Fernow v. Gubser
| Decision Date | 16 October 1945 |
| Docket Number | 31955. |
| Parties | FERNOW v. GUBSER. |
| Court | Oklahoma Supreme Court |
Appeal from District Court, Tulsa County; Oras A. Shaw, Judge.
Suit by John Fernow against E. H. Gubser, trustee of Liberty Royalties Corporation to vacate a judgment in a former action rendered against plaintiff and in favor of defendant trustee. From a decree denying relief, plaintiff appeals.
Affirmed.
See also 162 P.2d 535.
Syllabus by the Court.
1. A petition in an action in a court of general jurisdiction against an officer of a corporation for the recovery of secret profits, which alleges facts sufficient to call for an accounting on any one of the items of alleged secret profits is sufficient to invoke the equity powers of the court.
2. Where a pleading is indorsed a 'petition,' as the statute requires, with allegations showing that plaintiff has wrongfully sustained a detriment, a wrong for which the law or equity provides a redress, then from the nature of the facts stated, the court, vested as it is with the dual powers of a chancellor and a court of law, will determine and grant the proper relief. Wetzel v. Evans, Okl.Sup., 147 P.2d 133.
3. In an action in the district court, where the parties do not consent, the court may, under 12 O.S.1941 § 613, direct a reference and an accounting where the taking of an account shall be found necessary for the information of the court before judgment in cases which may be determined by the court, or where a question of fact other than upon the pleadings shall arise by motion or otherwise.
4. Every presumption is in favor of the validity of a judgment of a court of general jurisdiction and where, in the trial of an action before the court without a jury, the court directs a reference for the purpose of taking an account, in the absence of a showing of what evidence was before the court at the time the order of reference was made, it must be presumed that the court had before it sufficient evidence to justify the order.
W. P Nelson, A. J. Kriete, and Arch K. Kriete, all of Tulsa, for plaintiff in error.
Paul Pinson and G. C. Spillers, both of Tulsa, for defendant in error.
This is an appeal from a decree denying relief to plaintiff in error John Fernow, who sought vacation of a judgment rendered against him and in favor of defendant in error in the District Court of Tulsa County, September 19, 1941. The judgment was rendered in E. H. Gubser, Trustee of the Liberty Royalties Corporation, v. John Fernow. Herein it is referred to as Cause No. 52,696. That cause was commenced by M. H. Watts as Receiver of the Liberty Royalties Corporation to recover alleged secret profits taken by Fernow while he was president of that corporation. In that action it was claimed that in a transaction for the purchase of certain interest units in the United Royalties Company, an express trust, Fernow had conveyed two apartment buildings owned by him, to the United Royalties Company for the benefit of the Liberty Royalties Corporation; that the interest of Fernow in said buildings was worth not to exceed $4,000, whereas he took from the Liberty Royalties Corporation therefor the sum of $25,000 and thereby gained for himself a secret profit of $21,000; that in further carrying out and consummating the purchase of interests from the United Royalties Company, Fernow was charged with the duty of acquiring, for the account of Liberty Royalties Corporation, certain property to be conveyed to United Royalties Company; that Fernow did not disclose to the Liberty Royalties Corporation the amount paid by him for said property purchased in its behalf; that the amount thereof was unknown to plaintiff, but was not to exceed the sum of $8,000, but that Fernow had taken from the Liberty Royalties Corporation therefor the sum of $54,506.59, thereby taking and retaining further secret profits to himself to the extent of $46,506.59. Recovery was sought in the sum of $67,506.59. The answer of Fernow was a general denial.
