Western Securities Co. v. Spiro

• Decision Date: 12 December 1923
• Docket Number: 4023
• Court: Utah Supreme Court
• Parties: WESTERN SECURITIES CO. v. SPIRO

221 P. 856

62 Utah 623

WESTERN SECURITIES CO. v. SPIRO

No. 4023

Supreme Court of Utah

December 12, 1923

Appeal from District Court, Third District, Salt Lake County; J Louis Brown, Judge.

Action by the Western Securities Company against Solon Spiro. From a judgment for defendant, plaintiff appeals.

AFFIRMED.

Walton & Walton and Dey, Hoppaugh & Mark, all of Salt Lake City, for appellant.

Marshall Macmillan & Crow, of Salt Lake City, for respondent.

FRICK J. WEBER, C. J., and GIDEON, THURMAN, and CHERRY, JJ., concur.

OPINION

FRICK, J.

The Western Securities Company, a corporation, hereinafter called plaintiff, sued the defendant in the district court of Salt Lake county to recover upon two causes of action. The first cause of action was based upon an open account, and the second upon a promissory note.

The defendant, in addition to other defenses, set up a counterclaim and cross-demands, which he alleged should be set off against any amount that should be found due, if any, on either or both of plaintiff's causes of action. The cross-demands were, however, preferred against one H. P. Clark, who, the defendant averred, was the real party in interest, and that the claims of the plaintiff arose out of transactions had between the defendant and said Clark, and not between the plaintiff and defendant, although many of the transactions were executed in the corporate name of the plaintiff. The plaintiff filed a reply, in which it denied defendant's version of the transactions, and in an amendment to the reply also averred that a certain note which was set up as a cross-demand by defendant was without consideration.

The case was tried to the court as an action at law. In view that the findings of the court fairly reflect the pleadings and the evidence, except as hereinafter pointed out, and in view of the nature of the questions presented for decision, we shall set forth the findings somewhat fully. In view, however, that the findings of fact and the evidence are not fully reflected in the abstract, we have had recourse to the original bill of exceptions, and therefore, in so far as reference is made herein to the findings or the evidence, such reference is to the original findings as they are found in the bill of exceptions.

