Callahan v. Pioneer Nurseries Co.
| Decision Date | 23 March 1917 |
| Docket Number | 2988 |
| Citation | 164 P. 878,49 Utah 541 |
| Court | Utah Supreme Court |
| Parties | CALLAHAN v. PIONEER NURSERIES CO. ET AL |
Rehearing Denied May 5, 1917.
Appeal from District Court, Third District; Hon. T. D. Lewis, Judge.
Action by J. M. Callahan against the Pioneer Nurseries Company and another.
Judgment for defendants. Plaintiff appeals.
AFFIRMED.
S. P Armstrong for appellant.
Aaron Meyers and J. E. Darmer for respondents.
The plaintiff brought this action as a creditor of the defendant Pioneer Nurseries Company, hereinafter styled "company," against said company and against one Sidney Tuttle as a stockholder and mortgagee of said company. The pleadings are very voluminous, and, in view that there is no question raised with respect thereto, we refrain from setting them forth either in form or substance. Moreover, in the findings of the court, to which we shall hereinafter refer, the issues presented by the pleadings are sufficiently reflected to give a clear understanding of the points decided. The plaintiff alleged in her complaint that said company was insolvent. The relief she prayed for was that a certain decree foreclosing certain mortgages which said company had made and delivered to said Sidney Tuttle, and that the sale of said premises made in pursuance of said decree, all be set aside; that a receiver be appointed to take charge of said mortgaged premises; that plaintiff's claim be allowed and that said receiver be ordered to sell said mortgaged premises and apply the proceeds of the sale to the payment of said company's debts, including the plaintiff's claim. As suggested, there were in fact there several mortgages, but it is not necessary to consider them otherwise than as one entire mortgage, and such will be done hereinafter.
The court, on a preliminary hearing, set aside the foreclosure sale and appointed a receiver to take charge of and to sell the mortgaged premises. The receiver was, however, unable to sell the property, and the court, upon the final hearing of the case, reinstated said sale, discharged the receiver, and denied the plaintiff the relief prayed for. There was also a complaint in intervention, but the same was ultimately dismissed and requires no further attention. The court, on the final hearing, in addition to the findings on some informal matters, in substance, found that, prior to the 5th day of July, 1913, said company was the owner of a certain nursery farm in Salt Lake County of the value of "between $ 10,000 and $ 12,000," and that said farm, ever since said 5th day of July, 1913, had been, and at the time of the hearing was, the property of said Sidney Tuttle, subject, however, to a certain mortgage for $ 4,000 made and delivered by said company to one Hosmer; that said company, at the time of the hearing, was "practically" without assets of any kind; that the plaintiff had recovered a judgment against said company for the sum of $ 1,248.17, together with $ 200 attorney's fees, and costs, which is in full force, and that there are no other creditors of said company; that the defendant Sidney Tuttle, at all times mentioned in plaintiff's complaint was a minority stockholder of said company; that at a certain meeting of the stockholders of said company held in January, 1912, certain persons, naming them, were elected directors of said company, and that at another stockholders' meeting held in January, 1913, certain other persons, naming them, were elected directors of said company; that "the aforesaid directors and officers were not dummy officers of the said corporation, nor were they under the control or domination of the defendant Sidney Tuttle or of any other stockholder or combination of stockholders; that, while their financial interest in the said corporation was not large, they exercised their individual and independent judgment in the management of its affairs, and performed their duties with due and reasonable diligence, good faith, and fidelity to the interests of the corporation and its stockholders; that the salary of $ 90 per month to William W. Tuttle for his services as treasurer and general manager was moderate and reasonable; that the directors and manager of said corporation endeavored in good faith to conduct it as a going concern during the year 1912, but they were obliged to and did pay about $ 4,000 in old debts, and found the salable nursery stock so inferior and depleted, the nursery farm so run down, and the affairs and standing of the corporation so heavily embarrassed, that in the year 1913, their main effort was to close up the business of the corporation, and in the month of August, 1913, the said corporation was practically ended as a going concern; that at various times between January 17, 1912, and February 17, 1913, the defendant Sidney Tuttle loaned to the said Pioneer Nurseries Company, upon his express agreement and understanding with the said company that such loans were to be secured to him by mortgages from time to time upon the aforesaid farm of the said company, the sum of $ 7,200, which loans were made in good faith to the said company by the said Sidney Tuttle, and were actually received by the said company and in good faith applied to its use and benefit in the payment of its outstanding and current debts, and said loans were secured to the said Sidney Tuttle by note secured by a mortgage duly executed to him by the said company on March 25, 1912, upon the aforesaid farm of the said company in the sum of $ 2,000 payable in six months with interest [49 Utah 544] at 10 per cent., and by a second note secured by a mortgage duly executed to him by the said company on June 27, 1912, upon the said farm of the said company, in the sum of $ 2,000 payable in six months with interest at 10 per cent., and by a third note secured by a mortgage duly executed to him by the said company on February 17, 1913, upon the said farm of the said company, in the sum of $ 3,200 payable in 30 days with interest at 10 per cent., and at the time when said mortgages were executed the said farm was practically the only asset of the said company by which said loans could...
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