Clawson v. Boston Acme Mines Development Co.

• Citation: 72 Utah 137,269 P. 147
• Decision Date: 11 February 1928
• Docket Number: 4541
• Court: Utah Supreme Court
• Parties: CLAWSON v. BOSTON ACME MINES DEVELOPMENT CO., et al

269 P. 147

72 Utah 137

CLAWSON v. BOSTON ACME MINES DEVELOPMENT CO., et al

No. 4541

Supreme Court of Utah

February 11, 1928

On Rehearing, July 10, 1928.

Appeal from District Court, Second District, Morgan County; James N Kimball, Judge.

Action by Moroni Clawson against the Boston Acme Mines Development Company and the Boston Acme Mines Corporation. Judgment for plaintiff, and defendants appeal.

AFFIRMED as to last-named defendant, and REVERSED AND REMANDED, with directions as to defendant first named.

P. G Ellis, of Salt Lake City, for appellants.

P. C Evans and E. A. Walton, both of Salt Lake City, for respondent.

THURMAN, C. J. CHERRY, GIDEON, and HANSEN, JJ., concur. STRAUP, J. concurring in part, and dissenting in part.

OPINION

THURMAN, C. J.

The plaintiff, as assignee of certain alleged claims against the defendants, instituted this action to enforce the collection of said claims.

The defendant Boston Acme Development Company is an Arizona corporation, and the defendant Boston Acme Mines Corporation is a Delaware corporation. These companies will hereinafter be called the development company and the mines company.

It is alleged in the complaint that prior to May, 1919, the mines company was the owner of certain properties and mining interests in Morgan county, Utah, with the mining machinery, equipment, and fixtures used in operating its mining properties in said county; that the development company was organized as a subsidiary corporation, having officers and stockholders in common with the mines company; that, on or about May 12, 1919, the mines company sold to the development company its properties in Utah, including the mining machinery, etc., and received in consideration therefor the entire capital stock of the development company, which was the sole consideration for the transfer of said property. It is then alleged that the sale of said property was made in the city of Baltimore, and was unknown to plaintiff, or to his assignors, M. K. Tavenner and Hattie A. Tavenner, until long after the defendants had become indebted to the said Tavenners; that the conveyance was made secretly, and knowledge thereof withheld from subsequent creditors, and particularly the plaintiff and his said assignors, who dealt with the mines company believing that it owned the aforesaid properties.

It is further alleged that the mines company did not comply with the requirements of the Utah statutes to authorize it to do business in Utah, by filing a copy of its articles of incorporation with the secretary of state of Utah, and that it has always been a foreign corporation without authority to do business in the state of Utah; that the development company, although at one time authorized to do business in Utah, has heretofore forfeited its charter, and no longer has the status of corporate capacity in the state of its domicile.

Plaintiff then alleges that between July 15, 1918, and February 3, 1925, M. K. Tavenner performed services for defendants in managing their property in Utah, and that there is a balance due him for said services in the sum of $ 1,000; that Hattie A. Tavenner advanced to the defendants at their special instance and request in the year 1919 the sum of $ 1,600, and thereafter made other advances from time to time, specifying the particulars thereof; that all of said advances so made by Hattie A. Tavenner to said defendants aggregated the sum of $ 2,343.10, and that nothing has been paid thereon.

It is then alleged that for a valuable consideration M. K. Tavenner and Hattie A Tavenner assigned all of said claims to the plaintiff.

Finally, it is alleged that the sale of the said property by the mines company to the development company was without consideration, and was made for the purpose of defrauding both the existing and subsequent creditors of the mines company, and particularly the plaintiff and M. K. Tavenner and Hattie A. Tavenner.

Plaintiff prays judgment for the total amount of said claims in the sum of $ 3,343, with interest thereon and costs, and that the sale of said property be set aside as being in fraud of existing and subsequent creditors.

