Tracy Loan & Trust Co. v. Openshaw Inv. Co.

• Decision Date: 30 December 1942
• Docket Number: 6428
• Citation: 102 Utah 509,132 P.2d 388
• Parties: TRACY LOAN & TRUST CO. v. OPENSHAW INV. CO. et al
• Court: Utah Supreme Court

132 P.2d 388

102 Utah 509

TRACY LOAN & TRUST CO. v. OPENSHAW INV. CO. et al

No. 6428

Supreme Court of Utah

December 30, 1942

Appeal from District Court, Third District, Salt Lake County; B. P Leverich, Judge.

Action by the Tracy Loan & Trust Company, as administrator of the estate of Jonathan E. Openshaw, deceased, against the Openshaw Investment Company and others, under the declaratory judgment statute to determine ownership and right with respect to certain shares of stock in defendant corporation. From a judgment in favor of defendant C. R. Openshaw plaintiff appeals.

Affirmed.

Jesse R. S. Budge, of Salt Lake City, for appellant.

E. A Rogers, H. G. Metos, and Romney, Romney & Boyer, all of Salt Lake City, for respondents.

McDONOUGH Justice. MOFFAT, C. J., and WOLFE, J., and WADE, District Judge, LARSON, J., concurring. PRATT, J., on leave of absence.

OPINION

McDONOUGH, Justice.

This action was brought under the declaratory judgment statutes, Chap. 64, Title 104, R. S. U. 1933, by the administrator of the estate of Jonathan E. Openshaw, against all of the heirs at law of decedent, his widow, and Openshaw Investment Company, a Utah corporation, to determine ownership and rights with respect to certificate No. 1 for 638 shares of stock in said corporation.

Jonathan E. Openshaw died February 21, 1940, and he left both real and personal property. The certificate in question was issued to "Jonathan E. Openshaw, Trustee" on March 22, 1927, as part of the original stock issue. The certificate had not been transferred on the books of the corporation to any person up to date of filing of this action, but at the time of commencement of the suit, it was in the possession of defendant Clarence R. Openshaw, who is referred to variously as C. R. Openshaw and also as Dr. C. R. Openshaw. This certificate carried the endorsement of "Jonathan E. Openshaw, Trustee." Both before commencement of the action and by answer to the complaint C. R. Openshaw claimed he was the beneficial owner of the 638 shares of stock at all times, and that said stock was issued by said corporation at his request to his father as "trustee."

The trial court found in favor of defendant C. R. Openshaw, and entered judgment in his favor reciting that at the time of death of decedent said defendant was the owner and in possession of said stock. By this appeal the plaintiff contends: (1) The evidence is insufficient to support the judgment, (2) the defendant was incompetent to testify in support of his claim of beneficial ownership, (3) the testimony as to alleged delivery of the endorsed certificate to said defendant prior to death of decedent is incompetent, and (4) that in view of the denial under oath in the divorce action, as to ownership of anything in said corporation except 50 shares of stock, and by reason of the fact he obtained relief by way of reduction of alimony payments through his testimony of lack of assets, he is judicially estopped in this action to assert ownership of certificate number 1 for 638 shares of stock of said corporation.

We shall first consider the contention of appellant that defendant C. R. Openshaw is judicially estopped from asserting ownership of the 638 shares of stock in view of his former conduct and testimony. When the Openshaw Investment Company was organized on February 9, 1926, all of its capital stock of 1,000 shares was fully subscribed and paid for by the conveyance of certain property to the corporation. In the articles of incorporation Jonathan E. Openshaw subscribed for 895 shares, and he was designated president and director. Frank M. Openshaw subscribed for 36 shares and he was designated secretary and director. Clarence R. Openshaw subscribed for only 50 shares, and he was named vice-president and director. Other relatives were subscribers for smaller amounts. Those three men executed the jurat required by law to be signed by three of the incorporators and they declared under oath that they had paid in full for the stock. No stock was actually issued until March 22, 1927, at which time certificate number 1 was issued to "Jonathan E. Openshaw, Trustee" for 638 shares, certificate number 2 was issued to Jonathan E. Openshaw for 198 shares, and certificate number 3 was issued to Clarence R. Openshaw for 50 shares.

