Indian Land & Trust Co. v. Owen

• Decision Date: 26 December 1916
• Docket Number: Case Number: 8337
• Citation: 1916 OK 1056,162 P. 818,63 Okla. 127
• Parties: INDIAN LAND & TRUST CO. et al. v. OWEN.
• Court: Oklahoma Supreme Court

1916 OK 1056

162 P. 818

63 Okla. 127

INDIAN LAND & TRUST CO. et al. v. OWEN.

Case Number: 8337

Supreme Court of Oklahoma

Decided: December 26, 1916

Syllabus

¶0 1. Creditors' Suit--Aid of Execution.

By the laws of Arkansas in force in the Indian Territory prior to statehood, suit by a creditor in aid of execution would not lie until the claim was reduced to judgment, and an execution issued and returned nulla bona.

2. Limitation of Actions--Running of Statute-- Creditors' Suit.

In cases governed by this law, the statute of limitation on a cause of action in the nature of a creditors' bill begins to run from the time an execution on the judgment for the debt is returned null a bona.

3. Equity--Stale Claims--What Constitute.

What constitutes a stale claim in equity is not determined by lapse of time alone, but the question must be determined by the facts and circumstances of each case and according to right and justice.

4. Creditors' Suit--Actions--Delay.

Record examined, and held, that what delay there was was not the result of inexcusable neglect on the part of the plaintiff, but was in spite of his diligent efforts to reduce his claims to judgment, in order to be able to proceed in equity to collect his debt. Held, further, that as the nonaction of the plaintiff did not operate to damage the defendants, or to induce them to change their position, no estoppel arises by mere lapse of time.

5. Creditors' Suit-- Aid of Execution.

Under the statute, as well as the well-settled principles of equity jurisdiction, when a judgment debtor has no personal or real property subject to levy on execution sufficient to satisfy the judgment, any equitable interest which he may have in real estate, or in any money, contracts, choses in action due or to become due to him, or any money, goods, or effects which he may have in the possession of any person, body politic or corporate, shall be subject to the payment of such judgment by action in the nature of a bill of discovery in aid of execution.

6. Trusts--Following Trust Funds.

Where there are other shareholders, the officers or board of directors of a private corporation for profit cannot bind the corporation by converting to their own use without authority the corporate funds and assets of the company, and the funds and property so converted may be followed as trust funds of the persons chargeable with such conversion.

7. Trusts--Resulting Trust.

When real estate is purchased by a person with the funds of another, the title being taken in the name of the former, a trust is presumed to result in favor of the latter. The trust arises out of the circumstances that the money of the real purchaser, and not of the grantee in the deed, formed the consideration of the purchase and became converted into land.

8. Trusts--Following Trust Property--Remedies In Aid Of.

Prior to statehood, a corporation was organized in the Indian Territory for the purpose of buying and selling lands and dealing in agricultural leases for profit. O. became a creditor of the corporation and subsequently obtained judgment against it for the amount of his claim upon which execution was duly issued and returned nulla bona. Thereafter O. commenced a proceeding in the nature of a bill of discovery in aid of his executions at law against the corporation, in which he also joined B. and B. as defendants, upon the following grounds, which were found to be established by the trial court: Shortly after the organization of the corporation, B. and B. acquired a majority of its capital stock, and immediately commenced to act as its board of directors and its president and secretary, respectively; that at all times thereafter B. and B. assumed and exercised full control over the management of the affairs and assets of the company; that from time to time thereafter B. and B. not being creditors, without any authority by the corporation, its board of directors, or managing officers as such, collected large sums of money from persons indebted to the corporation, a portion of which they invested in lands. taking the title in their own names, and the balance of which they retained in their own possession without accounting therefor to the company. Held, that O. by bill of discovery in aid of his executions at law is entitled to follow the funds so converted as trust funds into the hands of B. and B., and also to have the lands purchased by B. and B. as above stated subjected to the payment of his executions. Held, further, that in these circumstances it makes no difference when O.'s debt was created, whether before or after such misppropriation of the corporate funds and assets of the company.

Error from District Court, Muskogee County; R. P. de Graffenried, Judge.

