Hannigan v. Italo Petroleum Corp. of America

• Decision Date: 19 September 1935
• Court: Delaware Superior Court
• Parties: MARTIN G. HANNIGAN v. ITALO PETROLEUM CORPORATION OF AMERICA, a corporation of the State of Delaware

181 A. 4

37 Del. 180

MARTIN G. HANNIGAN v. ITALO PETROLEUM CORPORATION OF AMERICA, a corporation of the State of Delaware

Superior Court of Delaware, New Castle County

September 19, 1935

Superior Court for New Castle County, No. 105, January Term 1935.

Case heard on demurrer to the defendant's fifth, sixth, eighth and ninth pleas to the plaintiff's declaration.

Action on two promissory notes, made by the defendant company payable to the order of Fred Shingle, Syndicate Manager, and subsequently assigned by him to Martin G. Hannigan, the plaintiff. One of these notes was for $ 9,476.13, dated January 20, 1929, and the other was for $ 35,222.25, dated April 20, 1929.

The material allegations of the pleas demurred to, and the grounds of such demurrer, will sufficiently appear in the opinion of the court.

For the opinion of the court on a prior demurrer in the same action see 6 W. W. Harr. (36 Del.) 442, 178 A. 589.

The demurrer of the plaintiff to the defendant's fifth plea is overruled, but his demurrer to its sixth, eighth and ninth pleas is sustained.

John Biggs, Jr., and Stewart Lynch for plaintiff.

Ivan Culbertson (of the office of Hugh M. Morris) for defendant.

HARRINGTON RICHARDS and REINHARDT, J. J., sitting.

OPINION

HARRINGTON, J.

The fifth plea, as amended, is based on the existence of an alleged champertous bargain between the beneficial owners of the notes sued on and one L. J. Byers, whereby they assigned all of their interests in such notes to Byers. It appears, however, that Byers was a mere volunteer, and had no previous interest in those notes.

It is, also, alleged that, in consideration of such assignment, Byers agreed to bring suit on the notes in question, to pay the expenses of that suit, and if he procured judgment in that action to pay a certain portion of the amount recovered thereon to his assignor; but Hannigan, and not Byers, is the plaintiff in the action.

This plea now further alleges "that in pursuance and in performance of the said agreement, the said L. J. Byers caused the above entitled cause of action to be brought in this court by and through his agent or nominee, Martin G. Hannigan, and procured the assignment or endorsement of the said instruments sued upon to the said plaintiff by the permitting the said agent or nominee of L. J. Byers to said Fred Shingle, Syndicate Manager, for the purpose of bring the within cause of action."

It, therefore, appears that the champertous agreement of Byers was the very basis of the plaintiff's claim. Hannigan v. Italo-Petroleum Corporation of America, 6 W. W. Harr. (36 Del.) 442, 178 A. 389; Gibson v. Gillespie, 4 W. W. Harr. (34 Del.) 331, 152 A. 589.

The eighth plea, in substance, alleges that a receiver was appointed for the defendant company by a District Court of the United States in Southern California, and that prior to the commencement of this action Shingle, Syndicate Manager, the plaintiff's assignor, and the payee in the notes sued on in this action, filed a claim on them in the receivership proceedings then pending, and that he thereby conclusively elected to pursue his claim in that proceeding, and can not prosecute this action.

That plea further alleges that the plaintiff is not a holder of such notes in due course.

A creditor is entitled to but one satisfaction, but, in most cases, he may use all possible remedies for the collection of his debt. Phila. Nat. Bank v. New Jersey Fidelity & Plate Glass Ins. Co., 7 W. W. Harr. (37 Del.) 174, 181 A. 1; 2 Woolley's Del. Pract. 671.

There are cases where a particular remedy is barred by an election of the plaintiff because of some prior action or proceeding taken by him, but a defendant who relies on such a prior election must clearly bring himself within the rule.

Broadly speaking, an election of remedies is the voluntary choice by a party to an action of one or more co-existing, but necessarily inconsistent and repugnant remedial rights growing out of the same known facts; and, as we have already said, when he has two or more concurrent and consistent remedies, he may prosecute one or all of them to satisfaction. Verder v. American Loan Society, 1 Cal. (2d) 17, 32 P.2d 1081; Lowrey v. Schroeder, 190 Iowa 459, 180 N.W. 145; 20 C. J. 236; 9 R. C. L. 959.

In considering this rule, the court, in Lowrey v. Schroeder, 190 Iowa 459, 180 N.W. 145, supra, said:

"A man may not take two contradictory positions, and when he has * * * two modes of redress, and the two are so inconsistent that the assertion of one involves the negation or repudiation of the other, his deliberate and settled choice of one, with knowledge, or means of knowledge, of such facts as would authorize a resort to each, will preclude him from thereafter going back and electing again."

