Mracek v. Dunifon

• Decision Date: 05 July 1951
• Docket Number: No. 5312,5312
• Parties: MRACEK et al. v. DUNIFON.
• Court: New Mexico Supreme Court

Page 792

233 P.2d 792

55 N.M. 342

MRACEK et al. v. DUNIFON.

No. 5312.

Supreme Court of New Mexico.

July 5, 1951.

Vincent M. Vesely, Clyde T. Bennett, Silver City, for appellants.

Carl P. Dunifon, Silver City, Hugh E. Wall, Jr., Dayton, Ohio, for appellee.

SADLER, Justice.

This appeal is prosecuted by claimants, Albert P. Mracek, Albert F. Mracek, his son, Max L. Rice and Therese A. Harrigan, from the judgment of the district court of Grant County, where administration proceedings on the estate of Rev. Roger Aull, deceased, were pending following removal from the probate court, disallowing in whole or in part separate claims of the respective appellants. Upon motion of the claimants mentioned, the district court ordered a consolidation of their claims for the purposes of this appeal. Accordingly, they are before us for review upon a single record. Since the statement of facts found in the brief of appellee, the administrator of decedent's estate, contains a rather succinct and compact review of the facts, it will be largely followed in giving a general history of the case employing only facts that are within the findings, or about which there is really no dispute.

The appeal arises from the disallowance of claims filed by appellants against the estate of Rev. Roger Aull who died at his home in Grant County, intestate, on August 4, 1948. He was a Catholic priest, a member of the PassionateReligious Order. His health having failed, his Order located him in New Mexico for health reasons. Eventually, the settled near Central, in this state in September, 1940, where, at the invitation of appellant, Albert P. Mracek, he established and built a home on an unpatented mining claim located by the former.

Prior to coming to New Mexico, Fr. Aull had become interested in a machine designed to relieve persons suffering from respiratory disorders, the patent on which was owned by a friend of long standing, one Emmett L. Harrigan. Fr. Aull visited him in Cleveland, Ohio, in 1935 and there for the first time observed the machine's operation. Soon after returning to New Mexico, Mr. Harrigan sent him two or three of the machines, known in the trade by the name of 'Halox.' Because the machine benefited him, Fr. Aull became impressed by its curative properties. Following the death of Mr. Harrigan in January, 1945, Fr. Aull entered into a written agreement with Mrs. Harrigan, one of the appellants, effective November 4, 1946, under which he was to have the exclusive right to manufacture, sell and lease the Halox machines on a royalty basis.

Fr. Aull manufactured the machines in a small factory building which he erected on part of the mining claim adjoining his home near Central. Appellant, Albert P. Mracek, was employed by him as manager of the business and was in charge of its books. His son, Albert F. Mracek and Max L. Rice, appellants herein, worked in the factory. The business was known either as the Halox Manufacturing Company; or, on occasions, the Halox Therapeutic Generator Company, a sole enterprise belonging to Fr. Aull.

Shortly after starting the manufacture of the Halox machines, Fr. Aull established a second, solely owned institution, known as the Father Aull Foundation. Separate books, records and bank accounts were kept by it. The Foundation purchased the Halox machines from the Halox Manufacturing Co. and then leased them to clinics, for the most part under an arrangement requiring the lessee to pay, in advance, a minimum five-year rental plus an amount equal to 10 per cent. of the gross income derived monthly from the use of the machines.

During the latter part of 1947, the federal government's Pure Food and Drug Administration began an investigation regarding the Halox machine. Earlier that year Fr. Aull and Mrs. Harrigan instituted a suit in the federal court in Tucson, Arizona, against a third party, charging the manufacture of a machine which allegedly infringed upon the Harrigan patent. Disliking the publicity likely to attend the foregoing and also wishing his name as a priest not to become involved, Fr. Aull instructed an attorney friend, Anthony T. Deddens of Bisbee, Arizona, to prepare a bill of sale purporting to transfer to Albert P. Mracek all of seller's interest in the business known as 'Halox Manufacturing Company' together with its good will etc.; a declaration of trust to be signed by Mracek, declaring himself trustee of the Halox assets for Fr. Aull; and an agreement whereby Mracek was to act as a sub-licensee under Fr. Aull's November 4, 1946, agreement with Mrs. Harrigan.

