Simper v. Brown

• Decision Date: 26 February 1929
• Docket Number: 4719
• Citation: 278 P. 529,74 Utah 178
• Court: Utah Supreme Court
• Parties: SIMPER v. BROWN et al

278 P. 529

74 Utah 178

SIMPER v. BROWN et al

No. 4719

Supreme Court of Utah

February 26, 1929

Rehearing Denied June 20, 1929.

Appeal from District Court, Sixth District, Sevier County; L. B Wight, Judge.

Action by Thomas W. Cimper against W. H. Brown and P. C. Scorup subsequently dismissed as to defendant first named. Judgment for plaintiff, and defendant last named appeals.

REVERSED, and remanded for a new trial.

Gustin & Pence, of Salt Lake City, for appellant.

J. H. McKnight, of Salt Lake City, for respondent.

STRAUP, J. CHERRY, C. J., and ELIAS HANSEN, EPHRAIM HANSON, and FOLLAND, JJ., concur.

OPINION

STRAUP, J.

Defendant Scorup appeals from a money judgment against him in favor of plaintiff. The principal assignments of error are that the court failed to make findings on all the material issues and that the findings as made are insufficient to support the judgment.

The substance of the complaint is that the Salina Co-operative Mercantile Institution, a corporation organized in 1881 with a capital stock of 2,000 shares of the par value of $ 5 each, was disincorporated in 1919; that in the court's order of disincorporation it was recited that the property of the incorporation by agreement had been divided among the stockholders, but in fact no such division had been made; that the plaintiff was the owner of 290.5 shares of the capital stock, and that he had not received his share of the property of the corporation, and "that the same is now in the hands of the defendants notwithstanding their agreement to divide the assets among the stockholders"; that the defendants for several years had been in complete charge of the property "and after the time of the disincorporation the said defendants divided the property of the said corporation between themselves and that they now hold the same and refuse to account to this plaintiff or to pay him his share of the said property, and that the said defendants have and continue to appropriate to themselves all of the profits of the business," which was alleged to be in a good condition; that at the time of the disincorporation in 1919 the probable value of the plaintiff's shares of stock was $ 10 each, "or a total sum of $ 8,715.00"; that the plaintiff "made demand on the said defendants for the same and that they failed, refused and neglected to pay him his proper share or proportion of said property." The prayer was for judgment "that a partition and appraisement of the property be made and that plaintiff be paid his pro rata share of said property, with interest at the legal rate from January 1919."

The answer of the defendants Brown and Scorup was a denial of the allegations of the complaint except as otherwise admitted. In the answers it was alleged that in 1900 the shares of the capital stock of the corporation were increased to 10,000 shares of the par value of $ 5 each, of which plaintiff was the owner of 290.5; that the corporation was dissolved as shown by an order of the district court attached to the complaint; that defendant Brown was the owner of 2,800 shares of the capital stock of the corporation, and defendant Scorup and others, including plaintiff, the owners of 1,800 shares; that it was agreed among the stockholders that some of the assets, as represented by his shares of stock, should be and were turned over to Brown and the remainder of the assets, as represented by the holders of 1,800 shares, including the plaintiff, was to be and was conveyed and transferred to Scorup, who, as the agent and representative of such stockholders, was to continue to operate and manage the mercantile business theretofore carried on by the corporation, for all such stockholders except Brown, "and that in consideration and in pursuance thereof the corporation conveyed and assigned to Scorup, as the agent for the said stockholders including the plaintiff, all of the assets of the corporation," which had not been turned over to Brown, which was 1800/4600 part of all the assets of the corporation, and that Scorup, as the agent and representative of such stockholders, in consideration of such conveyance and transfer, and with the approval of such stockholders, took possession of the mercantile business and continued to operate and manage it until the 1st day of May, 1923, when the building and stock of goods were destroyed by fire in manner unknown to the defendants; that the defendant Scorup, as the agent and representative of such stockholders, assumed his pro rata share of the obligations of the company; that the reasonable value of the total assets of the corporation, consisting of real estate, improvements, goods, wares, and merchandise and accounts, was estimated to be $ 60,000, and that the reasonable value of such assets received by Scorup was of the estimated value of $ 13,000, but, because of a general financial depression, such value had depreciated more than 50 per cent before the commencement of this action, and that the indebtedness assumed by Scorup was $ 9,500; that the assets so received by him consisted of a store building and a stock of merchandise, but neither the building nor the merchandise was convertible into cash without great loss, and because thereof it was agreed by all of the stockholders, including the plaintiff, except Brown, that Scorup should continue to operate the business as a going concern; that he, in pursuance thereof, continued such operation, and from time to time purchased goods, wares, and merchandise of the total value of $ 100,000, and that to pay off an indebtedness of $ 9,500 and to carry on the business Scorup advanced of his own money the sum of $ 34,500; that the reasonable value of the services rendered by Scorup in managing and carrying on the business from 1919 to the time of the fire was $ 6,000; that the assets of the business when the answers were filed consisted of real property of the value of $ 1,000 and an insurance policy, the face value of which was $ 25,000, but that the amount to be recovered thereon had not then been determined; that the indebtedness standing against the business due the defendant Scorup was $ 40,000 and $ 5,000 due wholesale houses. It was further alleged that the cause of action was barred by provisions of Comp. Laws Utah 1917, § 6468, subds, 2 and 3, and by section 6488. These matters were pleaded, not only as answers, but also as a counterclaim by Scorup against the plaintiff. The defendants thus prayed that plaintiff take nothing by his complaint, and that he be required to contribute his proportion of moneys necessary to pay the debts of the business.