Action by Robert L. Owen against the Indian Land & Trust Company, a corporation, and others. There was a judgment for plaintiff, and defendants bring error. Affirmed.

S. V. O'Hare, Thomas H. Owen, Joseph C. Stone, and Alvin F. Molony, for plaintiffs in error.

W. W. Noffsinger and Y. P. Broome, for defendant in error.

KANE, C. J.

¶1 Hereafter, for convenience, the defendant in error, Robert L. Owen, will be referred to as the "plaintiff," the plaintiff in error Indian Land & Trust Company, as the "Trust Company," and John S. Bilby and N. V. Bilby as the "Bilbys."

¶2 The trust company was a corporation organized under the laws of Arkansas in force in the Indian Territory prior to statehood for the purpose of buying, selling, and dealing in lands and leases in the Indian Territory for profit, the plaintiff being one of its organizers and first president.

¶3 On the 23d day of December, 1912, in an action then pending in the district court of Muskogee county, the plaintiff procured a judgment against the trust company in the sum of $ 18,070.10, and on the 9th day of March, 1914, in another action pending in the same court, the plaintiff recovered another judgment against the trust company in the sum of $ 8,137. Subsequently execution was issued in each of these cases and returned nulla bona. On the 12th day of April, 1913, the plaintiff commenced this proceeding in the nature of a bill of discovery, in aid of his executions at law, in which he joined the trust company and the Bilbys as defendants. In his petition in this proceeding the plaintiff set up his two judgments, the return of the executions nulls bona, and further alleged in effect: That during the period of time extending from the 9th day of July, 1902, to the time of filing his petition, the Bilbys continuously owned the majority of the capital stock of the trust company, one of them being elected its president, and the other its secretary, and thereafter managed its business and affairs and had immediate charge of all of its assets and exercised exclusive control over its affairs and all its business transactions. That the trust company was organized under the laws of the state of Arkansas, which were extended over and put in force in the Indian Territory, for the purpose of buying, selling, and dealing in agricultural lands and leases in the Indian Territory for profit, and that its assets consisted principally of agricultural leases on 88,000 acres of land situated largely in the Creek Nation. That the Bilbys as majority stockholders and officers of the trust company collected the rents of said lands and failed, neglected, and refused to account to said corporation for the same, and have misappropriated said rentals to their own use, whereby the said corporation has been and is now unable to pay its creditors, and especially this plaintiff. That during the management and control of said corporation by said Bilbys they used a large portion of the aforementioned grazing and cultivated lands for their own individual use, and never made any report or accounting to the said corporation for the reasonable value of the rents thereof, and the said Bilbys used the property and assets of said corporation during the whole of their management and control of same, not for the benefit of the company and its other stockholders, but for their own individual use and benefit. That said Bilbys have sold a large part of the leases owned by said company for large sums of money and have failed to report and account to said company for the amount received therefor, and have appropriated the same to their own individual use and benefit. After alleging other shortcomings against the Bilbys whereby they acquired in their own name assets belonging to the trust company, the petition prays, in substance: That the Bilbys be required to make a full discovery and disclosure of their management and control of said defendant corporation and of its property and assets in their charge and under their control, and of all the property and assets that have belonged to said corporation and their use and disposition of the same, and that all property and assets of said corporation wrongfully in the hands of said Bilbys be applied to the payment of the judgments in favor of the plaintiff until the same are fully satisfied, and for such other and further relief as to the court may appear just and equitable in the premises after a full and complete hearing of said cause.

¶4 Thereafter the trust company and N. V. Bilby each filed separate demurrers to the petition of the plaintiff, and thereafter John S. Bilby filed his separate demurrer thereto, and thereafter, to wit, on the 4th day of November, 1913, the trial court made and entered its order overruling these several demurrers. Thereafter the trust company and the Bilbys filed their joint answer, in form a general denial, and also pleaded the statute of limitations. Thereafter upon trial to the court, findings of fact were made, largely as stated by the plaintiff in his petition as to the organization and purposes of the corporation, the exclusive control of its affairs by the Bilbys, etc., and further to the effect that since January, 1904, the Bilbys collected the proceeds of the leases of...