Stratton & Terstegge Co. v. Criswell
| Citation | 290 Ky. 64,160 S.W.2d 137 |
| Parties | STRATTON & TERSTEGGE CO. v. CRISWELL et al. |
| Decision Date | 23 January 1942 |
| Court | Kentucky Court of Appeals |
As Modified on Denial of Rehearing March 20, 1942.
Appeal from Circuit Court, Clark County; W. J. Baxter, Judge.
Action by the Stratton & Terstegge Company against J. Herman Criswell and another, doing business as the Clark County Supply Store, to recover for the balance due on a stock of merchandise sold to defendants, wherein the defendants filed a counterclaim. From a judgment dismissing the petition against both defendants, the plaintiff appeals.
Judgment reversed.
Rodney Haggard and D. L. Pendleton, both of Winchester, for appellant.
M. C Redwine, of Winchester, and Catlett L. Buckner, of Paris, for appellees.
SIMS Commissioner.
The appellant, Stratton & Terstegge Company, plaintiff below, is engaged in the wholesale hardware business in Louisville. It brought this action against J. Herman Criswell and Ray Rushmeyer partners doing business as the Clark County Supply Store, for the balance of $2,928.28, with interest, due on a stock of merchandise of $4,390.63 sold the defendants in February and March, 1938, with perhaps $175 thereof sold in April of that year. The trial resulted in a verdict in favor of Criswell (the verdict failing to mention Rushmeyer), and from the judgment dismissing the petition against both defendants this appeal is prosecuted.
Since we have reached the conclusion that plaintiff's motion for a peremptory instruction should have been sustained, we will discuss but two of the many grounds upon which plaintiff seeks a reversal of the judgment: 1. The general demurrer should have been sustained to the answer as amended. 2. A peremptory instruction should have been given in favor of plaintiff after defendants presented their case. The defendants having admitted the debt and having pleaded satisfaction thereof, the court properly ruled they had the burden of proof.
Plaintiff brought its suit on October 29, 1938, and on December 5th following, defendants filed their answer and counterclaim which did not raise an issue as to the amount of the account but the sole defense pleaded was that at the time the goods were purchased the plaintiff agreed "it would allow the return within a reasonable time of all unsold and unsaleable stuff after a few months effort at selling same". This pleading alleged that in August, 1938, the plaintiff allowed the return of all unsold hardware from the Paris, Ky. store operated by defendants, and since August of that year defendants had insisted that plaintiff permit the return of goods from this Winchester store represented by the account sued on, which plaintiff refused. Defendants filed with their answer and counterclaim an invoice of the goods they sought to return in the sum of $2,677.25, which pleading tendered the goods to the plaintiff and averred they held same subject to its orders; in addition thereto they offered to confess judgment for the balance of $186.55.
On April 3, 1939, Criswell filed a separate amended answer in which he withdrew all allegations of the first and joint answer which were inconsistent therewith. In this amendment Criswell pleaded the partnership between him and Rushmeyer was dissolved on August 6, 1938, by a written contract wherein he took the Paris store with the stock and assumed its obligations and Rushmeyer took the Winchester store with its stock and obligations; that the plaintiff received a copy of this dissolution agreement and thereafter allowed Criswell to return to it at 10% discount all unsold goods it had shipped to the Paris store (except a small number of broken packages), which left him owing $936.51, all of which he has paid; that at the time he returned "said goods to the plaintiff and settlement (was made) with the plaintiff he was given to believe by the plaintiff that said transaction was pursuant to the terms of said contract of dissolution."
A general demurrer was sustained to this amended pleading, as well as to the second amended answer Criswell filed. His third amendment was in five paragraphs. The first paragraph of which denied owing plaintiff any sum; the second alleged that at the time of the purchase of the goods plaintiff agreed that defendants might return within a reasonable time all unsold and unsaleable goods after a few months' effort at selling same; the third paragraph alleged plaintiff accepted the return of the goods from the Paris store at a 10% discount and Criswell's payment of the balance due on the account of goods sold the partnership for that store "in full satisfaction of this defendant's entire obligation to the plaintiff arising out of the partnership business." The court sustained a demurrer to the fourth and fifth paragraphs which alleged the plaintiff's acts in approving the contract of dissolution lulled Criswell into a false sense of security, and that a tender of the return of the goods in the original answer is a defense to this action. The affirmative allegations of the third amendment were traversed by a reply.
The plaintiff insists that the demurrer should have been sustained to the second and third paragraphs of the third amendment. To this we cannot agree in view of the direct averment just alluded to as contained in those paragraphs of that pleading. If sustained by the evidence, such averments constitute a good defense to plaintiff's action.
One cannot read this record without feeling that very soon after the goods were purchased the defendants sought to devise ways and means whereby they might be relieved of personal liability therefor. On April 28, 1938, they formed a corporation, "Suppliers Incorporated", with 100 shares of capital stock ($100 par) to which each partner subscribed for 49 shares and their wives for one share each. The minutes of the first meeting show this stock was fully paid by the defendants assigning to the corporation all assets of the two stores owned by the partnership, including "good will", which latter must have constituted a considerable part of the assets of the partnership since it was largely indebted for its stocks of goods. The day after the charter was issued the corporation, an attorney wrote plaintiff on behalf of Criswell and Rushmeyer asking it to release them and to look to the corporation for its debt. In reply Mr. V. H. Webber, credit manager of plaintiff, requested a statement of the financial structure of the corporation. Webber's letter was never answered.
After plaintiff did not release defendants and agree to look to the corporation, the latter was never completed, so Criswell testified, and never transacted any business. However, the record shows the corporation did transact some business with the Belknap Hardware Company and the only uncompleted part of its organization is that no process agent was named as is required by § 571, Ky.Stats. Having failed to convince plaintiff it should release them and look to the corporation for the satisfaction of its...
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