: ARIZONA ASSOCIATION OF CREDIT MEN, an Arizona Corporation, and LYLE N. OWENS and J. L. VANCE, Doing Business Under the Firm Name and Style of OWENS RADIATOR AND BODY WORKS, and OWENS RADIATOR AND BODY COMPANY, Appellants, v. ASSOCIATED INDEMNITY CORPORATION, a Corporation, Appellee
• Court: Arizona Supreme Court

39 P.2d 626

44 Ariz. 548

ARIZONA ASSOCIATION OF CREDIT MEN, an Arizona Corporation, and LYLE N. OWENS and J. L. VANCE, Doing Business Under the Firm Name and Style of OWENS RADIATOR AND BODY WORKS, and OWENS RADIATOR AND BODY COMPANY, Appellants, v. ASSOCIATED INDEMNITY CORPORATION, a Corporation, Appellee

Civil No. 3469

Supreme Court of Arizona

December 31, 1934

APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment affirmed in part and reversed in part.

Messrs Windes & Miller, for Appellants.

Mr. E H. Karz (Mr. Wm. C. Fields, of Counsel), for Appellee.

OPINION

LOCKWOOD, J.

This is an action by Associated Indemnity Corporation, a corporation, hereinafter called plaintiff, against Arizona Association of Credit Men, an Arizona corporation hereinafter called the association, and Lyle N. Owens and J. L. Vance, doing business under the firm name and style of Owens Radiator & Body Works, to recover from the defendants the amount due plaintiff as premium upon a policy issued by it to the Owens Radiator & Body Company, Inc., hereinafter called the company, under the provisions of the Workmen's Compensation Act (Rev. Code 1928, § 1391 et seq.). The case was tried before the court without a jury, and judgment was rendered in favor of plaintiff and against all the defendants in accordance with the prayer of the complaint. From such judgment and the order overruling the motion for new trial this appeal is taken.

The general principle of law on which plaintiff bases its claim is not in dispute; it being that, when a trustee incurs an indebtedness on account of the estate for which he is trustee, he is personally liable for the debt (Taylor v. Mayo, Admx., 110 U.S. 330, 4 S.Ct. 147, 28 L.Ed. 163; Carr v. Leahy, 217 Mass. 438, 105 N.E. 445), unless at the time it was incurred he expressly and to the knowledge of the creditor limited it to be paid only out of the trust estate (Feldman v. Preston, 194 Mich. 352, 160 N.W. 655). The real question is whether the defendants herein were trustees of an express trust of the nature affected by the rule when the contract for the purchase of the policy above referred to was entered into. This depends, of course, upon the facts of the case. We have carefully read and compared the voluminous testimony found in the reporter's transcript, and are of the opinion that, taken in the strongest manner in favor of plaintiff's theory of the case, as under the judgment of the trial court we must take it, the facts necessary for a determination of the matter may be stated as follows:

In 1929 the Owens Radiator & Body Works, a domestic corporation hereinafter called the company, was engaged in the general business of automobile repairing at 209 East Van Buren Street in the city of Phoenix and was operating as a going concern. Practically all of the stock of the company was owned by Jimmie Owens, who was its president and general manager and who devoted all of his time to its affairs. On that date the company was heavily indebted on various accounts, many of which were overdue. A number of its creditors were dissatisfied with the way in which Owens managed the business, believing him to be a most excellent shop foreman but a very poor business man, and were about to take legal steps to enforce their claims. At the same time there existed in Phoenix a voluntary unincorporated association, known as the Arizona Association of Credit Men; it and its incorporated successor being hereinafter called the association. This association had as members a large number of individuals, firms and corporations engaged in various businesses in and near the city of Phoenix, and the general nature of the business of the association was the gathering and distribution of credit information to its members, and assisting them in every possible legal manner in the collection of debts due them. It had a president and a board of directors and various other officials, but its principal active officer was its secretary-manager who, generally speaking, did whatever in his discretion he thought necessary for the carrying out of the purposes of the association, subject, however, to review by the board of directors. This had been the custom of the association since its organization, and its board of directors had tacitly if not expressly approved thereof, and on February 14, 1929, one C. W. Lindsley was its secretary-manager. On that date Jimmie Owens was called into consultation with a number of the creditors at the office of the association, Lindsley being present, and was told that he would have to make an assignment of his business or that some more drastic legal steps would be taken. He immediately assented thereto, with the understanding that he was to be retained as shop foreman in charge of the actual work of the shop, but that the office end of the business, including the giving of credit and the disposal of the funds collected for the work done in the shop, would be handled by the assignee, and the proceeds distributed by the association to his creditors. Thereupon he on behalf of the company executed a written assignment of he business to Lindsley who, as we have stated, was at the time the secretary-manager of...