Meagher v. Harrington
| Decision Date | 12 March 1927 |
| Docket Number | 6056. |
| Citation | 254 P. 432,78 Mont. 457 |
| Parties | MEAGHER v. HARRINGTON. |
| Court | Montana Supreme Court |
Appeal from District Court, Silver Bow County; George Bourquin Judge.
Action by Charles E. Meagher, as trustee of the Heilbronner Company against Julia Harrington, as administratrix of the estate of I. A. Heilbronner, deceased. From a judgment for plaintiff defendant appeals. Reversed and remanded for new trial.
Kremer, Sanders & Kremer and H. D. Carmichael, all of Butte, for appellant.
John K. Claxton and Lamb & Malloy, both of Butte, for respondent.
Appeal from a judgment declaring a trust and directing defendant to transfer certain certificates of stock to plaintiff, as trustee.
On March 30, 1926, Charles E. Meagher, as trustee of the Heilbronner Company, a bankrupt, commenced action to compel Julia Harrington, as administratrix of the estate of I. A. Heilbronner, deceased, to transfer to him, for the benefit of the bankrupt estate, 60 shares of the capital stock of the New Finlen Hotel Company of Butte. The following facts are alleged in the complaint and admitted by answer:
The Heilbronner Company was incorporated in 1910 and thereafter, up to the time of his death on June 14, 1925, I. A. Heilbronner was its president and general manager and had general control and supervision over its affairs. On June 18, 1925, an involuntary petition in bankruptcy was filed against the company and plaintiff was then appointed trustee; he duly qualified and has ever since acted in that capacity. On June 25, 1925, the company was adjudged a bankrupt. On August 6, 1925, defendant was appointed administratrix of the estate of Heilbronner; she duly qualified and entered upon the discharge of her duties. Prior to the commencement of this action plaintiff made demand upon defendant for the transfer to him, as trustee, of the certificates of stock mentioned above, and defendant refused to comply with the demand
It is alleged in the complaint and denied by the answer, that Heilbronner during all of the times mentioned "exercised complete control of the money and funds of said corporation," and that he "purchased with and paid for, with the money and funds of the * * * company," the shares in question; that, instead of having the certificates issued to the company, he "obtained and caused the same to be issued in his own name"; and that during his lifetime Heilbronner held, and the defendant now holds, these shares "in trust" for the company. In addition to the denials indicated above, the defendant affirmatively alleged that Heilbronner purchased the stock with his own funds and "was the owner, in possession and entitled to the possession thereof" for "several years prior to the commencement of this action"; that he "exercised exclusive ownership" over them and kept them in the office of the company; and that they stood of record on the books of the hotel company in his name. She further alleged that all of these facts were known to the officers of the company, and notwithstanding such knowledge the company at no time made any "claim of any kind or character whatsoever" thereto; that by reason of such failure the company and this plaintiff have been guilty of laches and the plaintiff is estopped to claim any right, title, or interest therein.
Replying to the answer, plaintiff alleged that he had no knowledge or information sufficient to form a belief as to the truth of the allegations thereof, and therefore denied the whole thereof. No question is raised as to its sufficiency.
The cause was tried to the court without a jury But three witnesses were called by the plaintiff. When the first witness was placed on the stand, defendant objected to the introduction of any testimony on the ground that the complaint did not state facts sufficient to constitute a cause of action, which objection was overruled. The testimony in its entirety is brief and is substantially as follows:
W. J. Walsh merely testified that he was an accountant for plaintiff; that he had made search through the effects of the company for a check dated May 15, 1923, issued by the company, without success.
J. E. Woodard, president of the Metals Bank & Trust Company of Butte, testified that he was treasurer of the New Finlen Hotel Company in 1923 and 1924; that he knew that Heilbronner was a stockholder in the hotel company, and that T N. Brogan represented him in handling the subscription to stock and the books of the hotel company. He was shown a number of checks, but stated that he knew nothing about them. Over the objection of the defendant that the same was irrelevant, incompetent, and did not tend to prove any issue to the case, the witness was permitted to testify that he was the J. E. Woodard, treasurer, payee named in one of the checks.
