Attorney General of Utah v. Pomeroy

• Decision Date: 27 October 1937
• Docket Number: 5669
• Citation: 93 Utah 426,73 P.2d 1277
• Court: Utah Supreme Court
• Parties: ATTORNEY GENERAL OF UTAH v. POMEROY et al

73 P.2d 1277

93 Utah 426

ATTORNEY GENERAL OF UTAH v. POMEROY et al

No. 5669

Supreme Court of Utah

October 27, 1937

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

Rehearing Denied December 31, 1937.

Appeal from District Court, Third District, Salt Lake County; Roger I. McDonough, Judge.

Action by the Attorney General of the State of Utah against Jack W. T. Pomeroy and Clara Pomeroy, his wife, and Anton Strebel, receiver for White Star Gas & Oil Company, and Starlene Gas & Oil Company, wherein Anton Strebel, receiver for White Star Gas & Oil Company, filed a cross-complaint against the other defendants. From an order of non-suit in favor of Jack W. T. Pomeroy, Clara Pomeroy, and the Starlene Gas & Oil Company as to the plaintiff, the plaintiff appeals, and those defendants move to dismiss the appeal.

ORDER IN ACCORDANCE WITH OPINION.

Joseph Chez, Atty. Gen., and Burton W. Musser and Henry D. Moyle, both of Salt Lake City, for appellant.

Irvine, Skeen & Thurman, E. A. Walton, L. J. Bradford, and L. H. Callister, all of Salt Lake City, for respondents.

WOLFE Justice. FOLLAND, C. J., and HANSON, J., LARSON, Justice, concurring. MOFFAT, Justice, dissenting.

OPINION

WOLFE, Justice.

The Attorney General filed, on April 14, 1934, a complaint against the receiver of the White Star Gas & Oil Company, Jack W. T. Pomeroy, Clara Pomeroy, his wife, and the Starlene Gas & Oil Company, the object of which was to collect, under authority of section 57-12-11, R. S. Utah 1933, a gasoline tax imposed by chapter 39, Laws of Utah 1923, as amended and carried into chapter 12, title 57, R. S. Utah 1933 (57-12-1 et seq.), on the sale or use of motor fuels and alleged to be owing the State. The complaint is long and, as needed, we shall quote parts of it in considering the various theories which it reflects as a basis for the collection of these taxes.

It is alleged that the White Star Gas & Oil Company, hereinafter called the White Star, was engaged in Utah in "the business of retailing and distributing motor vehicle fuels." The defendant Pomeroys are joined on the theory that they operated and controlled the White Star and that they "used the income and assets of said company as their own, wholly ignoring the corporate existence of the White Star"; "that from and after July 22, 1929, the corporation was a mere name under which the said individual defendants conducted the business of purchasing, selling and distributing gasoline to themselves and other persons"; that the said Pomeroys "leased, operated and maintained various service stations in the State of Utah under the registered trade name of 'White Star Service Station.'" The complaint sets out various devices by which it is alleged the Pomeroy's obtained the property of the White Star in fraud of creditors and especially of the State: One by selling gasoline from the White Star to themselves for less than cost; another by the taking by them of discounts supposedly made to customers; another by the execution of a chattel mortgage in favor of Jack W. T. Pomeroy covering all of the property of the White Star and the foreclosing of same by advertisement and the purchase by said Pomeroy.

It is alleged that by the foreclosure and purchase of the property so mortgaged, the White Star was stripped of all its assets and that this property was conveyed to the Starlene Gas & Oil Company, hereinafter called the Starlene; that the Starlene was likewise controlled, owned, and managed by the two Pomeroys; and that this new corporation was in effect another name for the Pomeroys in conducting their business.

The complaint, therefore, proceeds on the theory that the White Star owed the State gasoline taxes for October, 1932, $ 3,484.72; for November, 1932, $ 1,466.84; and for December, 1932, $ 1,596.76, which were never paid and which could not be collected because of the alleged abstractions of corporate property by the Pomeroys, together with penalties of 25 per cent, amounting, respectively, to $ 871.18, $ 366.71, and $ 398.94, in addition to interest at the rate of 12 per cent per annum on the tax sums and penalties from the 15th of the succeeding months for which the taxes were payable. It, in effect, amounts to a suit for judgment against the White Star together with a creditor's bill to follow assets into the hands of the Pomeroys and the Starlene.

