Fortner v. Cornell

Decision Date24 October 1945
Docket Number7222
PartiesDOROTHY S. FORTNER, Appellant, v. J. R. CORNELL and J. W. CUNNINGHAM, Trustees of Oakes and Company, a corporation, and THE WESTERN LOAN AND INVESTMENT COMPANY, a corporation, Respondents
CourtIdaho Supreme Court

[Copyrighted Material Omitted]

66 Idaho 512 at 520.

Original Opinion of May 17, 1945, Reported at 66 Idaho 512.

Givens J. Ailshie, C.J., Budge, Holden and Miller, JJ., concur.

OPINION

Givens, J.

ON REHEARING

Respondents sought a rehearing on the ground that the following statements in the original opinion,

"The sole point now at issue is therefore whether the complaint states a cause of action, the other special grounds of demurrer not having been ruled on are not before us for consideration. (Rosa v. Devingenzo, 53 Ida. 213 at 216-17, 24 P.2d 1051.)"

* * * *

"The allegations of fraud -- aside from the application of the statute of limitations, which is not now before us and we do not consider -- were sufficient as against a general demurrer. (Just v. Idaho Canal Etc. Co., Ltd., supra at 649; James v. P. B. Steifer Mining Co. (Cal.), 171 P. 117.)" were erroneous as contrary to and in conflict with the settled and repeated pronouncements of this court to the effect that if a judgment is sustainable on any ground of demurrer interposed but not considered or passed on by the trial court, it will be affirmed, as announced in Gagnon v. St. Maries Light Etc. Co., Ltd., 26 Ida. 87, 141 P. 88; Feehan v. Kendrick, 32 Ida. 220, 179 P. 507; Jorgenson v. Stirling, 35 Ida. 785, 209 P. 271; MacLeod v. Stelle, 43 Ida. 64, 249 P. 254; Wormward v. Brown, 50 Ida. 125, 294 P. 331; Earhart v. Wright, 50 Ida. 270, 295 P. 630; American Ben. v. United Ben., 63 Ida. 755, 120 P.2d 1010.)

A re-hearing was granted and the point, though raised in respondents' original brief, was more fully argued and presented.

Appellant counters with the proposition that because respondents did not insist that the trial court consider and pass upon the other grounds of demurrer, they were impliedly overruled, even though the trial court expressly stated he did not pass on them, and not being cross-appealed from are waived.

Of our decisions appellant cites, Guthrie v. Phelan, 2 Ida. 95, 6 P. 107, did not consider the situations we have here, namely, where one ground of demurrer was sustained and other grounds were specifically not considered. There the court evidently deemed the party waived the entire demurrer by not properly bringing, as a matter of practice, the question to the court for review. The same is true in United States v. Alexander, 2 Ida. 386, 17 P. 746. In other words, the court was apparently not considering a situation where one ground of demurrer had been sustained and others overruled, but was treating the demurrer as an entirety and the same evidently had been the practical construction placed upon these cases in later pronouncements by this court. Smith v. Clyne, 16 Ida. 466, 101 P. 819, applied Guthrie v. Phelan and United States v. Alexander, supra, as to the relative disposition of issues of law and and fact but did not hold as contended by appellant that grounds of demurrer not passed on as herein, are deemed abandoned. The latest case cited by appellant, Eastern Idaho Loan & Trust Company v. Blomberg, 62 Ida. 497, 113 P.2d 406, while referring to Guthrie v. Phelan, and United States v. Alexander, supra, did not apply the rule as holding that the demurrer had been abandoned or waived, but did consider grounds of demurrer not shown to have been passed on by the court below. While the court in the authorities cited above and relied upon by respondent did not apparently consider the rule appellant contends was announced in the authorities cited by him, we cannot presume the court was unmindful of those cases.

We have therefore concluded the rule as announced in Gagnon v. St. Maries Light Etc. Co., Ltd., supra at 91, and re-asserted in one form or another in the above cases, urged by respondent, namely that "if the demurrer was good on one ground stated, it would be the duty of this court to sustain the trial court even though he sustained the erroneous ground", has become so well entrenched in our jurisprudence that it should not be departed from.

The other grounds of demurrer challenge the complaint as being insufficient to avoid the statute of limitations.