T. N. Brogan testified that he was "in charge of the trust company"; that in 1923 and 1924 he was the "accountant in charge of the construction books" of the hotel company. He was then asked: "Have you the books of the bank showing the transaction, if any, had between I. A. Heilbronner and the New Finlen Hotel Company?" His answer was, "Yes, sir" He was then shown five checks bearing dates from January 23, 1923, to February 25, 1924, from the Heilbronner Company to the hotel company or J. E. Woodard, treasurer, each for $1,000, and asked the question: "Does your books of the bank show the receipts of those checks or similar ones?" To this question the objection stated to the question put to Woodard above was interposed, with the addition that the complaint does not state facts sufficient to constitute a cause of action, which objection was overruled. On being asked to turn to the book showing the account, the witness produced the "cash book" of the hotel company, but was not permitted to testify therefrom on the ground that no foundation had been laid for the introduction of testimony as to the contents of the book. The witness was then questioned, and answered as follows:
"Q. Who made these entries? A. Most of them were made by me.
Q. Those not made by you, were they made under your supervision? A. Yes, sir.
Q. You are acquainted with all of the records contained in that book? A. Yes, sir.
Q. They were made at the time of the transactions? A. Yes, sir.
Q. Now, then, I renew the question, and ask you if they show a transaction with respect to the purchase of 60 shares of stock by I. A. Heilbronner?"
Counsel for defendant thereupon objected on the ground that no proper foundation had been laid for the introduction of any testimony with regard to the book, and for the further reason that the question was leading. This objection was overruled.
The pages of the book said to show the transaction was then admitted in evidence over the objection of defendant and the witness permitted to read therefrom such items as, "April 4th, I. A. Heilbronner, $1,000," and explain that it referred to the receipt of cash from Heilbronner. As to the date of each check tendered him, he showed a corresponding entry of cash received from Heilbronner for stock subscription. As to the missing check of May 15, 1923, he produced the original deposit slip of the hotel company, from the files of the Metals Bank, and, over the objection of the defendant, this was admitted, and he explained its connection with an entry in the "cash book." Asked if the book admitted in evidence showed the amount of the Heilbronner subscription, he replied: The witness then produced a book which he designated "the stock ledger" of the hotel company. The only question asked him concerning this book was, "Are you familiar with that?" to which he replies, "Yes, sir." Over the objection that no proper foundation had been laid for testimony concerning the contents of this book, the witness was permitted to testify that it showed that Heilbronner was issued two certificates, giving the numbers and the amount of stock, totaling 60 shares. The checks were then admitted in evidence, over the objection of defendant. Plaintiff rested.
Thereupon counsel for defendant stated that defendant rests and then moved the court to dismiss on the grounds that the complaint does not state facts sufficient to constitute a cause of action; that plaintiff failed to prove the material allegations of the complaint by competent, sufficient, and substantial evidence, and particularly by that clear, convincing, and satisfactory evidence required to establish a trust; that the evidence establishes laches and does not show that Heilbronner did not pay for his stock with his own funds or that the money was not used with the knowledge and consent of the directors of the company. This motion was denied and the cause taken under advisement.
The court made and filed findings in accordance with the admitted allegations of the complaint, and in addition thereto found that Heilbronner purchased the stock "in the year 1923" and paid the full purchase price out of the account and moneys of the company. From these findings the court concluded, as a matter of law, that the relation borne by Heilbronner to the company was fiduciary and precluded Heilbronner from acquiring property rights antagonistic to the company; that, as the record shows no intention to create or to hold the stock for the company, a constructive, and not a resulting, trust "arises in invitum to work out justice in the most efficient way." Judgment was entered in conformity with the findings of fact and conclusions of law, and from this judgment defendant has appealed.
Counsel have assigned 25 specifications of error, which, however present but three questions: (1) Did the court err in overruling the objection to the introduction of any testimony, on the...
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