Thomas v. Foulger

• Decision Date: 23 January 1928
• Docket Number: 4572
• Citation: Thomas v. Foulger, 71 Utah 274, 264 P. 975 (Utah 1928)
• Court: Utah Supreme Court
• Parties: THOMAS v. FOULGER et al

264 P. 975

71 Utah 274

THOMAS v. FOULGER et al

No. 4572

Supreme Court of Utah

January 23, 1928

Appeal from District Court, Second District, Weber County; George S Barker, Judge.

Action by Mae Thomas against Herbert B. Foulger and others.From a judgment for plaintiff, defendants appeal.

AFFIRMED.

J. E Evans and C. R. Hollingsworth, both of Ogden, for appellants.

Stuart P. Dobbs, of Ogden, for respondent.

HANSENJ. THURMAN, C. J., and CHERRY, STRAUP, and GIDEON, JJ., concur.

OPINION

HANSEN, J.

The defendants prosecute this appeal from a judgment rendered in a mortgage foreclosure proceeding.The facts forming the basis of the decree of foreclosure are not in dispute.On January 17, 1922, the plaintiff and the defendants Albert B. and Herbert B. Foulger entered into a written contract whereby the plaintiff agreed to sell and Albert B. and Herbert B. Foulger agreed to buy 249 1/2 shares of stock in Last & Thomas, a corporation, for the sum of $ 35,000.The defendantsRachel E. Foulger and Isabel Foulger were not parties to the agreement, but were made parties to the foreclosure proceeding because they were the wives of Albert B. and Herbert B. Foulger, respectively.For convenience in this opinion we shall disregard the wives and use the word "defendants" as including Albert B. and Herbert B. Foulger only.The contract so entered into between the plaintiff and defendants provides that seven promissory notes should be executed by defendants payable to plaintiff, one for $ 2,000, one for $ 8,000, and five for $ 5,000, each.The $ 2,000 note and the $ 8,000 note were both payable on demand.One of the $ 5,000 notes was to mature January 17, 1923, one January 17, 1924, one January 17, 1925, one January 17, 1926, and one January 17, 1927.The notes were to be secured by 111 shares of stock in the Burton Creamery Company and a mortgage upon certain real estate situated in Weber county, Utah, and particularly described in the contract.The contract also provides that one share of the stock of Last & Thomas, a corporation, should be, and the same was immediately, transferred to each of the defendants so that they could become stockholders and directors of the corporation; that plaintiff should retain the remainder of the stock until the defendants paid for the same when it should be delivered to the defendants; that the defendants should be given proxies to vote the stock held by the plaintiff so long as the defendants complied with the terms of the contract.The notes and mortgage were executed and delivered to the plaintiff as provided in the contract, and the certificate for 111 shares of capital stock in the Burton Creamery Company was also delivered to the plaintiff.The defendants became directors of Last & Thomas, a corporation, and continued to act as such directors until the corporation was dissolved.

The plaintiff offered and the trial court received in evidence the files in case No. 9174, civil, of the district court of Weber county, Utah.The documents thus received in evidence are not made a part of the bill of exceptions and are not brought up for review on this appeal.The court made findings of fact evidently based upon the proceedings had in said case No. 9174, civil; and in the absence of any showing to the contrary we must assume such findings are supported by the evidence.The trial court found:

