Kentucky Auto Mechanics Service Co., Inc. v. Kentucky Auto Parts Co., Inc.

• Decision Date: 02 March 1937
• Citation: 267 Ky. 531,102 S.W.2d 1022
• Parties: KENTUCKY AUTO MECHANICS SERVICE CO., Inc., v. KENTUCKY AUTO PARTS CO., Inc., et al.
• Court: Kentucky Court of Appeals

102 S.W.2d 1022

267 Ky. 531

KENTUCKY AUTO MECHANICS SERVICE CO., Inc., v. KENTUCKY AUTO PARTS CO., Inc., et al.

Court of Appeals of Kentucky

March 2, 1937

Appeal from Circuit Court, Jefferson County, Chancery Branch, First Division.

Froceeding by the Kentucky Auto Mechanics Service Company, Incorporated against the Kentucky Auto Parts Company, Incorporated, and others, in the matter of the settlement and distribution of the assets of the last-named company among its creditors. From a judgment overruling exceptions to a commissioner's report sustaining an exception to the claim of the first-named company, and confirming a report of the commissioner adverse to claimant, claimant appeals.

Reversed with directions.

C.E Schindler and H.S. Horen, both of Louisville, for appellant.

Steinfeld & Steinfeld and Eugene R. Attkisson, all of Louisville, for appellees.

REES Justice.

The Kentucky Auto Parts Company was incorporated under the laws of Kentucky in December, 1927. Samuel B. Sollish owned 47 shares of the capital stock, Benjamin G. Bloch 50 shares, and Pauline Willett 3 shares. The Kentucky Auto Mechanics Service Company was incorporated under the laws of Kentucky on September 19, 1930, and at the time this litigation arose 50 shares of stock were outstanding of which Samuel B. Sollish owned 44, Pauline Willett 3, and C.E. Schindler, 3. The Kentucky Auto Parts Company executed a deed of assignment to W.A. Stout on March 23, 1935, and the assignee immediately brought an action to settle the affairs of the company and distribute its assets among its creditors. The cause was referred to the court's commissioner to ascertain the debts against the company, and to determine the rights and priorities of the various creditors. The Kentucky Auto Mechanics Service Company presented to the commissioner, with the request that the same be allowed, its claim against the Kentucky Auto Parts Company for $7,329.29. The claim was verified by the affidavits of Samuel B. Sollish and E.P Willett. One of the creditors of the Kentucky Auto Parts Company excepted to the claim and moved that its payment be postponed until all other claims had been paid. The exception reads: "Now comes the Van Norman Machine Tool Company and excepts to the claim of the Kentucky Auto Mechanics Service Company, and moves to exclude said claim and to postpone same until all other claims have been paid, because of the identity and intimate connection of the said creditor with the Kentucky Auto Parts Company, Inc."

The commissioner sustained the exception, and disallowed the claim on the ground that the Kentucky Auto Mechanics Service Company was the agent or adjunct of the assignor, Kentucky Auto Parts Company, and that it should not be permitted to recover moneys advanced to its principal until all other creditors had been paid. Exceptions to the commissioner's report were filed by the Kentucky Auto Mechanics Service Company, but the circuit court overruled the exceptions and confirmed the commissioner's report, and adjudged that the claim of the Kentucky Auto Mechanics Service Company should not participate in the distribution of the assets of the assigned company until all other claims had been paid. The total receipts of the assignee were $5,120.64, and his disbursements amounted to $1,249.91, leaving $3,870.73 to be paid to the assignor's creditors. The preferred claims allowed and paid amounted to $1,339.57, which left $2,531.16 to be paid to the general creditors. General claims allowed amounted to approximately $13,500, and the commissioner was directed to pay a dividend of 18.74 per cent. On these claims. If appellant's claim had been allowed, the dividend would have been reduced to slightly more than 12 per cent. The Kentucky Auto Mechanics Service Company excepted to the ruling of the court postponing the payment of its claims and has appealed.

The itemized claim filed with the commissioner by the appellant showed that most of the indebtedness was for money advanced to the assigned corporation. Attached to the claim were the canceled checks representing the advancements. Some of these were the checks of the Kentucky Auto Mechanics Service Company, signed by Samuel B. Sollish, president, and some were his personal checks. In his affidavit accompanying the claim, Sollish stated that "the account herein claimed for and attached hereto is due for the articles or services mentioned therein, and that the same were sold and delivered or rendered, by said claimant to the said Kentucky Auto Parts Company, Inc., at their special instance and request and...