Grants Pass Hardware Co. v. Calvert

• Decision Date: 02 June 1914
• Citation: 142 P. 569,71 Or. 103
• Parties: GRANTS PASS HARDWARE CO. v. CALVERT ET AL.
• Court: Oregon Supreme Court

142 P. 569

71 Or. 103

GRANTS PASS HARDWARE CO. v. CALVERT ET AL.

Supreme Court of Oregon

June 2, 1914

Department 2.

Appeal from Circuit Court, Josephine County; F. M. Calkins, Judge.

Suit by the Grants Pass Hardware Company against J. L. Calvert and another. From a decree for defendants, plaintiff appeals. Affirmed.

A. C Hough, of Grants Pass (R. S. Taylor, of Grants Pass, on the brief), for appellant. H. D. Norton, of Grants Pass, for respondents.

RAMSEY J.

On October 18, 1911, J. L. Calvert, one of the defendants herein, as plaintiff therein, commenced an action at law in the court below against the Grants Pass Hardware Company, as defendant therein, to recover the aggregate sum of $4,877.41 from the defendant in said action.

The defendant in said action filed an answer therein alleging that it had no plain, speedy, or adequate remedy at law, and at the same time, filed in said court a complaint in the nature of a cross-bill, making J. L. Calvert, the plaintiff in said action at law, and Joseph Wolke defendants, and itself the plaintiff in said cross-bill. The cross-bill alleges, inter alia, the commencement of said action at law and the filing of said answer therein, and that the plaintiff herein is a corporation.

The cross-bill alleges also that, when the plaintiff was incorporated, its capital stock amounted to only $25,000 divided into 250 shares of $100 each, and that it was so incorporated about 1903; that the defendant Joseph Wolke, one of the defendants, became a director of said company in 1903, and remained a director until May 16, 1911, and that the defendant J. L. Calvert became a director of the company in 1904, and remained a director until May 16, 1911.

The cross-bill alleges also that on the 20th day of January, 1908, the capital stock of the plaintiff was increased from $25,000 to $50,000, and that said last-named amount has remained as the amount of the capital stock of said company; that on the 20th day of January, 1907, the total capital stock of said company that had been issued amounted to 172 shares of the par value of $100 each, of which the defendant Joseph Wolke owned 66 shares, and J. L. Calvert, the defendant, owned 56 shares; that the directors of the company at that time were the defendants, Wolke and Calvert, and T. S. Harvey; that the defendants, T. S. Harvey, and one Carlson owned all the capital stock of the defendant then issued.

The cross-bill alleges also that said stockholders fraudulently, and with the intent to appropriate to themselves a portion of the assets of said corporation, and without any authority so to do, directed that said stockholders each be credited upon their personal account with said corporation with certain sums of money, among which are the following, to defendant J. Wolke, the sum of $8,381.31, to defendant J. L. Calvert, the sum of $6,710, and said credits were thereafter made upon the books of the corporation; that upon the same day, and fraudulently and unlawfully, and without any right so to do, the said stockholders did order certain shares of the unissued capital stock of said corporation to be issued to its said stockholders, among whom were J. Wolke, defendant, 37 shares, and J. L. Calvert, defendant, 36 shares, and the said shares were thereafter issued to said defendants, Wolke and Calvert, without any authority of law so to do, and without any payment having been made for said shares to said corporation, and said corporation has at no time received any compensation whatever for said stock so issued; that said shares were and are of the par value of $100 each.

