Perry v. United States Sch. Furniture Co.

• Decision Date: 06 February 1908
• Citation: 83 N.E. 444,232 Ill. 101
• Parties: PERRY et al. v. UNITED STATES SCHOOL FURNITURE CO. et al.
• Court: Illinois Supreme Court

232 Ill. 101

83 N.E. 444

PERRY et al.

v.UNITED STATES SCHOOL FURNITURE CO. et al.

Supreme Court of Illinois.

Dec. 17, 1907.

Rehearing Denied Feb. 6, 1908.

Appeal from Appellate Court, First District, on Appeal from Superior Court, Cook County; Joseph E. Gary, Judge.

Suit by William A. Perry and another, trustees, against the United States School Furniture Company and others. From a judgment of the Appellate Court affirming a decree dismissing the bill for want of equity, complainants appeal. Affirmed.Aldrich & McAuley, for appellants.

John J. Symes (Albert H. Meads, of counsel), for appellees.

The original bill in this case was filed by John Loughlin against the United States School Furniture Company (hereafter called the United States Company), the American School Furniture Company (hereafter called the American Company), Frederick A. Holbrook, Thomas M. Boyd, Oliver S. Garretson, George Burkart, and G. W. Perkins. A demurrer to the bill was sustained, and a decree entered dismissing the bill, from which decree an appeal was prosecuted by complainant to the Appellate Court. That court reversed the decree of the superior court, and remanded the case. Loughlin v. United States School Furniture Co., 118 Ill. App. 36. Subsequently Loughlin, who was a resident of Ohio, made an assignment under the laws of that state for the benefit of creditors, and William A. Graham and William A. Perry were duly appointed trustees of the insolvent estate, and by leave of the court, August 25, 1905, filed a supplemental bill. Said supplemental bill addeged that Loughlin had, on the 10th day of October, 1901, in the superior court of Cook county, Ill., recovered a judgment against the defendant the United States School Furniture Company for the sum of $32,417.42 damages and $11 costs, and that the judgment remained in full force and effect and unsatisfied; that Loughlin had, in October, 1901, caused an execution to be issued on said judgment to enforce its collection, but that said execution was returned by the sheriff with the indorsement that he could find no property of the judgment debtor in his county. The bill further alleged that said United States Company was a corporation organized under the laws of the state of Illinois in January, 1892, with an authorized capital stock of $250,000, for the purpose of manufacturing, buying, and selling school furniture and school supplies throughout the United States, and had its principal office in the city of Chicago; that it established a business and good will, which, together with its patents for inventions and other property, aggregated in value more than $500,000. The bill alleges that Loughlin loaned to the United States Company, at the request of its officers and directors, more than $10,000 in money, and sold and delivered to it, on credit, school furniture and supplies to an amount, which, together with the amount loaned, aggregated $24,500. The bill further alleges that in February, 1892, the capital stock of the United States Company was increased to $2,000,000; that Holbrook, Boyd, Garretson, Burkart, and Perkins were large stockholders in the corporation and members of its board of directors; that in 1899 they, together with other parties to complainants unknown, constituting a majority of the stockholders, directors, and managers of the corporation, some of whom were creditors of said United States Company having no preference over Loughlin, entered into a conspiracy to cheat and defraud said Loughlin, and for that purpose organized a corporation under the laws of New Jersey on the 13th of March, 1899, called the ‘American School Furniture Company’; that the organizers, promoters, stockholders, officers, and managers were made up and composed largely of defendants Holbrook, Boyd, Garretson, Burkart, and Perkins; that upon the organization of the American Company its officers, directors, and managers, including the defendants before mentioned, without the knowledge or consent of said Loughlin, for no consideration whatever, with intent to cheat, defraud, hinder, and delay said Loughlin and other creditors similarly situated, procured all the business, property, assets, trade, and good will of the United States Company, of the value of more than $500,000, to be assigned, transferred, and taken over by the American Company, thereby causing the business of the United States Company to be closed and abandoned, and said company entirely deprived of its assets and property. The bill further charges that the promoters, stockholders, and officers of the American Company, who were creditors of the United States Company, caused their own claims to be protected and paid. The bill prays that the judgment in favor of Loughlin against the United States Company may be satisfied out of the property and assets of the American Company, and that if it is found the individual defendants had caused themselves to be paid, as creditors of the United States Company, out of its proceeds, or that they profited to the prejudice of Loughlin by the transfer to the American Company, a personal decree be entered against them.

Upon the organization of the United States Company it entered into agreements with a number of other dealers in and manufacturers of school furniture and supplies located in different parts of the United States, by which said other dealers and manufacturers agreed to sell their business and good will to the United States Company, and that, for a period of time named, such other dealer or manufacturer would sell his product only to the United States Company at a price and upon terms named in the contract. Loughlin was a manufacturer of school furniture in Sidney, Ohio, and on February 13, 1892, entered into a written agreement with the United States Company of the character above named. The amount agreed to be paid him by said company was $140,000, to be paid in the capital stock of the United States Company, and Loughlin agreed he would sell all school furniture manufactured by him for a period of five years from January 1, 1892, to the United States Company, and that he would accept, in part payment for school furniture manufactured by him and sold to said United States Company, bonds of said company to the amount of $17,500, and that he would not, during the period of time mentioned, sell school furniture to any other person, firm, or corporation. In 1893 the Attorney General of the state of Illinois instituted a quo warranto proceeding against the United States School Furniture Company to revoke and annul its charter on the ground that it was a trust. A demurrer to the information was overruled, and on the 8th of July, 1895, said United States Company filed a disclaimer, in which it alleged that all agreements for the exclusive manufacture and sale to it of school furniture and supplies, except the agreements of six corporations and firms mentioned in the information, had expired or been canceled before the decision of the court overruling the demurrer to said information, and that since the decision overruling the demurrer the agreement with the remaining six parties had also been canceled, and said United States Company disavowed and disclaimed the power and privilege of continuing or making any such agreements as were in the information alleged. Thereupon a judgment was entered imposing a fine against said United States Company of $100, and ordering it to no further exercise the power and privilege of continuing in force said contracts or agreements. Loughlin's contract with the United States Company was canceled April 26, 1895. At that time he held bonds of the United States Company to the amount of $24,500, which matured February 1, 1897. In January, 1897, the board of directors of the United States Company adopted a resolution that the bonds of the company maturing February 1, 1897, be refunded and made payable in one, two, three, and four years, with interest at 7 per cent. Loughlin surrendered the bonds held by him maturing February 1, 1897, and accepted in lieu thereof bonds of the new issue, aggregating $24,500. In January, 1900, these bonds not being paid, Loughlin brought suit against the United States Company to recover the principal and interest thereon. The United States Company filed a plea denying liability on the ground that the bonds were issued in furtherance of an agreement in restraint of trade and designed to establish a monopoly to control the output and prices of school furniture and supplies, and that this had been so declared by a judgment entered by the circuit court of Cook county December 23, 1896. Replications to the pleas were filed, trial had by the court without a jury, and judgment rendered in favor of Loughlin for $32,417.42 and costs.

The defendants to the supplemental bill of Perry and Graham, trustees of the estate of Loughlin, filed pleas to said bill, alleging that the claim of Loughlin upon which he procured the judgment against the ...