A reply was filed denying all the affirmative allegations of the answers. During the trial the action was dismissed as to Brown. The appeal thus involves rights only as between the plaintiff and the defendant Scorup.

The case was tried to the court. The only findings of fact made by the court were that in January, 1919, and prior thereto, all of the parties were stockholders in a corporation known as the Salina Co-operative Mercantile Institution; that in February, 1919, all of the stockholders of the corporation, including plaintiff, entered into an agreement to dissolve the corporation, and that it was regularly dissolved by order of the district court of Sevier county; that the property of the corporation, including portions belonging to the plaintiff and Scorup and others, was conveyed to the defendant Scorup "in trust for the benefit of all of the stockholders except Brown"; that out of a total of 1,829 shares the plaintiff was the owner of 290.5 shares; "that the property taken over by the defendant Scorup on the 10th day of February, 1919, was of the reasonable value of $ 16,735.69 over and above the debts and liabilities of the company at that time; that according to the number of shares of stock held by this plaintiff his proportion of such property was of the value of $ 2,658.13; that the said Scorup held said property in trust for this plaintiff Thomas W. Simper; that he has never paid the same to said Simper, nor any part thereof."

From the foregoing findings the court made conclusions of law that Scorup "became and was the trustee of property of the plaintiff of the value of $ 2,658.13,; and that plaintiff was entitled to a judgment against Scorup for the principal sum of $ 2,658.13 and for the further sum of $ 1,913.85 as interest on such principal sum from February 10, 1919, at the rate of 8 per cent per annum, a total of $ 4,571.98. Judgment was entered accordingly.

Some point is made as to the nature of the action stated in the complaint, whether it is on the theory of a conversion and hence a case at law or one for an accounting and thus an action in equity.

Looking at a portion of the complaint, it has earmarks of the former while looking at other portions it has earmarks of the latter. The answers and counterclaim apparently proceed on the theory that a trust relation existed between plaintiff and Scorup; that the interest of plaintiff and all other shareholders of the dissolved corporation, except Brown, in and to the property and assets of the corporation were conveyed and transferred to Scorup as their agent and representative to carry on and manage the mercantile business of the dissolved corporation for their use and benefit, from which the law implies a duty on the part of Scorup to account to them for his doings in the premises and for their interests in and to the property so conveyed and transferred to him and to the business carried on and conducted by him. Thus the relation and matters so stated in the answers and in the counterclaim were of equitable cognizance. However, on the point made by the defendant that no findings were made on all of the material and necessary issues raised by the...