Mracek did not sign either the trust agreement or the sub-license agreement, claiming to have returned all three documents to Fr. Aull with a statement that he would have nothing to do with the transaction. Following the death of Fr. Aull on August 4, 1948, by some two months, appellant Albert P. Mracek showed up with the bill of sale claiming it was returned to him by Fr. Aull with a statement that it was to be effective as of the date borne by it. This bill of sale became the chief support of the claim by this appellant against the estate of Fr. Aull, consisting of some eight items. In view of the fact that the appeal involves the separate claims of four distinct claimants, it will conduce to an intelligent understanding of the case if we consider the claims in the order in which they appear in the record.

The Albert P. Mracek claim consisted of eight items. The first, or item No. 1, was for the aggregate of two separate bank accounts, one the so-called Halox account in American National Bank at Silver City in the sum of $4,208 and the other the Father Aull Foundation account in the same bank in the sum of $1,981.83, the two totaling $6,189.83.

Item No. 2, was a claim for an amount said to be known to the administrator but unknown to the claimant representing moneys claimed to have been collected by the administrator for leased machines and from doctors and clinics as royalties. Item No. 3 represented a claim for a total of $1,000. It was said to have been loaned by claimant to Fr. Aull at the rate of $200 per month for a period of five months subsequent to the claimed effective date of bill of sale.

Item No. 4 represented a claim for $1,293.89 to cover bills and accounts said to have been owed by Fr. Aull and to have been paid by claimant between December 1, 1947, and January, 1948. Item No. 5 was a claim for $850, plus interest, for balance said to be due the claimant for machines manufactured by him at $8 per machine under promise of Fr. Aull to pay the additional sum of $2 on each machine at a later date to cushion a drop in business.

Item No. 6 was a claim for $398 said to be due for the manufacture of 29 machines at $10 each and sold at Tombstone, Arizona, and for 36 additional machines manufactured by claimant and used in the Tombstone Clinic of which clinic Fr. Aull was reputed to be a part owner. Item No. 7 was a claim for $21,000 said to have been advanced to Fr. Aull upon his request, partly from the Halox Bank account and partly from the Father Aull Foundation account, both in the bank mentioned above, to meet expenses in prosecuting the Arizona suit for infringement of the patent right under which the Halox machines were manufactured and for defending a suit then lately filed in a federal court in California for a claimed violation of the Pure Food, Drug and Cosmetic Act in the manufacture and sale of Halox machines.

The last and final item of Albert P. Mracek's claim, designated item No. 8, is for an unnamed amount representing premium on a fire insurance policy on personal property of Fr. Aull, as well as storage charges on the personal property; also damages in an unnamed and allegedly unknown amount said to have been suffered by claimant in the loss of business resulting from lack of funds due to the administrator's act in taking charge of all money belonging to the decedent; and, in addition, the reasonable rental value of property since decedent's death. Except to reserve action on the rental item to fix its reasonable amount in the event administrator and claimant could not agree, the court disallowed in toto all other items making up this claim of Albert P. Mracek. Since the assigns no error on the disallowance of this item of his claim, it will not be the subject of further mention.

Since all items of the claim filed by the foregoing claimant on which error is here assigned, except 5 and 6, rested wholly upon acceptable proof that the bill of sale dated December 1, 1947, was unconditionally delivered to him by Fr. Aull during his lifetime, if claimant's proof on this issue failed, then all items of his claim dependent on it failed also. Thus it becomes important to examine the trial court's findings touching this claim. They follow, along with the conclusions of law drawn from them by the court.

'Findings of Fact

'I. That at all times prior to his death on August 4, 1948, Rev. Roger Aull was the sole owner and proprietor of two separate proprietorships established by him, known as 'Halox Manufacturing Company' and 'Father Aull Foundation.'

'II. That Rev. Roger Aull caused to be prepared and signed some time after December 17, 1947, a certain bill of sale (Claimant's Exhibit 1), bearing the date of December 1, 1947, intending to convey certain assets of Halox Manufacturing Company to Albert P. Mracek as trustee for Rev. Roger Aull.

'III. That there is no credible proof of unconditional delivery of said bill of sale or of any valuable consideration supporting it.

'IV. That at all times from the dates of the establishment of Halox Manufacturing Company and Father Foundation to the date of Rev. Roger Aull's death on August 4, 1948, Albert P. Mracek was never more than an employee of said Rev. Aull and had no proprietory interest at any time in any of the assets of Halox Manufacturing Company or Father Aull Foundation.

'V. That Albert P. Mracek was paid in full by Rev. ...