Beck v. Semones' Adm'r.*

• Decision Date: 23 September 1926
• Parties: BECK et al. v. SEMONES' ADM'R.*
• Court: Virginia Supreme Court

134 S.E. 677

BECK et al.

v.SEMONES' ADM'R.^*

Supreme Court of Appeals of Virginia.

Sept. 23, 1926.

Appeal from Circuit Court, Bedford County.

Suits by R. E. Cook, executor of J. W. Semones, deceased, and by U. M. Beck and another, against the Blue Ridge Metals Corporation, were consolidated. From the decree, U. M. Beck and another appeal. Affirmed.

Landon Lowry, of Bedford City, Leonard G. Muse, of South Roanoke, and Woods, Chit-wood, Coxe & Rogers, of Roanoke, for appellants.

Martin & Wingfield, of Roanoke, for appellee.

BURKS, J. The Blue Ridge Metals Corporation was a Virginia corporation, but all of its stock was owned by persons residing in or near Pittsburg, Pa. U. M. Beck was president of the company, and E. T. Beedle its treasurer. The company bought two tracts of land in Bedford county, Va., supposed to contain valuable mineral deposits. One of these tracts containing 474.25 acres was paid for in full. The price of the other tract was something over $18,000. The cash payment reduced the purchase price to $12,500, for which the company gave its notes and a deed of trust on this tract. Default was made In the payment of the notes, and this tract was sold under the deed of trust and netted the vendor $4,085. The vendor, J. W. Semones, having died, his executor, on November 23, 1923, gave notice to the company that on December 12, 1923, it would apply to the court of law and chancery of the city of Roanoke for a judgment against it for the balance on said notes, and such judgment was accordingly rendered on the date last mentioned. There is no controversy over this judgment.

Three days before this judgment was rendered, U. M. Beck, the president of the company, received from the agent in Virginia, on whom the notice was served, the copy of the notice served on him. It was then too late to call a meeting of the directors, as the by-laws of the company required three days' notice of such meeting; but he saw, or talked over the telephone to, a majority of the directors, and they advised him, or assented to a suggestion from him, to go to Virginia and do whatever was best to protect the interests of the company and of himself and Mr. Beedle, to whom the company was indebted. This indebtedness was for money which had been advanced to make the cash payment on the Semones tract and certain development expenses, and Beck and Beedle held the notes of the company for the amounts advanced by them respectively.

The company at that time had no assets except the tract of 474.25 acres, and owed no debts except to Semones, Beck, and Beedle, but the land was not of sufficient value to pay all three of them. Then began the struggle of Beck and Beedle to get priority over the judgment to be rendered on December 12, 1923, in favor of Semones' executor.

Beedle had died, but had no personal representative in this state. Beck set out at once for Virginia, bringing with him the notes which had been executed by the company to him and to Beedle, respectively, and upon arrival employed counsel, and began active preparations to secure judgments in favor of himself and of Beedle's estate against the company, before judgment could be rendered in favor of Semones' executor, upon the notice he had served on the company.

A resident of the state was appointed personal representative of Beedle's estate on December 11, 1923. On the same date (the day before judgment was to be rendered in favor of Semones' executor), U. M. Beck appeared by counsel in the corporation court of the city of Roanoke and presented a notice of motion for a judgment against the said Blue Ridge Metals Corporation, and "moved thecourt to docket his motion for judgment against the defendant, and to permit him to file in open court his written notice of said motion, returnable to this date." Thereupon the following proceeding was had:

"And thereupon the defendant appeared by its president, and in open court waived notice of said motion. It is accordingly ordered that said motion be, and the same hereby is, with the consent of the defendant, duly docketed, and said notice duly filed.

"And thereupon the said plaintiff, by his attorneys, moved the court for a judgment against the defendant in the sum of $2,592, with interest on $2,350, a part thereof, from December 2, 1919, and with interest on $242, the remainder thereof, from February 25, 1920, due by notes executed by the defendant, payable to the plaintiff. Thereupon the plaintiff was-sworn, and exhibited said notes, which were duly proved according to law.