The mining machinery and equipment of the defendants were attached by plaintiffs, and summons issued and served on both defendants. Service was made by the sheriff by delivering a copy thereof to E. J. Klem, manager and director of the development company and a director of the mines company. On motion of the defendant mines company, the summons as to it was quashed on account of insufficient service. Plaintiff thereafter filed an amended complaint against the defendants in two causes of action; the first based upon the claim of M. K. Tavenner, and the second on the claim of Hattie A. Tavenner. The first cause of action alleges substantially the same facts as are alleged in the original complaint, except that the claim, instead of being for the sum of $ 1,000 for services rendered the mines company, as its manager, it alleged an agreement with the mines company by which it was to pay the hotel expenses of the said M. K. Tavenner and his wife, Hattie A. Tavenner, while M. K. Tavenner was acting as manager for said company. And it is alleged that such expenses from January 1, 1921, to September 1, 1921, amounting to the sum of $ 850.95, have not been paid by said defendants, and that the said amount is due and owing.

The second cause of action, based upon the claim of Mrs. Tavenner, alleges substantially the same facts as are alleged in the first cause of action, except that it is alleged that the money advanced by her was advanced to the defendant mines company alone instead of being advanced to both defendants. The aggregate amount of her claim, however, is the same.

It thus appears from the amended complaint that the indebtedness alleged in each cause of action is against the mines company only, but judgment is prayed for against both defendants that the attempted sale from the mines company to the development company be declared void and held for naught as against existing and subsequent creditors, and particularly as to the said M. K. Tavenner and Hattie A. Tavenner. Otherwise the prayer is against the mines company for the aggregate amount of the claims.

Service of the summons upon the mines company was made by publication. Motion to quash the summons for insufficient service was again interposed by the defendant mines company and denied. The defendant mines company stood on its motion to quash and declined to further plead. Its default in that regard was duly entered.

The defendant development company, answering plaintiff's complaint, alleges that neither of said causes of action states sufficient facts to constitute a cause of action. Further answering, said defendant admits that prior to May, 1919, the mines company was the owner of the property in question, including the mining machinery referred to in the complaint; admits that this defendant was organized by persons theretofore interested in the mines corporation, and that thereafter they had certain directors in common; admits that the mines company sold all its property interests in Utah, including said mining machinery, to this defendant; denies that there was never a change of possession thereof, or that any persons dealing with the mines corporation and entitled to notice, including plaintiff and his assignors, did not have notice thereof; denies that plaintiff and his assignors are or were creditors of the mines company at the time of such sale; and denies that they, or either of them, have now, or had at any time, any interest in said property, or that they, or either of them, were entitled to notice of such sale; denies the transfer of said property was conducted secretly, or that knowledge thereof was withheld from any creditor or other person entitled thereto; admits that M. K. Tavenner was employed by the mines corporation for a time, not as manager, but in a special capacity only, and that such employment terminated in March, 1921; admits that Tavenner and his wife resided at plaintiff's hotel during some of the period alleged, and that Tavenner paid his hotel bill from funds of the company in his hands. Defendant denies every other allegation in said first cause of action.

For a defense to the second cause of action, defendant admits, denies, and alleges as to each and every paragraph thereof the same as in its answer to the first cause of action, in so far as the allegations are substantially the same. Upon information and belief denies every one of the agreements, transactions, claims, matters, and things alleged as the basis of the claims of Hattie A. Tavenner, and denies every allegation not specifically admitted. As a further defense, defendant alleges the circumstances and conditions attending the sale of the property, including the mining machinery. In view of the finding, these matters are immaterial.

As further defenses, defendant separately pleads in bar the following statutes of limitation: Compiled Laws of Utah 1917, §§ 6466, 6467, 6468, subd. 3, and section 6468, subd. 4.

As a further defense, defendant alleges that plaintiff's assignors were fully paid by defendant mines corporation all lawful claims and demands at any time accruing to them prior to the alleged transfer and assignment of their claims to the plaintiff.

For a further defense, defendant alleges a former adjudication of all matters relating to the validity of the sale and transfer of the mining machinery involved in this action. That case was tried in the district court of Salt Lake County, and appealed to this court. See Boston Acme Development Co. v. Clawson, 66 Utah 103, 240 P. 165, for full particulars. In view of the findings in this case, it is unnecessary to...