Baker Furniture Company v. Hall

• Decision Date: 08 March 1906
• Docket Number: 14,203
• Citation: 107 N.W. 117,76 Neb. 88
• Parties: BAKER FURNITURE COMPANY ET AL. v. RICHARD S. HALL [*]
• Court: Nebraska Supreme Court

107 N.W. 117

76 Neb. 88

BAKER FURNITURE COMPANY ET AL. v. RICHARD S. HALL ^[*]

No. 14,203

Supreme Court of Nebraska

March 8, 1906

ERROR to the district court for Douglas county: WILLIS G. SEARS JUDGE. Affirmed.

AFFIRMED.

Brome & Burnett, for plaintiffs in error.

John F Stout, contra.

EPPERSON C. AMES and OLDHAM, CC., concur.

OPINION

EPPERSON, C.

On the 16th day of February, 1903, the defendant in error herein obtained a judgment in the district court for Douglas county against Charles Shiverick & Company, and against the individual members of that firm, for $ 6,997.60, the amount then due from the judgment debtors upon a promissory note. Later an execution was issued upon the judgment, which was returned nulla bona. The defendant in error, appellee, hereinafter called plaintiff, then instituted this action in the district court for Douglas county against the Baker Furniture Company, contending that the latter is liable for the payment of said indebtedness, as the successor in business of the judgment debtor Charles Shiverick & Company; that it assumed and agreed to pay the debts of said copartnership, and took over to itself, without consideration and in fraud of creditors, the assets of said debtor company, which is insolvent.

In October, 1899, and for ten years prior thereto, Arthur S. Shiverick and Ella C. Shiverick were engaged in the retail furniture business in the city of Omaha, conducting said business as a copartnership under the firm name of Charles Shiverick & Company. At that time the members of the firm and Joseph L. Baker organized a corporation known as the Shiverick Furniture Company, and in 1903 changed its corporate name to Baker Furniture Company. The circumstances attending the organization of the corporation are as follows: The Shivericks had been doing an unprofitable business, and their liabilities then greatly exceeded their assets. They were indebted to Baker in the sum of $ 5,750; to the plaintiff in the sum of $ 6,000, later reduced to judgment; to the First National Bank in the sum of $ 34,000; and to certain of their relatives in sums aggregating $ 27,000, and owed merchandise indebtedness amounting to about $ 6,100. Just prior to the incorporating the Shivericks, Baker and the First National Bank entered into a certain written agreement, in which the Shivericks and Baker agreed to form the corporation for the purpose of conducting the furniture business, and in which it was also provided that the Shivericks should secure forgiveness and relinquishment of the debts owing to their relatives, and to pay to the bank $ 10,000 of its indebtedness, and for which they gave their notes; and Baker agreed to pay $ 5,000 of the bank's indebtedness, $ 5,000 of the merchandise indebtedness, and cause the corporation to assume liability for the balance of the merchandise debts; to cancel his own indebtedness against the copartnership, and to pay $ 1,000 of the personal obligations of the Shivericks; in consideration for which he was to receive from the Shivericks assignment of shares of stock in the corporation. The bank agreed to accept the notes of the Shivericks for $ 10,000, and the $ 5,000 cash from Baker, and to forgive $ 19,000, the balance of their indebtedness. In the written agreement there was also this provision: "The purpose and intention of this agreement is to enable said Shivericks through said corporation to continue in business and to prevent their business failure; and the understanding is that said Shivericks will and shall be absolutely freed from all indebtedness to all parties, except on said notes to said bank, aggregating ten thousand dollars ($ 10,000), and such other notes and evidences of indebtedness as it now holds, and except an indebtedness of said Ella Shiverick to said Baker not exceeding one thousand dollars ($ 1,000) which she may hereafter owe to him for moneys which he may advance on her behalf."

The corporation was organized, and 499 shares of the stock were issued to the Shivericks, and one share to Baker, who paid nothing therefor. And, as agreed previously, 384 shares issued to the Shivericks were assigned to Baker. The property of the copartnership was turned over by proper conveyances to the corporation, and the business conducted under the management of Charles Shiverick in the same manner and for the same purposes as was the copartnership. By the incorporation and the agreements leading to it, the Shiverick copartnership was relieved of all indebtedness, except the note due to the plaintiff, and the $ 1,100 of the merchandise...