"And it appearing to the court that the said notes are not taxable in the state of Virginia, because of the nonresidency of the plaintiff, the holder thereof, it is accordingly ordered that the plaintiff have and recover of the defendant the said sum of $2,592, with interest on $2,-350, a part thereof, from December 2, 1919, and with interest on $242, the remainder thereof, from February 25, 1920, until paid, together with the costs.

"And it is further ordered, for cause shown, that this judgment be forthwith docketed, and a duly certified abstract furnished the plaintiff."

Similar proceedings, in all respects, were had by the personal representative of Beedle, and a similar judgment was rendered in his favor.

These judgments were assailed in a lien creditors' suit, brought by Semones' executor against Blue Kidge Metals Corporation, to subject the said tract of 474.25 acres to the lien of his judgment. They were assailed on various grounds, and, amongst them, on the ground that they were obtained by fraud, and that the corporation court of the city of Roanoke never acquired jurisdiction in those cases over the person of the defendant.

The allegation of fraud in the procurement of the judgments is not sustained by the evidence. There was no evidence of actual fraud, but the plaintiffs in those judgments, if valid, obtained priority over Semones' executor for the satisfaction of their debts. This was not per se fraud. A corporation, though insolvent, may give preference to one or more of its creditors over others, if It acts in good faith, with no fraudulent intent. Planters' Bank v. Whittle, 78 Va. 737, and cases cited.

It remains to inquire whether the court acquired jurisdiction over the defendant corporation so as to render personal judgments against it. The record shows that "the defendant appeared by its president, " without showing who that president was; and it is argued that this fact cannot be shown by parol, and that, even if it could be, it would not invalidate the judgment; that the judgments cannot be collaterally assailed.

It will be observed that no attack is made on the absolute verity of the record, but parol evidence was offered to explain a latent ambiguity in the record itself. Everything in the record is admitted to be exactly true as therein stated, and the offer is not to vary, alter, or contradict it, but to show the circumstances under which the judgments were entered. It is said in the opening brief for the appellant that "it was physically impossible for Beck to have concealed from the court the capacities in which he undertook to act." The fact that Beck was, at the date of the judgments, president of the defendant company was the only fact sought to be shown by the parol evidence, and, as this fact in no wise impugns the verity of the record, it was permissible to show it.

But it is said this was a fact known to and determined by the trial court, and hence is not subject to collateral attack. The appellant's position is that if the record had recited that "defendant appeared by U. M. Beck, its president, " the judgments would not have been subject to collateral attack. They cite in support of their position Irvine v. Randolph L. Corp., 111 Va. 408, 69 S. E. 350; White v. Crow (C. C.) 17 F. 98, 110 U. S. 183, 4 S. Ct. 71, 28 L. Ed. 113; Farant Invest. Corp. v. Francis, 138 Va. 417, 122 S. E. 141. But none of these cases involved the question here at issue. While there are expressions in some of the cases favorable to appellant's views, in none of them was the plaintiff in the case an officer of the defendant corporation upon whom the process was served, or who confessed the judgment.

When an officer of a corporation, either in his own right or as agent for another, sues the company of which he is the officer, he abandons, for the occasion, his position as officer, and cannot commence an action against the company by service of process upon himself as officer. This would be simply service of process upon the plaintiff instead of upon the defendant. If this could be done and the judgment rendered thereon could not be collaterally assailed, it would open the door to the grossest fraud, and subvert the orderly administration of justice. Where the relation of the officer served to the plaintiff is such as to make it to his interest to suppress the fact of service, service cannot be made upon such officer, although he is within the terms of the statute designating those upon whom service may be made.

In Buck v. Ashuelot Mfg. Co., 4 Allen (Mass.) 357, an action was instituted by Buck, the president of the defendant company, and the service was on Buck. It was said in the opinion:

"Upon inspecting the writ in the present case, it appears by the officer's return that the only service made upon the defendants was by leav-ing an attested copy of the writ with Bushrod Buck, the plaintiff in the action. This mode of service is said to be authorized by Rev. St. c. 90, § 43, in which it is provided that the service upon the corporation therein named may be made by leaving a copy of the writ 'with the clerk, cashier, secretary, agent, or any other officer having charge of their business; and, if there be no such officer found in the county, the service may be made on any member of the corporation.' The officer here certifies that he 'did not find a clerk, secretary, agent, or any other officer having charge of the business of the within named Ashuelot...