Brotherhood State Bank of Spokane v. Chapman

• Decision Date: 22 September 1927
• Docket Number: 20447.
• Citation: 145 Wash. 214,259 P. 391
• Parties: BROTHERHOOD STATE BANK OF SPOKANE v. CHAPMAN. SIMPSON et al. v. RIALTO BLDG. CO. et al.
• Court: Washington Supreme Court

259 P. 391

145 Wash. 214

BROTHERHOOD STATE BANK OF SPOKANE v. CHAPMAN.

SIMPSON et al. v. RIALTO BLDG. CO. et al.

No. 20447.

Supreme Court of Washington

September 22, 1927

Department 2.

Appeal from Superior Court, Spokane County; Lindsley, Judge.

Consolidated actions, one by the Brotherhood State Bank of Spokane against William Chapman, the other by Mrs. Will W. Simpson and others against the Rialto Building Company and others. From portions of the judgment rendered, adverse to him, William Chapman appeals. Affirmed.

W. B. Mitchell and S. S. Bassett, both of Spokane for appellant.

C. C Upton and Danson, Lowe & Danson, all of Spokane, for respondents.

PARKER J.

The first of these consolidated causes was commenced in the superior court for Spokane county by the Brotherhood State Bank against William Chapman and the sheriff of that county seeking the transfer to that court of their attempted foreclosure, by summary notice and sale, of a chattel mortgage purporting to have been executed to Chapman by O. V Newton upon property claimed by him as his individual property; the bank alleging that the property belongs to the Rialto Building Company and that the company is insolvent and indebted to the bank. The second of the causes was commenced by Mrs. Simpson and other stockholders of the Rialto Building Company seeking the appointment of a receiver to take charge of all of its business and property, including the property covered by the Chapman mortgage, looking to the winding up of its business, alleging as cause therefor that it is insolvent and that its officers have abandoned its business and property, including the property covered by the Chapman mortgage. Orders of the superior court were entered, transferring the mortgage foreclosure to the superior court, restraining the attempted foreclosure by summary notice and sale, consolidating these causes, and appointing a temporary receiver to take charge of the business and property of the Rialto Building Company, including the defense of the foreclosure of the Chapman mortgage; it being agreed, however, by all the parties, that the property covered by the Chapman mortgage remain in the hands of the sheriff pending the determination of the question of the ownership of that property. The consolidated cause proceeded to trial upon the issue, principally of the ownership of the property covered by the Chapman mortgage and his claimed rights of foreclosure thereunder, and incidentally of the making of the receivership permanent for the purpose of finally winding up the business of the Rialto Building Company. Findings and judgment were made and rendered, denying to Chapman foreclosure of his claimed mortgage lien upon the property because it belongs to the Rialto Building Company, and making the receivership permanent for the purpose of winding up the business of the company because of its insolvency and the abandonment of its business and property by its officers. From this disposition of the cause by the superior court, in so far as it is adverse to Chapman, he has appealed to this court.

For some time prior to July, 1920, O. V. Newton was the owner of a moving picture business carried on by him in the town of Hilliard, in Spokane county. He and two associates then caused to be incorporated under the laws of this state the Rialto Building Company. The purpose was to have the corporation take over his business and the property used incident thereto, he to receive payment therefor in the shares of stock of the corporation. He thus became the owner of all the stock of the corporation, immediately transferring a very few shares to the other two incorporators. The corporation took over the business and property accordingly, causing the business to be continued, and made efforts to expand the business by the construction and equipment of a new theater building. About a year thereafter a change in the name of the corporation to 'Rialto Amusement Company' was decided upon, and amendatory articles of incorporation were prepared accordingly, but such contemplated change of name was not legally consummated, though the business of the corporation was practically wholly thereafter...