Van Sickle v. Locke

• Decision Date: 15 April 1949
• Docket Number: No. 14007.,14007.
• Citation: 220 S.W.2d 919
• Parties: VAN SICKLE et al. v. LOCKE.
• Court: Texas Court of Appeals

Page 919

220 S.W.2d 919

VAN SICKLE et al. v. LOCKE.

No. 14007.

Court of Civil Appeals of Texas. Dallas.

April 15, 1949.

Rehearing Denied May 13, 1949.

Appeal from District Court, Dallas County; W. L. Thornton, Judge.

Suit on contracts for share in profits of construction contracts by L. J. Van Sickle against N. S. Locke, individually and as trustee. C. W. Hicks and G. C. Webb intervened as plaintiffs. From the judgment L. J. Van Sickle, and the intervenors appeal.

Affirmed.

Malone, Lipscomb & Seay and Hassell & Hassell, all of Dallas, for appellants.

James S. Grisham, of Dallas, and Thomas Y. Banks, of Tyler, for appellee.

CRAMER, Justice.

Appellants state the nature of the suit as follows: "This was a suit instituted on August 18, 1944 by L. J. Van Sickle against AAA Air Conditioning & Manufacturing Corporation of Texas, six other corporations, N. S. Locke, individually, N. S. Locke, Trustee and three copartnerships in which N. S. Locke was alleged to be a partner or which he was alleged to control. The suit was based upon a series of contracts promising plaintiff a share in the profits of certain construction contracts and subcontracts made by the corporations. Plaintiff charged that N. S. Locke dominated and controlled all of the corporations and partnerships and that they were in fact his alter ego; that N. S. Locke had confused the records, accounts, funds and properties of the company and had appropriated the same to his own use and benefit and prayed for judgment against the corporations, partnerships and Locke, individually. Plaintiff sought and obtained interlocutory relief, including the appointment of a receiver. C. W. Hicks and G. C. Webb intervened as plaintiffs upon like allegations, seeking like relief and after the appointment of a receiver there were interventions by other creditors, the appointment of a master in chancery to hear claims and finally the Van Sickle, Hicks and Webb claims were heard by the court without a jury, following which the court (Tr. 192) entered judgment against the receiver and the corporations in favor of Van Sickle in the amount of $63,125.00, Hicks in the sum of $35,000.00 and Webb in the sum of $10,752.00, but denied them judgment against Locke and the other defendants. It is from the order denying judgment against Locke that this appeal is prosecuted."

Appellants assign four points of error as follows: "1. Since it was shown without substantial contradiction in the record that N. S. Locke was the only party at interest in any of the active corporations and partnerships; that he dominated, controlled and managed them in all matters affecting their operation, including the appointment and dismissal of directors and officers, in complete disregard of the laws of the state or proper corporate practice, it was clear that the said corporations were but the shadow and alter ego of N. S. Locke and he himself was personally and primarily liable for the obligations created by and arising in the course of operation of the business including the obligations to appellants. 2. Where, in addition to being the only party at interest in any of the corporation and in addition to his complete domination of the corporate affairs of the several corporations, N. S. Locke caused to be transferred upon his ipse dixit and without consideration the moneys and properties of the several corporations from one to another and to himself or to enterprises and partnerships which he owned and controlled, it was the duty of the court as a matter of law to render judgment against N. S. Locke personally for the obligations arising in the course of the operations of such businesses. 3. Where it appeared that corporations wholly dominated and controlled by N. S. Locke who exercised without hinderance absolute power over their every act, including the transfer to himself without consideration of money and property received by said corporations, had been stripped of their assets, and that the same had passed into the hands or under the control of N. S. Locke, he became liable to the creditors of said corporations not only because such creditors were in fact and in law his creditors, but also as trustee and the court should have rendered personal judgment against him for the claims of appellants. 4. The existence of the corporate entity will not be recognized as a bar to the claim of a creditor directly against N. S. Locke where the corporations existed only as the shadow of N. S. Locke and are sought to be used as a shield to protect him, since to deny appellants recovery against N. S. Locke personally would be to permit the use of the corporate entity to further acts of fraud and wrongdoing and not merely acts of nonfeasance or mismanagement."

Appellee answers with four counterpoints as follows: "(1). Appellants could not recover against N. S. Locke, individually, in disregard of the corporate entities, because, at the time of the trial, they had elected to proceed in recognition of the corporate entities, and were estopped to assert a different mode of action. (2) Appellants could not recover against N. S. Locke, individually, since they had procured the appointment of a receiver for corporate entities, and the frauds, conversions and other tortious acts charged against Locke, with respect to corporate assets, were not actionable by appellants as individual creditors, but were only actionable by the receiver for the benefit of the creditors as a whole. (3). Appellants could not recover against N. S. Locke, individually, because the receiver appointed at their instance had already proceeded against Locke, and recover judgments against him for the benefit of the creditors, including appellants. (4) Appellants could not recover against N. S. Locke, individually, because such recovery would amount to a double recovery against Locke."

The record fully sustains the factual basis set out in appellants' points; and if the facts made the basis of appellee's counter points are not a complete defense to appellants' claim to a judgment against N. S. Locke, personally, the judgment below is in error. Appellee sets out the facts in abstract form as a basis for his points which we find to be correct. They read as follows: "The original plaintiff, Van Sickle, and the intervenor, Hicks, (bot...