The cross-bill alleges also, in substance, that on January 20, 1908, the defendants, Wolke and Calvert, and T. S. Harvey were the directors of said corporation, and did on said day, under a resolution of said board of directors, and unlawfully and fraudulently, set apart and appropriate to themselves, and to the other stockholders of said corporation, the sum of $10,000, and ordered that said amount be credited to the personal account of said stockholders in proportion to the number of shares that each held as compared with the total shares that had been issued by said corporation, and thereafter said amounts were credited upon the books of said corporation, to wit, to defendant Calvert $______, and to the defendant Wolke $______; that upon the same day, and fraudulently and unlawfully, and without any authority so to do, the said board of directors ordered certain shares of unissued stock of said corporation to be issued to its said stockholders, and thereafter, in pursuance of such order, without any authority so to do, there was issued to the defendant Wolke 42 shares, and to the defendant Calvert 26 shares, without any payment having been made for said shares to said corporation, and said corporation has at no time received any compensation whatever for said stock so issued; that upon the 19th day of September, 1908, the plaintiff corporation purchased certain real estate with the improvements thereon, in the city of Grants Pass, Or., described as lots 17 and 18, and the south half of lots 13, 14, 15, and 16 in block 50 of Grants Pass, and paid for said real estate from the assets of said corporation; that at the time of said purchase there was paid in cash by plaintiff the sum of $3,666.66, and its written obligation given for the balance of said purchase price, being the sum of $7,333.34, the total price of said real estate being $11,000; that on the 10th day of May, 1911, and while the plaintiff was still the owner of said real estate hereinbefore described, these defendants, Jos. Wolke and J. L. Calvert, with the intent to defraud the plaintiff herein, came before the directors and stockholders of said corporation, and falsely claimed and stated that the title to the said real estate was held by said corporation in trust for them, the said defendants herein, and falsely claimed and stated that said real estate was no part of the assets of said corporation, and that no money or property of the corporation had ever been used as a payment or part payment for said real estate, and demanded that said real estate be conveyed to them, claiming that they were the true owners thereof; that the plaintiff was not at that time informed as to the truth of said statements, and believed the statements of the defendants in that regard, and did, upon said day, at the request of the defendants, authorize its president and secretary to execute a deed to said real estate of an undivided one-half interest therein to the defendant J. L. Calvert, and said corporation, by its president and secretary, relying on said representations of said defendants, and believing in the truth thereof, executed and delivered to said J. L. Calvert said deed for an undivided one-half of said real estate, and said corporation did thereafter, and upon or about the 19th day of May, 1911, by reason of said false and fraudulent representations made as aforesaid to them by defendants herein, authorize the president and secretary of said corporation to make, execute, and deliver to the defendant Joseph Wolke also a deed for the undivided one-half of said real estate; that a deed for the undivided one-half of said real estate was thereafter made, executed, and delivered to the said Wolke, and the plaintiff shows that said deeds, as aforesaid, executed to the defendants, were made without any consideration therefor, and with the full belief that the statements made by said J. L. Calvert and the said Joseph Wolke, as hereinbefore set forth, were true.

The plaintiff alleges also, in substance, that after the purchase of said real estate by the defendants, and before the execution of said deeds to the defendants, the defendants made large and various improvements upon said property, and used a large quantity of merchandise, consisting of hardware and building material, said merchandise being the property of the plaintiff herein, of the value of which plaintiff is not informed, but believes to be $2,500, and therefore alleges the same was used in making improvements upon the said real estate, and that no charge of any kind or any account of any kind was kept by plaintiff for said goods, wares, and merchandise, nor was there ever any payment whatever made for the same.

The plaintiff alleges also, in substance, that there has been, during all the times mentioned in the cross-bill, an open account between the plaintiff and the defendants herein, and that the defendants have and each of them has at various times drawn large sums of money from the plaintiff and defendants, and each of them has drawn the sums of money, so as aforesaid credited to them, and illegally appropriated from the assets of said corporation and the whole thereof.

The bill prays for an accounting, etc. A demurrer to the cross-bill was overruled. The defendants answered, denying much of the cross-bill, and setting up a large amount of new matter, including an estoppel, etc. The reply denied most of the answer. The trial court rendered a decree, dismissing the cross-bill, etc. The plaintiff appeals.

The evidence is voluminous. We have read it, but it is impracticable to set it forth.

1. There was some evidence produced by the plaintiff in an attempt to show that the board of directors did not authorize the president and the secretary of the plaintiff to execute to the defendants, Calvert and Wolke, deeds conveying to them the real property referred to in the pleadings and the evidence as the Layton Hotel property. The minute book of the company shows that they were authorized to make these deeds but the plaintiff attempts to impeach these minutes. All evidence on that point was irrelevant, because the allegations of the cross-bill show that the...