Swartley v. Oak Leaf Creamery Co.

• Citation: 113 N.W. 496,135 Iowa 573
• Parties: SWARTLEY v. OAK LEAF CREAMERY CO. ET AL.
• Decision Date: 21 October 1907
• Court: United States State Supreme Court of Iowa

135 Iowa 573

113 N.W. 496

SWARTLEY

v.OAK LEAF CREAMERY CO. ET AL.

Supreme Court of Iowa.

Oct. 21, 1907.

Appeal from District Court, Allamakee County; A. N. Hobson, Judge.

The petition contains 24 paragraphs, all stated in one count. It alleged the existence of the Oak Leaf Creamery Company and Waukon Excelsior Creamery Company as corporations engaged in manufacturing, buying, shipping, and dealing in dairy products during the year 1896; that W. W., G. L., and J. E. Hubbell were the owners of the majority of the stock in each company, and that W. W. Hubbell was president and G. L. Hubbell secretary and manager of each; that the business of both corporations was conducted by G. L. Hubbell as such manager, and in such a manner that parties dealing with said corporations were unable to determine with which the said business was done, “a part of some transactions being frequently transacted and done in the name of each of said corporations for a portion of the time”; that in 1896 the Oak Leaf Company became indebted to the plaintiff in a large amount, and on the 4th day of August, in that year, the Waukon Excelsior Creamery Company, through its said officers, executed a note of $250 to the order of the Oak Leaf Creamery Company, payable February 4, 1897, and it indorsed the same by its manager to the plaintiff to be applied in partial payment of said indebtedness; that subsequent thereto the officers of the Oak Leaf Creamery Company “did withdraw from and pay out of the assets of said corporations funds and moneys belonging to said corporation, which said payments were in the nature and character of dividends and distribution amongst the officers and stockholders of said corporation, and such payments and distribution made subsequent to the execution of said note and the indorsement thereof to Nace & Swartley did render said corporation insolvent and diminished its capital stock,” which was well known to said officers and consented thereto by them; that said officers willfully abandoned the management of said corporation and ceased to perform their duties as such, and concealed and destroyed all the books and records thereof, and refused to indicate their whereabouts, so that plaintiff and other creditors are denied access to said books and records; that the indebtedness of said corporation was greatly in excess of the amount of its indebtedness, and this was well known to its officers; that the concealment and destruction of the records of the company was for the purpose of escaping personal liability to the creditors of the corporation; that the plaintiff and their assignors were in no better position to enforce collection of the note against the Waukon Excelsior Creamery Company than at the present time, and its rights have not been prejudiced by delay in bringing suit. The allegations with respect to the abandonment of the corporations, the concealment and destruction of the books and records, the indebtedness of the company, and the withdrawal of its assets was repeated with respect to the Waukon Excelsior Creamery Company, and it is further alleged that since January 1, 1897, no business of any kind has been transacted by either company, no officers been elected, nor books kept, and no accounting made of the assets of either corporation; that defendant Daniel Williams was a stockholder of the Waukon Excelsior Creamery Company at the time of the note, and knew the official condition of the institution; that at that time the company was owner and holder of a certain tract of land which has not since been alienated, but since then said Williams has entered upon and taken possession of said land and claims to own the same; that his only right thereto arises from the fact that said Williams has acquired all the stock of said corporation, but plaintiff alleges that his claim thereto is subject to the indebtedness of said corporation; that Anna Williams is the wife of said Williams, and claims some right in said property; that, by reason of the foregoing allegations, plaintiff is entitled to personal judgment against the corporations, and W. W., G. L., and J. E. Hubbell, and to have said judgment declared a lien on the said real estate kept by Williams, and for this relief plaintiff prayed. W. W., G. L., and J. E. Hubbell collectively and severally assailed the petition by motion that all the paragraphs relating to the withdrawal of assets from the corporations, the concealment or destruction of the books and records, and the abandonment of the corporations, be stricken; also, that the cause of action against these defendants be separated from other cause of action and transferred to the law side of the docket; and, further, that the court separate the action against the Oak Leaf Creamery Company on the indorsement of the note from the action against these defendants, and require plaintiff to set up his various causes of action as against them in separate and distinct counts, it being claimed that eight distinct causes of action are set up in the petition besides, and separate causes of action against each of the moving defendants. The defendants Williams moved that all the paragraphs mentioned in the foregoing motion be stricken from the petition, and also that the plaintiff be required to separate his petition in two causes of action, one in law and one in equity, and that they stand upon the docket of the court as separate causes of action. These motions were submitted to the court, and it ordered that plaintiff “separate each of his distinct and separate causes of action sued on, and present each of said causes of action in cases in his favor against the respective defendants as defendants.” From this ruling the plaintiff appeals. Affirmed as to J. E. Hubbell and Anna Williams, and as to the other defendants reversed.Wm. S. Hart, for appellant.

H. H. Stillwell and A. G. Stewart, for appe...