So far as possible we condense the court's findings. It found that one H. P. Clark of Salt Lake City "procured to be organized the plaintiff organization" with a nominal capital stock of $ 100,000, divided into 1,000 shares; that said Clark subscribed for 990 shares, and two others who are named subscribed for 5 shares each; that neither of the other two subscribers "ever had any interest in said corporation or in the organization thereof, and never paid anything whatever upon their subscriptions, * * * but simply allowed the use of their names, and signed the articles of incorporation to oblige said Clark, and enable him to incorporate the plaintiff corporation; that said corporation was procured to be organized by said Clark for the purpose of the transaction of his personal business under the name of Western Securities Company whenever his interest, convenience, or inclination prompted him to do so, * * * and said Clark has, ever since the organization of said corporation, owned and controlled the same, and has frequently assumed and used the name Western Securities Company in the transaction of his own personal affairs"; that prior to the agreements and transactions set forth in the complaint and in the defendant's answer, "said Clark informed the defendant that said Clark for business reasons had assumed, and was then using, the Western Securities Company as the name by which said Clark would frequently be known in his personal dealings and transactions with defendant, and that at the time of the dealings and transactions set forth in the answer, where the name Western Securities Company was used, the plaintiff and said Clark represented to defendant that the name Western Securities Company was being used as an assumed name by said Clark in those particular dealings and transactions and each of them, and it was understood and agreed by and between plaintiff and defendant and said Clark that, although such dealings and transactions were in form dealings and transactions between said Western Securities Company and the defendant, they were, nevertheless, in fact dealings and transactions between said Clark and the defendant"; that in said dealings and transactions said Clark was in fact the real party in interest, and the defendant treated all of the dealings and agreements made in the name of the Western Securities Company and involved in this action as the personal dealings and agreements of said Clark; that during the years in which the transactions and dealings involved in this proceeding were had, large amounts of money were required for the purchase of mining stocks by both said Clark and the defendant; that said Clark during said time was engaged in the banking business, and was president of a bank in Salt Lake City, "and did not desire it to be generally known that he was speculating largely in mining stocks, and in the dealings between said Clark and defendant in the matter of their joint speculations in the purchase and sale of mining stocks, and in the matter of borrowing money by one from the other, and in paying out or advancing money by one for the other, and in their written agreements concerning such transactions, the said Clark quite generally assumed and used the name of the Western Securities Company," and in that way and name entered into contracts with the defendant and others; "that this action was brought and prosecuted by said Clark in his own interest and behalf," and said Clark and not the plaintiff is the real party in interest; that said Clark, between certain stated dates, paid out on behalf of the defendant different sums of money, which in the aggregate amounted to the sum of $ 21,776.80, on which there was paid and credited at the commencement of this action the sum of $ 5,121.42, leaving an unpaid balance, which, with interest "to this date," amounts to $ 25,960.49; that all items paid out by said Clark, whether made in his name or in the name of plaintiff, "were in fact made by and on behalf of said Clark"; that on the 21st day of October, 1911, the defendant executed and delivered his promissory note for $ 1,000, payable to the order of the plaintiff; that nothing has been paid on said note which, with interest "at the present time," amounts to $ 1,643.22; that said note, although payable to the order of the plaintiff, was in fact "made to, owned, and held by said Clark"; that the amount "unpaid on the money paid out and advanced for the defendant," with interest, including the said note, on "January 19, 1918," amounted to the sum of $ 23,481.92, which, with interest "to the present time," amounts to $ 27,603.71; that on December 21, 1911, said Clark executed and delivered his promissory note payable June 21, 1912, to the order of the defendant for the sum of $ 5,012.10; that no part of said note was paid at the time this action was commenced, and said note, with accrued interest "at the present time" amounts to $ 8,001.22; that the defendant owned a certain option for the purchase of certain mining stocks, on which he had paid the sum of $ 2,000, and had agreed to pay for said stock the further sum of $ 27,475.60; that in addition to the $ 2,000 paid as aforesaid, defendant also had expended and paid out the sum of $ 563.26 on said option; that on the 3d day of January, 1912, the defendant and said Clark entered into a certain agreement in writing (which is fully set forth in the findings), in which agreement Clark, in the name of plaintiff, agreed to pay 40 cents a share for the stock upon which the defendant had the option as aforesaid upon the terms and conditions stated in said agreement; that the defendant and said Clark subsequently "entered into a supplemental oral agreement with respect to said option, by the terms of which it was mutually understood and agreed that said Clark would sell said shares of stock to the best advantage, and from the proceeds thereof would pay" to the original owners of the stock the balance due on defendant's option, and would also reimburse the defendant for the amounts paid by him on said option, "and in addition thereto pay the said defendant one-half of all of the net profits received by said Clark as a result of said sale"; that thereafter said Clark, acting under said oral agreement, sold all of said stock, and received therefor the sum of $ 50,000 in cash, "and thereby derived a net profit on said transaction of $ 19,961.74, one-half of which, or the sum of $ 9,980.87, was to be paid to the defendant"; that by reason of said transaction, although executed in the name of plaintiff, said Clark "became indebted to the defendant" in the aggregate amount of $ 12,544.13, no part of which has been paid, and that there was owing by said Clark to the defendant on the dealings and transactions aforesaid, with accrued interest computed "to the present time," the sum of $ 20,776.17.

We remark that we have stated the figures or amounts as they are given in the findings of fact, and do not vouch for their correctness. In view, however, that no objections have been made by any one respecting the correctness of the figures or amounts as herein stated, we have not considered it our duty either to verify or to correct them, if they are not correct.

As conclusions of law, the court found that the amounts found due and owing as aforesaid from said Clark to the defendant should be set off against the amount found due and owing from the defendant to said Clark as hereinbefore stated in the findings; that in view that the...