H. E. Briggs & Co. v. Harper Clay Products Co.

• Decision Date: 13 December 1928
• Docket Number: 21464.
• Court: Washington Supreme Court
• Parties: H. E. BRIGGS & CO. v. HARPER CLAY PRODUCTS CO. GRANT v. LIPPY.

272 P. 962

150 Wash. 235

H. E. BRIGGS & CO. v. HARPER CLAY PRODUCTS CO.

GRANT v. LIPPY.

No. 21464.

Supreme Court of Washington

December 13, 1928

Department 2.

Appeal from Superior Court, King County; James B. Kinne, Judge.

Action by H. E. Briggs & Co. against the Harper Clay Products Company, in which receivers were appointed for the defendant. In the receivership proceedings William E. Grant and Thomas S. Lippy each filed claims. From an order allowing Lippy's claim as a claim of the same rank as Grant's claim, Grant appeals. Affirmed.

McClure & McClure, of Seattle, for appellant.

Wright Fronde, Allen & Hilen and Palmer, Askren & Brethorst, all of Seattle, for respondent.

PARKER, J.

On October 31, 1927, in the case of H. E. Briggs & Co. Plaintiff, v. Harper Clay Products Co., Defendant, receivers were appointed for the defendant by the superior court for King county looking to the liquidation of its affairs because of its insolvency. William E. Grant filed in the receivership proceedings his claim against Harper Clay Products Company claiming it to be indebted to him in the sum of $9,343. This claim was allowed by the receivers as a valid indebtedness against the assets of the receivership. Thomas S. Lippy filed in the receivership proceedings his claim against the Harper Clay Products Company, claiming it to be indebted to him in the sum of $44,908. The receivers, being doubtful as to the validity and justice of Lippy's claim, in their report to the court thereon asked to be directed what action they should take as to its allowance. Grant filed objections to the allowance of Lippy's claim. The question of the allowance of Lippy's claim being thus presented, it came on for hearing before the court in the receivership proceedings. Both claimants appeared in person and by counsel. The receiver appeared in person and by counsel, but apparently only insisting that Lippy make strict proof of the justness of his claim, the controversy being principally between Grant and Lippy. The trial proceeded, resulting in the court making findings of fact and entering a formal order allowing Lippy's claim against the assets of the receivership in the sum of $35,583.75, of the same rank as Grant's allowed claim. From this order Grant has appealed to this court. The receivers have not appealed, though they have appeared in this court requesting that no costs be awarded to either of the contesting claimants against the assets of the receivership.

Harper Clay Products Company was duly incorporated under the laws of this state in August, 1918, with an authorized capital stock of $50,000 divided into 500 shares of $100 each. Thomas S. Lippy then became the owner of 498 shares of the stock; Leander T. Turner then became the owner of one share of the stock; and George S. Stillson then became the owner of one share of the stock. All of these shares were then fully paid for to the corporation. These gentlemen then became the three trustees of the corporation and have so remained ever since; except that in October, 1924, M. F Joerndt became the owner of one share of the stock and became a trustee of the corporation, succeeding George S. Stillson, and has so remained ever since. Lippy has at all times since the organization of the corporation remained the owner of 498 shares of its stock, and been its president and the general manager of its business and affairs until the appointment of the receivers. Prior to October, 1924, Lippy had advanced from his personal funds to the corporation, to aid in financing its affairs, sums aggregating $29,500. These advances were by the trustees formally ratified as debts owing by the corporation to Lippy, and were then and thereafter evidenced by promissory notes of the corporation, one for $17,800 and two for $6,000 each. These notes remain wholly unpaid. Since then, and in addition to these advances, Lippy has advanced to the corporation of his personal funds from time to time, and received credit therefor in an open account upon the books of the corporation, varying sums of which there remain owing to him $5,783.75. The total of all these advances constitutes the extent of the allowance by the court of Lippy's claim. The evidence brought here seems to us to clearly preponderate in support of the trial judge's view that the advances made by Lippy to the corporation in the $35,583.75 aggregate of these promissory notes and the balance due upon the open account were actually so made by him and remain unpaid. We think that the corporation thereby became and has remained justly indebted to him in the aggregate of those amounts, unless we are to hold otherwise upon considerations now to be noticed.

It is contended in behalf of appellant Grant that the corporation was...