After defendant Clarence R. Openshaw testified in this suit, counsel for the administrator read into the record evidence by way of rebuttal and estoppel, the testimony of said defendant in a divorce action in the same court filed August 2, 1921; and counsel introduced in evidence the file and record of proceedings in said divorce action in which Margaret C. Openshaw was plaintiff and said Clarence R. Openshaw was defendant. It appears from such record in the divorce action, which came to trial after organization of said corporation, said defendant denied ownership of any property except a home on Ninth East Street in Salt Lake City, and 50 shares of stock in Openshaw Investment Company, and a few other securities in addition to office equipment. He also testified that he was indebted to said company in the sum of $ 6,300 on two promissory notes, and that he received no income from said company except by way of dividends credited on said notes. On the basis of such testimony of lack of sufficient assets and his positive declarations that he had not made any money for five years and that he was constantly running deeper into debt, the trial court entered an order for alimony to be paid in the sum of $ 175 instead of a larger sum which his wife claimed was reasonable in view of her claim that he had substantial assets and ability to pay.

The defendant appealed from the judgment in the divorce action to this court, and one of the grounds for appeal was his claim that the award of alimony was excessive in view of his impoverished condition. This court relied on his testimony that he lacked financial ability to pay the $ 175 and ordered the alimony reduced to $ 150 per month. Openshaw v. Openshaw , 80 Utah 9, 12 P.2d 364. On December 1, 1932, following the modification of said judgment by this court in the particular recited, the defendant testified before a referee that he owned 50 shares of stock in the Openshaw Investment Company; that his father had charge of it and that it was his father's business, and that defendant then did not have any stock in said corporation. On his further plea of poverty he obtained a further reduction in alimony to $ 100 per month on May 19, 1933.

The testimony of Clarence R. Openshaw in the divorce proceedings was almost diametrically opposite to his verified pleadings and testimony in the present case. In the present suit he testified that he paid over to the Openshaw Investment Company thousands of dollars and that he owned the 638 shares of stock in addition to the 50 shares, and that he furnished the major part of the property and securities which went into the company. His testimony was positive in both cases. In fact, the testimony indicates that he made his statements as to the purported facts carefully and deliberately. Counsel for appellant contends that inasmuch as he knew the facts all the time, he either perjured himself in the divorce action or in this case; and that the law does not permit a litigant to play fast and loose with the courts so as to give testimony to suit his own purposes in one action and then in a later action be permitted to contradict his testimony because it is advantageous for him to do so. Appellant contends that the rule of "judicial estoppel" applies to bar Clarence R. Openshaw from asserting ownership of the 638 shares of stock issued to his father as trustee, for the reason his prior testimony amounts to a sworn declaration that he had no stock nor any interest in any stock except the 50 shares which he swore in 1932 he then no longer owned.

The general rule of "judicial estoppel" or "estoppel by oath" is stated in 19 Amer. Jur. 712. Most of the decided cases hold that the rule may be invoked only where the prior and subsequent litigation involves the same parties, and where one party has relied on the former testimony and changed his position by reason of it. In other words, a person may not, to the prejudice of another person deny any position taken in a prior judicial proceeding between the same persons or their privies involving the same subject-matter, if such prior position was successfully maintained. Pratt v. Paris Gas Light & Coke Company, 168 U.S. 255, 18 S.Ct. 62, 42 L.Ed. 458; Sinclair Refining Co. v. Jenkins Petroleum Process Co., 1 Cir., 99 F.2d 9, certiorari denied 305 U.S. 659, 667, 59 S.Ct. 362, 83 L.Ed. 427, 1062, 1530.

A majority of the cases hold that the party invoking the rule of estoppel must show that he has done something or omitted to do something in reliance upon the conduct of the other party by reason of which he will be prejudiced now if the facts are shown to be different from those on which he relied; but there is no estoppel where there was no reliance and the parties had equal knowledge of the facts. Galt v. Phoenix Indemnity Co., 74 App. D.C. 156, 120 F.2d 723. See Macan v. Scandinavia Belting Co., 264 Pa. 384, 107 A. 750, 5 A. L. R. 1505; Hatten Realty Co. v. F. A. Baylies, 42 Wyo. 69, 290 P. 561, 72 A. L. R. 587; Helfer v. Mutual Benefit Health & Accident Assoc., 170 Tenn. 630, 96 S.W.2d 1103, 113 A. L. R. 921, 925, 929, 930.

In this case the administrator represents the interests of the decedent, and there is nothing in this case which shows that Jonathan E. Openshaw did or refrained from doing anything which prejudiced him in any manner, or that the administrator did or refrained from doing anything to its prejudice or to the prejudice of heirs or creditors. It is true,...