Inter-Ocean Cas. Co. v. Leccony Smokeless Fuel Co.
| Decision Date | 14 October 1941 |
| Docket Number | 9170. |
| Citation | 17 S.E.2d 51,123 W.Va. 541 |
| Parties | INTER-OCEAN CASUALTY CO. v. LECCONY SMOKELESS FUEL CO. et al. |
| Court | West Virginia Supreme Court |
Syllabus by the Court.
The person wronged by conversion of money or property is entitled to recover on an implied promise or for money had and received, where a benefit has accrued to the party converting the money or property, and in such case the person wronged may "waive" the tort and recover on contract.
Where employer corporation, in accordance with contract, made deductions from employees' wages to pay premiums on industrial accident and death policies but failed to make such payments or place amount thus deducted in special account, and money therefor was never in hands of corporation which was insolvent, deductions being merely bookkeeping transactions, insurer could not recover amount deducted for premiums on the theory of "implied contract" for money had and received, since relationship between employer and insurer was that of "debtor and creditor" as to such amount.
The bare allegation of the common counts in assumpsit in a notice of motion for judgment was not sufficient to warrant recovery on the basis of fraud, since fraud must be clearly alleged and proved.
In the absence of an active intent to deceive or defraud creditors, creditor of a corporation cannot maintain an action at law or proceeding by notice of motion for judgment against the officers and directors of the corporation for simple nonfeasance of duty to the corporation or fraud in its management or mismanagement in the disposition of money or property.
Where employer corporation, in accordance with contract to make deductions from employees' wages for premiums on industrial accident and death policies, made such deductions as a bookkeeping transaction but never had the funds represented thereby in its hands, being insolvent and without funds after payment of wages and operating costs, insurer could not recover against employer corporation for unpaid premiums on theory of "constructive trust", since there was no fund available to constitute a trust res.
A trust res is necessary for creation of a trust.
1. Where an employer corporation by a contract undertakes to make deductions from the wages of its employees for coverage of industrial insurance for accident and death and to pay to the insurer the amounts deducted, the relationship between the employer and the insurer is one of debtor and creditor as to the amounts charged to the employees where the same are not placed in a special account nor paid to the insurer.
2. In this jurisdiction where recovery is sought on the basis of fraud, the fraud must be clearly alleged and proved.
3. In the absence of an active intent to deceive or defraud creditors, a creditor of a corporation cannot maintain an action at law or proceed by notice of motion for judgment against the officers and directors of the corporation for simply non-feasance of duty to the corporation or fraud in its management or mismanagement in the disposition of its money or property.
4. A trust res is necessary for the creation of a trust.
Where employer corporation, in accordance with contract to make deductions from employees' wages for premiums on industrial accident and death policies, made such deductions as a bookkeeping transaction but never had the funds represented thereby in its hands, being insolvent and without funds after payment of wages and operating costs, insurer could not recover against employer corporation for unpaid premiums on theory of "constructive trust", since there was no fund available to constitute a trust res.
J. W. Maxwell, of Beckley, and Mahan, Bacon & White, of Fayetteville, for plaintiffs in error.
File Scherer & File and Sayre & Bowers, all of Beckley for defendant in error.
Plaintiff, Inter-Ocean Casualty Company, a corporation, filed in the Circuit Court of Raleigh County against Leccony Smokeless Fuel Company, a corporation, Harry E. Moran, Claude Jarrett and Richard R. Conant, a notice of motion for judgment in the amount of $3,605.98, alleging only the common counts in indebitatus assumpsit. To a judgment against Moran and Jarrett in the amount declared on, based upon a directed verdict, they prosecute this writ of error.
A bill of particulars was filed to plaintiff's notice, setting forth items of an account for money alleged to have been collected by the defendants from the employees of the Leccony Smokeless Coal Company, a corporation, which should have been paid to plaintiff for premiums on policies of insurance issued by plaintiff to said employees, and diverted by defendants to other purposes. At the conclusion of the evidence the defendants, except Conant, who had not been served with the notice, moved to strike the evidence and direct a verdict. This was sustained as to Leccony Smokeless Fuel Company, which had purchased the properties of Leccony Smokeless Coal Company at a receivership sale after the amounts declared on had become due, but the court overruled the motion as to Moran and Jarrett, and, upon plaintiff's motion, directed a verdict against the last-mentioned defendants and entered thereon the judgment complained of.
On April 1, 1930, the Leccony Smokeless Coal Company entered into a written agreement with plaintiff's agent, West Virginia & Kentucky Insurance Agency, whereby the latter agreed to carry coverage of industrial insurance for accident and death upon the coal company's employees. The material part of the contract relating to premium payments reads: "We agree to pay, collect, or cause to be collected, the premiums as above shown, for each person whose name appears on the pay roll, during the month and to furnish report of the gross monthly collections, less 10% commissions, together with remittance for same to West Va. and Ky. Insurance Agency *** not later than the 15th of the month following the close of each month's pay roll." The contract provided for a term of twelve months and unless terminated, as therein provided, a continuance thereof for similar terms thereafter.
Until the closing of its operation by the appointment of a receiver in a pending chancery suit on December 15, 1938, the Leccony Smokeless Coal Company was engaged in the production of coal in Raleigh County. The defendant, Leccony Smokeless Fuel Company, was organized in September, 1939, acquired the properties formerly operated by the coal company, and continued to carry the industrial insurance with plaintiff. From 1935 to and including 1938, the defendant Moran was president and Jarrett was vice president and general manager of the coal company, and, together with Conant, constituted its board of directors. The coal produced by the coal company was sold by the Lake & Export Coal Corporation, having its principal office in New York City, with Moran as president and Conant as secretary and treasurer. As early as 1933, the coal company was and continued to be insolvent and unable to pay its debts.
The first proposition stated by counsel for defendants, to the effect that under White v. Conley, 108 W.Va. 658, 152 S.E. 527, and Stuart v. Carter, 79 W.Va. 92, 90 S.E. 537, liability for unliquidated damages due to breach of contract cannot be asserted by notice of motion for judgment, is untenable here for the reason that plaintiff seeks to recover specific sums of money alleged to be due on a contract and not for damages for the breach thereof.
Here plaintiff asserts liability on the theory that money was received by the coal company for the insurance premiums and converted by plaintiffs in error. Of course, a plaintiff is entitled to recover on an implied promise or for money had and received,...
To continue reading
Request your trial