Geary v. Cain
| Decision Date | 28 March 1932 |
| Docket Number | 4892 |
| Citation | 79 Utah 268,9 P.2d 396 |
| Court | Utah Supreme Court |
| Parties | GEARY v. CAIN et al |
Rehearing Denied August 5, 1932.
Appeal from District Court, Third District, Salt Lake Couny; Ephraim Hanson, Judge.
Suit by Rachel P. Geary, in the nature of a creditor's bill in aid of execution, against Addison Cain and another. From an adverse decree, defendants appeal.
REVERSED and remanded, with directions.
Hutchinson & Hutchinson, of Salt Lake City, for appellants.
Hurd & Hurd, of Salt Lake City, for respondent.
EPHRAIM HANSON, J., being disqualified, did not participate.
The plaintiff has a judgment against Addison Cain, which she obtained in an action for damages for tort, upon which there was due $ 12,657.99 on the date the judgment was entered in this case, and upon which an execution had been returned unsatisfied. She brought this suit, which is in the nature of a creditor's bill in aid of execution, to obtain a judgment and decree subjecting property which stands in the name of the Doris Trust Company, a corporation, to the payment of her judgment against Cain, naming both Cain and the said corporation as parties defendant.
From a judgment in favor of the plaintiff and against the Doris Trust Company for the amount due upon her judgment against Cain, and which also provides that certain real property therein described be sold to satisfy the same, in case the defendants fail to pay it, both defendants have appealed.
The plaintiff has two theories upon either or both of which she seeks to sustain the judgment in this case. Her first theory is that Addison Cain and the Doris Trust Company, a corporation, are in fact one and the same person; or otherwise stated, that the corporation is merely Cain's alter ego, or a name under which he holds the title to his property and in which he transacts his individual business when he so desires; and hence that the property held in the name of the corporation is in reality Cain's property and therefore may and ought to be taken to pay his judgment debt to the plaintiff. Her second theory is that the Doris Trust Company, a corporation, is Cain's agent, or trustee, holding in its name the title to property which in fact and in equity belongs to Cain; and hence the trial court was warranted and required to decree that the same be sold to pay the judgment against Cain.
The judgment cannot be sustained upon either theory upon the facts disclosed by the record.
The Doris Trust Company is a corporation, duly organized and existing under and by virtue of the laws of the state of Utah. It was organized by Addison Cain in the year 1909, and is what may be termed a family corporation because all of its outstanding shares are owned by members of one family. As such corporation the Doris Trust Company in contemplation of law is a person, having an entity separate and distinct from all other persons on earth and distinct from the body of its stockholders, and having the power in its name, under the provisions of its articles of incorporation and the laws of this state, to own and hold real property.
The legal title to all of the property involved in this action is vested in the corporation. Part of it was conveyed to the corporation by Addison Cain and his wife in the year 1909, shortly after Cain filed the articles of incorporation of the Doris Trust Company with the county clerk; part was conveyed to the Doris Trust Company by the Caroline Cain Corporation, a corporation, in the year 1919; and the greater part of it by Addison Cain and his wife in the year 1920. These are all outright conveyances of title, without limitations, reservations, or restrictions of any kind material to the present inquiry. The last of said conveyances was made about four years prior to the date upon which Cain committed the assault upon the plaintiff which formed the basis of the action against him in which she recovered the judgment which she is undertaking to collect by this suit. There was no consideration paid by the Doris Trust Company to the Caroline Cain Corporation for the property conveyed in 1919. There is a dispute between the parties hereto as to whether the equitable title to that property, at the time of its conveyance, rested in Cain or in his three children. The parties are not in agreement as to whether there was any consideration paid by the grantee to the grantors for the property conveyed in 1920; Cain claiming that there was the sum of $ 5,000 paid for his interest therein and the plaintiff claiming that nothing whatever was paid. As to the property conveyed in 1909, which consists of an apartment house known as the Doris Terrace, Cain's testimony is that the building was erected with funds which he held in trust for his three children, and that he conveyed the property in exchange for the capital stock of the corporation which was subscribed at the time of incorporation, and that he and his wife took 300 shares of stock each which they held in trust for two of their children who were then under age, and their eldest child, Ruth, took 300 shares, in her own right; while the plaintiff claims that the property belonged to Cain and was conveyed by him to the corporation for the stock which was then issued. But whatever the facts may be in regard to the matter of consideration for the three conveyances above mentioned, and conceding for present purposes that they were all made without consideration, there is no question made about the fact that they operated so as to pass the legal title to the property to the Doris Trust Company, where it is now vested.
The Doris Trust Company has an authorized capital stock of $ 9,000 with a par value of $ 1 per share. The books of the corporation show that in the year 1920 there were 3,752 shares issued and outstanding, the remainder being treasury stock or unissued stock. Of the issued and outstanding shares, as of the year 1920, the books show 1,250 in the name of Ruth Cain Bell, 1,250 in the name of Brighton Cain, 1,250 in the name of Carol Cain (Garnick), all of whom are children of Addison Cain, 1 share in the name of Addison Cain, and 1 in the name of Frances L. Cain, who is the wife of Addison Cain. The books do not disclose any transfers of stock since that year; and according to the books, the stock was owned as above stated at the time of the trial. The stock books of the corporation themselves are prima facie evidence of the ownership of the shares by the members of the Cain family. Rasmussen v. Sevier Valley Canal Co., 48 Utah 490, 160 P. 444; Semple v. Glenn, 91 Ala. 245, 6 So. 46, 9 So. 265, 24 Am. St. Rep. 894; Sherwood v. Illinois Trust & Savings Co. 195 Ill. 112, 62 N.E. 835, 88 Am. St. Rep. 183; Holland v. Duluth Iron Mining & Dev. Co., 65 Minn. 324, 68 N.W. 50, 60 Am. St. Rep. 480. Furthermore, both Carol Cain Garnick, the secretary, and Addison Cain, the president, of the corporation, testified that the stock was owned as shown by the books. No one testified to the contrary; nor do we find in the record any substantial evidence of a contrary import. Hence, we say that the evidence shows that all of the outstanding shares of the...
To continue reading
Request your trial
-
Little v. United States
...president and his wife was secretary. Obviously, the "doctrine of corporate alter ego" is clearly applicable here. (Cf. Geary v. Cain, 79 Utah 268, 9 P.2d 396, 398.) The legal fiction of Star Oil Company should be ignored, "to prevent fraud and accomplish justice" under the facts establishe......
-
Herd v. Chambers
...Sendlin et al., Adm'rs, v. Robbins et al., 62 Ala. 477, 484, 485, Wetherill v. Canney, 62 Minn. 341, 345, 64 N.W. 818, and Geary v. Cain, 79 Utah, 268, 9 P.2d 396. doctrine just discussed and most of the decisions referred to are not determinative of the appellant's contention under circums......
-
Colman v. Colman
...v. Fiberchem, Inc., 562 P.2d 1252, 1253 (Utah 1977); Dockstader v. Walker, 29 Utah 2d 370, 510 P.2d 526, 528 (1973); Geary v. Cain, 79 Utah 268, 9 P.2d 396, 398 (1932). It is not necessary that the plaintiff prove actual fraud, but must only show that failure to pierce the corporate veil wo......
-
Transamerica Cash Reserve, Inc. v. Dixie Power and Water, Inc.
...the assets of a controlling shareholder. See Dockstader v. Walker, 29 Utah 2d 370, 372-73, 510 P.2d 526, 528 (1973); Geary v. Cain, 79 Utah 268, 273, 9 P.2d 396, 398 (1932). This was done to prevent the legal separation between the corporation and the controlling shareholder or shareholders......