Mosher v. Lee

• Decision Date: 21 November 1927
• Docket Number: Civil 2591
• Parties: HATTIE L. MOSHER and HATTIE L. MOSHER as Surviving Partner of the CITY ICE DELIVERY COMPANY, a Copartnership, and CITY ICE DELIVERY COMPANY, a Corporation, Appellants, v. C. P. LEE, as Receiver of the CITY ICE DELIVERY COMPANY, a Copartnership, Appellee
• Court: Arizona Supreme Court

261 P. 35

32 Ariz. 560

HATTIE L. MOSHER and HATTIE L. MOSHER as Surviving Partner of the CITY ICE DELIVERY COMPANY, a Copartnership, and CITY ICE DELIVERY COMPANY, a Corporation, Appellants, v. C. P. LEE, as Receiver of the CITY ICE DELIVERY COMPANY, a Copartnership, Appellee

Civil No. 2591

Supreme Court of Arizona

November 21, 1927

APPEAL from a judgment of the Superior Court of the County of Maricopa. Joseph S. Jenckes, Judge. Affirmed.

Mr John W. Ray and Mr. J. C. Niles, for Appellants.

Messrs Kibbey, Bennett, Gust, Smith & Lyman, for Appellee.

OPINION

McALISTER, J.

This is an action by C. P. Lee, as receiver, praying for a decree canceling a bill of sale and a lease executed by Hattie L Mosher as the surviving partner of the City Ice Delivery Company, a copartnership, to a corporation of the same name, and restraining her and the latter from using this name in connection with the business of manufacturing, buying and selling ice. The answer contained a general and several special demurrers and allegations of fact intended to avoid the matters set up in the complaint. The demurrers being overruled, the plaintiff filed a motion for judgment on the pleadings, which was granted, and the defendants appeal from this order.

It appears from the complaint that William b. Lount and Hattie L. Mosher were for a number of years partners in the ice business in Phoenix, Arizona, under the name of the City Ice Delivery Company, and that on August 31st, 1924, the former, who owned a 11/16 interest in the partnership and had sole charge of its management, died, and the latter, who was the owner of a 5/16 interest but had theretofore no part in the actual management of it, took charge of it as surviving partner; that in February, 1925, Carrie A. Lount, wife of William B. Lount and executrix of his estate, filed an action against Hattie L. Mosher, as surviving partner, praying for the appointment of a receiver of the partnership assets, upon the ground that under her management these were being wasted and dissipated; that this action resulted in the appointment of one C. P. Lee as receiver, but that said Hattie L. Mosher appealed from the order appointing him, filed a supersedeas bond in the sum of $25,000 before he qualified, and continued to carry on the business of the partnership; that in November, 1925, this order was affirmed by this court (29 Ariz. 267, 240 P. 1027), and on January 6th, thereafter the receiver qualified by giving the required bond.

It further appears that on October 16th, 1925, more than a month prior to the determination of the receivership matter in this court, defendant Hattie L. Mosher caused to be organized a corporation, known as the City Ice Delivery Company, to carry on the business of manufacturing, buying, selling and distributing ice, and to acquire, own and operate machinery for this purpose; that two of the incorporators reside in Oregon, one of these being the son-in-law of defendant Hattie L. Mosher, and the other his attorney; that the other four, three of whom drove ice wagons for defendant Mosher, and one Clarence Johnson, acted as office boy for her, live in Phoenix, Arizona, and that none of them have paid for any stock in the corporation; that appellant is president and Clarence Johnson secretary-treasurer of the corporation; that these six, together with Hattie L. Mosher, were the incorporators, and the former joined in the articles of incorporation at her instance and request; that those residing in Arizona other than said Hattie L. Mosher are without any pecuniary responsibility whatever, and that the directors, Clarence Johnson and William M. Jordan, are dummies and tools of hers; that while the appeal in the receivership case was still pending, to wit, on October 16th, 1925, Hattie L. Mosher, as surviving partner of the City Ice Delivery Company, attempted to lease to this corporation all the partnership real estate and by bill of sale in writing to sell and convey to it all the partnership personal property, the former for a period of two years at a rental of $150 per month, and the latter for $7,000, the consideration under both instruments being wholly inadequate and unpaid; that soon after qualifying as receiver, appellee demanded of defendants a cancellation of the lease and a reconveyance to him of all property described in the bill of sale, but that they refused to comply with this request.

It is also alleged that the business was carried on for many years under the name of City Ice Delivery Company; that during this time it became widely and favorably known to the public under this name; and that at the time of the death of William B. Lount this name was a part of the goodwill of the co-partnership business and one of its most valuable assets; that it was taken over by Hattie L. Mosher as surviving partner along with the other partnership assets and continued to be used by her in carrying on the business until October 16th, 1925, when she undertook to transfer to the corporation by lease and bill of sale the real and personal property of the partnership that was necessary to carry on the ice business; that said corporation took over and used the property so conveyed and assumed to and did carry on the business of the partnership under its corporate name; that using the name, City Ice Delivery Company, was in fact an appropriation by the corporation of the goodwill of the partnership without right or remuneration; that the articles of incorporation empower the corporation to carry on such business and only such as the partnership had formerly engaged in; and that said Hattie L. Mosher and the corporation plan, purpose, and intend in doing this to continue to use and appropriate to its own use and benefit the trade name formerly used by it, to the great loss and damage of the said partnership.

The answer, among other things, alleges that Hattie L. Mosher, as surviving partner, took possession of the assets of the partnership and proceeded to wind up its affairs by collecting its outstanding accounts and paying its debts, and, as soon as possible, to sell its personal assets and business; that she was unable to find a satisfactory purchaser immediately after the death of William B. Lount, and, it being at the time a busy season of the year in the ice business, she, as surviving partner, conducted the business on partnership credit, using the same name and place of business this partnership had used and intending to render an accounting and pay a reasonable rental therefor; that this operation continued until October, 1925, when she despaired of finding a satisfactory purchaser of the partnership assets except upon condition that she associate herself with others in the business, and this she declined to do otherwise than as a member of a corporation with limited liability; that such being the only way the surviving partner could find to dispose of the partnership property at anything like a fair value, she, in connection with others, some of whom had been employed by the partnership and were familiar with its business, organized the corporation, City Ice Delivery Company, for the express purpose of purchasing the personal assets of the partnership and leasing for a term of years the real property that had been used by it, but which she was advised she held as tenant in common with the heirs of William B. Lount if there were no outstanding liabilities of the partnership requiring a sale of the realty, or as sole tenant if such a sale were necessary; that in order to effect a sale of the personalty, consisting of trucks, scales, and such articles as are peculiarly adapted to the manufacture, sale and distribution of ice, she agreed, either as tenant in common or as sole tenant by right of being surviving partner, to make the lease of which plaintiff complains; that the consideration therein named is a fair, reasonable rental therefor, and that there was no possibility of a sale of the personalty without a lease of the machinery with which and the real estate upon which to do business.

It is further...