That cause was not brought to trial in the District Court until about February 28, 1941. In the meantime, about 1938, proceedings were commenced in the United States District Court for the Northern District of Oklahoma for the reorganization of the Liberty Royalties Corporation under the Federal Bankruptcy Act, 11 U.S.C.A. § 1 et seq., and E. H. Gubser had been appointed as trustee in bankruptcy of said corporation and was substituted as plaintiff in said cause No. 52,696 in the District Court of Tulsa County. When cause No. 52,696 came on for trial, February 28, 1941, defendant John Fernow appeared in person and by his attorneys, a jury was waived, and the court appointed a referee and authorized him to take evidence concerning the transactions and mutual accounts between the defendant and Liberty Royalties Corporation, and to make a complete accounting between the parties.
On August 12, 1941, the referee filed his findings that in the transaction concerning the transfer of the real estate of Fernow for the benefit of Liberty Royalties Corporation the value of Fernow's interest therein was $21,000 and that Fernow had taken from his corporation therefor the sum of $25,000, thereby taking a secret profit of $4,000; and that Fernow had, while acting as chief managing officer of the Liberty Royalties Corporation, caused to be paid to himself in cash, or placed to his credit, the aggregate sum of $138,969.55, consisting of five items: (1) Cash paid to Fernow, or to others for his account, $78,323.70; (2) suspended dividends apportionable to 591,742 units from United Royalties Company, $53,032.63; (3) 20 shares of preferred stock, $700; (4) expenses in connection with royalty purchases, $2,246.56; (5) purchase of 13,333.33 shares of common stock at 20¢ per share, $2,666.66. That Fernow had accounted or received credit therefor in the aggregate, the sum of $111,470.38, consisting of nine items, showing a balance due from Fernow of $25,499.17. The referee recommended judgment against Fernow for that amount.
On September 19, 1941, the court overruled Fernow's objections and entered judgment in the sum recommended. Fernow gave notice of intention to appeal. Time to appeal expired April 16, 1942. No appeal was perfected and the judgment became final April 17, 1942.
On November 4, 1943, under permission of the United States District Court for the Northern District of Oklahoma, Fernow, as plaintiff, commenced this action against E. H. Gubser, Trustee, to vacate the judgment rendered against him in cause No. 52,696. The principal contention made is that the judgment is void on the face of the judgment roll and that unavoidable casualty and misfortune prevented him from perfecting and prosecuting an appeal to the Supreme Court.
In his contention that the judgment sought to be vacated is void on the face of the judgment roll, Fernow alleges in this action that the cause of action set forth upon the face of the petition was for the recovery of two items only, namely, the sum of $21,000 on the apartment transaction, and the sum of $46,506.59 which plaintiff in said action claimed was a secret profit made by Fernow, resulting from a sale to the corporation of certain royalty interests Fernow had acquired for said corporation; that the action was for a money judgment only and was in all things an action at law; that issues were joined by general denial and that neither of the parties had asked for an accounting except as to the two items mentioned in the petition, and that the action of the trial court in ordering a reference, appointing a referee with directions to hear all testimony and other evidence concerning the business transactions and mutual accounts between Fernow and Liberty Royalties Corporation and making a complete accounting between the parties and directing the referee to make said accounting, and the judgment based thereon were outside the issues in said case so as to render the judgment utterly void.
The basis of the claim of unavoidable casualty and misfortune preventing an appeal in cause No. 52,696 is that Fernow had employed an attorney to represent him in said cause; that his fees had been fully paid and expenses furnished for the purpose of preparing the case-made and filing the appeal in the Supreme Court, and that after the case-made had been prepared, served, and filed in the District Court, said attorney, without notice to him, assumed an adversary position to plaintiff and about April 1, 1942, without notice, wholly abandoned plaintiff as his client and the intended appeal; that Fernow, in good faith, believed said appeal had been or would be duly perfected and was without knowledge that the appeal had not been perfected until after April 16, 1942, when the time to file said appeal expired, so that plaintiff herein was, without fault on his part, deprived of his right to have said appeal perfected and the case reviewed by the Supreme Court.
The answer, in substance, alleges that the pretended cause of action set forth in the petition is a collateral attack on a judgment of the district court and cannot be maintained; that John Fernow is now under guardianship by appointment of...
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