In fact, the doctrine of election is generally regarded as an application of, at least, some of the general principles of the law of estoppel. Verder v. Amer. Loan Soc., 1 Cal. (2d) 17, 32 P.2d 1081; Ex Parte Hernlen, 156 S.C. 181, 153 S.E. 133, 69 A. L. R. 443; 20 C. J. 4.

A receiver is an agent appointed by the court to take charge of, conserve, and, in most cases, to administer the then assets of a corporation; and his appointment is for the benefit of all interested parties, including those who may ultimately establish rights in the case. Jersawit v. Banning, 2 W. W. Harr. (32 Del.) 47, 118 A. 727.

The effect of filing a claim with a receiver is, however, merely to give notice of such claim, and it is not equivalent to a pleading in the case in which he is appointed. International Banking Corporation v. Lynch (C. C. A.), 269 F. 242; 1 Clark on Receivers, 916.

Applying these rules to this case, no such inconsistency of position, as is necessary to constitute an election of remedies and to preclude this action, is shown by the mere allegation that Shingle, as Syndicate Manager, the plaintiff's assignor, in an effort to collect the notes sued on and payable to him, filed a claim on them with H. Clay Carpenter, who was the receiver of the defendant company, in a receivership cause entitled Hickey Pipe & Supply Co. et al. v. Italo-Petroleum Corporation of America. Phila. Nat. Bank v. N. J. Fidelity & Plate Glass Ins. Co., 7 W. W. Harr. (37 Del.) 174, 181 A. 1, recently decided by this court, seems decisive of that question. See, also, Ex Parte Hernlen, 156 S.C. 181, 153 S.E. 133, 136, 69 A. L. R. 443; Mathewson v. Colpitts, 284 Mass. 581, 188 N.E. 601; 69 A. L. R. 460, Note.

In Ex Parte Hernlen, supra, the court, in considering the rights of a depositor in a closed bank, said:

"She had and has the right to pursue every remedy open to her for the collection of the amount due her. * * * She could sue the stockholders, she could sue the directors, and she could file her claim as a depositor, and resort to any other means of reimbursing herself, subject only to an estoppel arising in the event that she did anything amounting to a waiver of her present claim, and to her discontinuing all other proceedings when in any one of such proceedings she obtains payment. The remedies invoked by her in the respects indicated would not be inconsistent. In all of them she would be merely seeking to recoup her loss."

None of the cases cited by the defendant company, in support of this plea (Equit. Trust Co. v. Conn. Brass, etc., Corp. (D. C.), 6 F.2d 582; Cont. Oil Co. v. Amer. Co-Op. Asso., 31 Wyo. 433, 228 P. 503; Davenport v. Walker, 132 App. Div. 96, 116 N.Y.S. 411; Mercantile Realty Co. v. Stetson, 120 Iowa 324, 94 N.W. 859) are inconsistent with this conclusion.

The same is, also, true of the statement quoted from 1 Clark on Receivers, 915, so strongly relied on by the defendant company. See, also, 1 Clark on Receivers, 916.

The ninth plea, in substance, alleges:

1. That on December 13th, 1930, one H. Clay Carpenter was appointed receiver for the defendant company, and of all of its property, wherever situated, by the District Court of the United States for the Southern District of California, Central Division.

2. That pursuant to the order of that court, made June 4th, 1931, requiring all creditors "having claims, of whatsoever nature," to file them on or before July 15th, 1931, Fred Shingle, Syndicate Manager, did on July 14th, 1931, file his claim in that proceeding on the identical notes sued on in this action.

3. That on or about August 27th, 1931, Carpenter, the receiver of the defendant company, disallowed the said claim of Fred Shingle, Syndicate Manager, "and gave to the said claimant written notice of the rejection and disallowance of his said claim; such rejection and disallowance being based on the contention that the said Fred Shingle, Syndicate Manager, had no valid claim against Italo-Petroleum Corporation of America by reason of said promissory notes. That thereafter the said United States District Court for the Southern District of California * * *duly entered its order confirming the act of the said Receiver in rejecting the claim of Fred Shingle, Syndicate Manager."

4. That the plaintiff was the assignee or endorsee of such notes after maturity, and was not a holder in due course or for value.

Substantially the same allegations appear in the sixth plea, but with the additional allegations:

1. That Shingle, Syndicate Manager, failed to contest the rejection of his said purported claim by the receiver, or the confirmation of his action by the court; nor did he appeal from the action of the court "or take any steps, whatsoever, to set aside either the rejection or confirmation thereof."

2. That the defendant company subsequently undertook a plan of corporate organization, which was premised on the...