"That on February 17, 1925, litigation was pending between the defendantHerbert B. Foulger, as defendant, and one of the other stockholders of said corporation, Marjory T. Condie, in which action, on or about said date, by stipulation, the plaintiff, said corporation, and all other stockholders of said corporation except the defendantsAlbert B. Foulger and Herbert B. Foulger, became partiesplaintiff, and the defendantAlbert B. Foulger was added to Herbert B. Foulger as partydefendant, all of such parties joining in such stipulation, which further provided for a determination of certain disputes between the plaintiffs and defendants with reference to the management and division of assets of the corporation by said court, and provided that upon the same being determined a dissolution of such corporation should be had for the division of any assets remaining, the individual plaintiffs in said action as a whole to receive one-half, and the defendants, Albert B. Foulger and Herbert B. Foulger to receive one-half.That on February 17, 1925, a meeting of the stockholders of said Last & Thomas was had with all stock represented, the defendants being present and voting 249 shares of stock, at which a resolution was adopted reciting that it appeared that all stockholders of said corporation had agreed among themselves as to a method of liquidating the assets of said corporation, and distributing the same after payment of the incorporate indebtedness, and providing for dissolution of said corporation and liquidation of its assets in accordance with said agreement.That on the same date a meeting of the board of directors of said corporation was had, plaintiff, both said defendants, and one other director being present and acting as directors, at which the minutes of said stockholders' meeting were read and approved unanimously, payments of debts was directed, such stipulation was approved, and joinder of such corporation in said action was authorized.That both said defendants were present at each of such meetings.

"That after the determination of the questions presented by such stipulation, the court entered its decree in said action directing distribution of the assets of such corporation, after its dissolution had been had pursuant to the provisions of such stipulation, the said decree providing that the same was a full settlement of all matters between the parties to such action arising out of such litigation or out of the conduct of the affairs of such corporation, or connected therewith, except the rights of the defendantMae Thomas to receive the balance due her for the capital stock of said corporation sold by her to the defendants, and to enforce all rights of security and retain all security she has thereupon, the same as if said stipulation had not been made, and that all rights of said Mae Thomas under and arising out of said sale against the defendants or either to receive such balance of such purchase price, and enforce her security therefore should be reserved from the effect of the decree herein entered.That thereafter dissolution of such corporation was had, and thereafter and about August 12, 1925, the matter of distribution of the assets of such corporation came before the court in such action between the stockholders, at which time the plaintiff herein filed her petition setting out in full that certain contract referred to in the first paragraph of these findings, and reciting that the defendants then were in default in their payments thereunder, and asking that the court determine what, if any, right title or interest said plaintiff might have in and to the assets of such corporation which by the terms of such decree were to pass to and be distributed to the said defendantsHerbert B. Foulger and Albert B. Foulger, the defendants making no answer to such petition, but being served therewith and represented at and taking part by counsel in the hearing thereon, at which time the court made its order that that part of the assets represented by the said 249 1/2 shares of stock so sold by plaintiff to the defendants should pass to the said defendants free of any lien upon the part of said plaintiff.

"That said defendants had defaulted in payment of interest when due several times prior to February 17, 1925, and were in default on and at all times after July 17, 1925, and at the time said last mentioned hearing and proceeding was had.That nevertheless the said defendants received in such proceeding all that part of the assets of said corporation to which the said stock, so sold them under said contract, would have entitled them if the said stock had been paid for in full, and that by reason of such proceedings, and with the consent of the plaintiff and said defendants, the said stock became of no value whatsoever, and all assets of such corporation which on the winding up thereof should pass to the owner of such stock have passed to the said defendantsAlbert B. Foulger and Herbert B. Foulger, and the plaintiff has no security for the payment of the unpaid balance of such purchase price except the said mortgage and her lien upon said capital stock.That in the said proceedings the said defendants acted as and were treated as the owners of such stock, and still have and claim to hold and own the avails of the same so distributed, and have become equitably possessed of such stock, and participated in such meetings as the owners of such stock, and by reason of such matters, and by reason of such conduct on the part of the defendants, they now are estopped from claiming that plaintiff's only remedy under her said contract with them by reason of their failure to pay the balance due thereon was and is a forfeiture of their interest in such stock."

Prior to the commencement of this action the defendants paid all of the notes executed and delivered by them to the plaintiff except two.The notes for $ 5,000 each and maturing on January 17, 1926, and January 17, 1927, were not paid, and this action was begun for the collection of these two notes.The interest on these notes was paid up to July 17, 1925, but not thereafter.The complaint in this action was filed in the district court of Weber county, Utah, on April 13, 1926.Upon issues joined by plaintiff's complaint, the defendants' answer, and plaintiff's reply, the court tried this case and rendered judgment for the amount unpaid on the...