Mfr.S & Jobbers Finance Corp. v. Lane, No. 308.

• Docket Nº: No. 308.
• Citation: 19 S.E.2d 849, 221 N.C. 189
• Case Date: April 15, 1942
• Court: United States State Supreme Court of North Carolina

19 S.E.2d 849
221 N.C. 189

MANUFACTURERS & JOBBERS FINANCE CORPORATION.
v.
LANE et al.

No. 308.

Supreme Court of North Carolina.

April 15, 1942.

[19 S.E.2d 850]

Appeal from Superior Court, Caldwell County; John H. Clement, Judge.

Claim and delivery proceeding by Manufacturers and Jobbers Finance Corporation against V. E. Lane and B. R. Pless, partners, trading as P. & L. Motor Company, and Lane Motor Sales & Service, Inc., wherein V. E. Lane and Lane Motor Sales & Service, Inc., filed a counterclaim. From certain orders, the Lane Motor Sales & Service, Inc., appeals.

No error.

The plaintiff brought this action against the defendants, at the same time suing out a proceeding of claim and delivery, alleging that the defendants are in possession of numerous motor cars in which it has an interest and to which it is entitled to the possession. It is alleged that in the course of plaintiff's dealing with the defendants, V. E. Lane and B. R. Pless, partners trading as P. & L. Motor Co., in the financing of automobile sales made by the partnership, the latter became liable to the plaintiff in a total of about $23,000 upon the contracts of sale so financed, and became indebted for still other amounts upon transactions occurring in the course of the business and upon collections of amounts due the plaintiff, which they refuse to pay. It is further alleged that V. E. Lane purchased the interest of B. R. Pless in the partnership, and agreed with the latter to pay the partnership debts, which arrangement the plaintiff had not accepted or approved. Plaintiff alleges that the necessities of its business demanded that it withdraw from further service to the P. &. L. Motor Co., which, under its agreement it had the right to do; and thereupon the defendant, Lane, with the intention of hindering, delaying and defeating plaintiff in the collection of the debt due by the defendants and the customers with whom they dealt, and the recovery of its property, fraudulently formed a dummy corporation in which he holds all the shares except qualifying shares which are held by his wife and one of his employees, and that the said corporation is insolvent. It is alleged that the defendant, Lane, fraudulently transferred to this corporation and put into its possession all of the assets belonging to the partnership and all of his individual assets, and put it in possession of the motor cars above referred to; and that, based upon these assets, including those rightfully belonging to the plaintiff, the defendant, Lane, is endeavoring to sell stock in the newly formed corporation in a way that will jeopardize the rights of plaintiff in its property. It is alleged that the corporation is proceeding to collect money on the sales contracts due the plaintiff and which the plaintiff only has a right to collect, and wrongfully retains the same; that the corporation continues to deal with the property of the plaintiff as its own; and that said property is likely to deteriorate or to be destroyed unless relief is given to the plaintiff. On plaintiff's application a re-

[19 S.E.2d 851]

straining order was issued, which was continued to the hearing of the cause.

The answer of the defendant, Pless, admits most of the plaintiff's allegations, alleges that upon the sale of his interest to Lane the latter assumed all debts and obligations of the partnership, and asks that his equities be protected in any judgment rendered in the case. He further asks for an accounting and joins the plaintiff in the request for a receiver.

The defendant, Lane, and the Lane Motor Sales & Service Corporation, answering, denied the material allegations of the complaint and set up a further defense and counterclaim based upon an alleged want of good faith on the part of the plaintiff in suing out and maintaining the present action and the ancillary remedies therein, which, in the pleading, is denominated a malicious abuse of process. Therein, after alleging that the sales contracts, which largely form the basis for the action, were void because usurious, and were the result of a conspiracy in which plaintiff participated, the defendant corporation states its counterclaim as follows: "That on account of the defendant's unlawful, wilful, wanton, and malicious abuse of process as hereinbefore alleged in suing out a writ of claim and delivery and a restraining order enjoining the operation of this defendant's business, and the plaintiff's efforts to enforce the alleged contracts, hereinbefore set fo.th, which were illegal and void because of the unlawful conspiracy entered into this answering defendant has been damaged in the amount of $100,000.00."; and demands recovery of this amount.

In the course of the proceeding, on motion of plaintiff and B. R. Pless, a receiver was appointed, and to this order the defendants excepted and gave notice of appeal which was not perfected. Subsequently the plaintiff, conceiving that all of the property designated in this order had not been turned over to the receiver, applied to the court to have the specific property, including books, records, papers, stock books, cancelled checks, check stubs, deposit books, and other papers concerning the operation of the business, turned over to the receiver, basing this request upon an allegation that the defendant had not theretofore turned them over on demand of the receiver. An order to this effect was made, and defendants excepted, and Lane Motor Sales & Service, Inc., appealed.

At November Term, 1941, of Caldwell Superior Court the plaintiff demurred ore tenus to the counterclaim of Lane Motor Sales & Service, Inc., set out in its separate answer as above stated, and the judge presiding sustained the demurrer, and the defendant, Lane Motor Sales & Service, Inc., excepted and appealed. At the same term the plaintiff and the defendant, Pless, made a motion for the appointment of a referee on the ground that the action involves the taking of a complicated account between plaintiff and defendants, and a reference was ordered. This order contains the following provision: "The Court has heretofore sustained demurrers to certain portions of the Lane Motor Sales & Service, Inc., pleadings, and said defendant has given notice of appeal to the Supreme Court. Therefore, the Referee is directed to delay the taking of testimony until such times as said appeals have been withdrawn or disposed of by the Supreme Court." The defendants excepted and Lane Motor Sales & Service, Inc., appealed. The defendant, V. E. Lane, excepted to these orders, but the record shows no entry of appeal on his part, and he files no brief in this court, although apparently joining in some of the assignments of error.

There are three assignments of error in the record: (1) "enlarging the powers of the receiver" in the second order; (2) sustaining the demurrer to the counterclaim; (3) making the order of compulsory reference.

W. H. Strickland, of Lenoir, for appellant Lane Motor Sales & Service, Inc.

Eddy S. Merritt and C. W. Bagby, both of Hickory, for appellee.

SEAWELL, Justice.

The pleadings in this case themselves fill perhaps eighty of the ninety-one pages of the record. Space forbids detailed analysis, but the foregoing summary is sufficient for an understanding of this appeal and the grounds upon which decision is based.

(1) The exception to the order referred to by the defendant as enlarging the scope of the receivership cannot be sustained. The allegations of the complaint were sufficient to put it within the discretion of the court to order the documents in question turned over to the receiver in the first place, if, indeed, the original order of the court did not include them; and the...