We think the allegations of the complaint also reflect another theory which in the consideration of this case, as will later appear, plays much importance. This is the theory that the Pomeroys were in reality the purchasers of the gasoline using the name of the White Star. There is a difference in the conception of the White Star being the purchaser of the gas and therefore the debtor to the State with effort to pursue its assets and collect such a judgment, and the conception that the Pomeroys while selling gas at retail were really also the purchasers at wholesale and distributors, using a corporate entity or name to accomplish such purpose. The legal results of these two conceptions will become apparent when we consider the question of whether the claims of the State were barred by the statute of limitations.

Allegations of the complaint which, in part, reflect this theory are as follows: "That at all times herein mentioned, it was the established practice and course of business of the defendants, Jack W. T. Pomeroy and his wife, Clara Pomeroy, doing business as the White Star Gas & Oil Company, and of the White Star Gas and Oil Company, a corporation, in selling motor vehicle fuels at retail, to specifically include in the retail price thereof four cents per gallon as and for and on account of the aforesaid tax, and did actually collect from its retail customers the said four cents per gallon tax for the use and benefit of the State of Utah," etc. It is claimed that this is the basis for an action for moneys had and received for the use and benefit of the State in addition to the action for an indebtedness. There are other allegations of like character largely in the nature of repetition of idea, if not of words. In fact, the allegations of the complaint taken as a whole make it difficult to determine just what theories the plaintiff does rely on. In the very part last above quoted and in the allegations earlier quoted that the Pomeroys "leased * * * service stations * * * under the * * * name of 'White Star Service Station,'" there seems to be involved the idea of the White Star having been the purchaser at wholesale and itself the retailer confused with the conception that the White Star was the alter ego for the Pomeroys and that they were, as before stated, the real purchasers at wholesale and also the retailers. In other words, some of the allegations of the complaint give support to the theory that the Pomeroys were in reality the alter ego for the White Star, instead of the White Star the alter ego of the Pomeroys; but since the Pomeroys owned and controlled retail stations which are not seriously urged to be the property of the White Star, we must assume that this theory is to be excluded and the theory that the White Star was the cover or another name for the Pomeroys, rather than that the Pomeroys were another name for the White Star, is the only tenable theory reflected by the complaint in addition to that first above mentioned, to the effect that the White Star was the real purchaser, distributor, and debtor of the State and that the claim of the State was therefore against it with effort to pursue assets allegedly taken by the Pomeroys in order to obtain satisfaction. We will later have occasion to take up these theories more in detail.

Having given enough of the allegations of the complaint or the substance thereof to reflect the various theories, we may proceed with the next steps in this legal drama. It appears in the first place that one Ralph Carter on March 24, 1933, obtained a judgment against the White Star for $ 12,543.10. On May 3, 1933, Anton Strebel was appointed receiver of the White Star, "with full authority to take into his possession all of the business assets, choses in action, bonds, papers of said White Star"; that he duly qualified as such receiver and since said May 3, 1933, acted as such. Thus was the said Strebel as receiver joined as a defendant by plaintiff.

The receiver, in a cross-complaint against the Pomeroys, adopted the allegations of the complaint as regards the alleged fraud of the Pomeroys and their abstraction of the assets of the White Star and prayed for the recovery and retaking by the White Star of the said claimed assets and for an accounting by the Pomeroys and for the subjecting of said assets whether found in their original or in a converted or transmuted form to the judgment of the said Carter. Thus, it should be noted that in the original cross-complaint Strebel, the receiver, mainly relies on the one theory that the Pomeroys have wrongly abstracted assets of the White Star. There was already judgment against the White Star, and he only attempted to follow assets in order to subject these assets or their equivalent to the said judgment, whereas the plaintiff seeks to require the Pomeroys and the Starlene to account for the taxes, interest, and penalties, meanwhile enjoining them from transferring or encumbering their property, on the basis of the two theories above stated. But in a later amendment to the cross-complaint, filed on August 3, 1934, Strebel alleges not only as in his original cross-complaint that the White Star was a dummy corporation completely controlled by the Pomeroys, but further that the White Star and Starlene were "mere agencies and instrumentalities of the Pomeroys" and in effect merely the assumed names under which "the...