Consequently, it is necessary to examine the paragraphs of the complaint as amended, which seek to avert the bar of the statute. They are paragraphs XIII and XIII-A.

XIII

"That the said R. E. Simpson, who was the owner of the certificates of stock herein above described, and this plaintiff, did not discover the fraud of the said officers, directors and managing agents of the said Oakes and Company, in purporting to convey said real property to the said The Western Loan and Investment Company, and Eugene Looney, to evade the payment of the par value of the certificates of stock herein above described pursuant to the resolution of the stockholders of said Oakes and Company, adopted between February 1st, to February 7th, 1926, until on or about March 21st, 1941."

XIII-A

"That the officers, directors and managing agents of the aforesaid Oakes and Company, a corporation, and defendant, The Western Loan and Investment Company, who were one and the same named persons as alleged in paragraph XIII, of the Amended Complaint, continued to manage, operate and control the corporate affairs of the said Oakes and Company, a corporation, from on or about February 1st, 1926, up to and including November 30th, 1935, when its charter was forfeited for non-payment of its annual corporation tax as alleged in paragraph II, of the Amended Complaint, and thereafter from November 30th, 1935, up to on or about March 21st, 1941, for the purpose of carrying out the terms and provisions of the resolution adopted from February 1st to February 7th, 1926, viz; to apply the assets of the corporation to the retirement of the capital stock of the corporation, including the stock of plaintiff herein as described in paragraph IV, of the Amended Complaint; and that pursuant to the terms of said resolution, the aforesaid officers, directors and managing agents of the said Oakes and Company, a Corporation, and the defendant, The Western Loan and Investment Company, consented that the assets of the said Oakes and Company, a Corporation, including the real property herein described as Lot 16, Block 145, Twin Falls Townsite, Twin Falls County, Idaho, should be applied to the retirement of the capital stock of the corporation including the stock of the plaintiff herein above described, which arrangement was consented to by R. E. Simpson, predecessor of plaintiff and accepted by plaintiff; that on or about March 21st, 1941, the defendants herein refused to comply with the terms of said resolution, and refused to apply the assets of the said Oakes and Company, a Corporation, including the real property herein last above described, to retire the capital stock of plaintiff; that at no time prior thereto had defendants given notice to R. E. Simpson, predecessor of plaintiff, or to plaintiff, that the aforesaid arrangement, to which defendants had consented, would not be complied with."

Suit was commenced herein March 4, 1941. If not tolled, concededly barred by the statute. It may be conceded that though appellant or her predecessor in interest knew the consideration as recited in the deed, namely $ 10.00, was less than the real value of the property sold and that they had not received any proceeds therefrom, they were not necessarily charged thereby with notice or knowledge of the repudiation of the trust. (Brasch v. Brasch, 55 Ida. 777 at 785, 47 P.2d 767.)

This court however in harmony with other jurisdictions has uniformly held that to avoid the bar of the statute, the circumstances, time and place of discovery and why the discovery was not sooner made must be alleged in detail and with particularity.

"It will be observed upon an examination of the amended complain that there is no averment that during the period over which the transactions complained of extended the appellants or any of them made or caused to be made the slightest inquiry touching the transaction in connection with the sale of the stock of the Boise power company to Blanchard & Company, through its agent, the City Trust Company, that no examination was made of the books of the corporation, that no information was sought from Cunningham, the general manager of the corporation, and that the sale of appellants' stock, with the exception of Ingraham's, was made to the Mainlands direct.

"In cases of this character where fraud, concealment and ignorance of the facts are relied upon to suspend the running of the statute of limitations, there must have been such concealment as would prevent a person from exercising due diligence from discovering the facts. What diligence was used is a question of law to be determined by the court from the complaint. Mere conclusions of law are not sufficient to remove the bar of the statute. The particulars of the discovery must be alleged. It should be stated when the discovery was made, what it was, how it was made, and why it was not made sooner. The amended complaint is silent as to how the contract was obtained, neither are there any reasons assigned why the contract was not sooner obtained. In other words, the circumstances of the discovery are not fully stated. The fact that Cunningham gave out no information of his transactions with the Mainlands would not be sufficient, or the fact that the plaintiffs knew nothing of the transaction between the Mainlands and Cunningham until they procured a copy of the contract between Cunningham...

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