Wilson v. Kiesel

• Decision Date: 29 January 1894
• Citation: 9 Utah 397,35 P. 488
• Court: Utah Supreme Court
• Parties: PETER WILSON, APPELLANT, v. FRED J. KIESEL AND OTHERS, RESPONDENT. PETER WILSON, RESPONDENT, v. FRANK J. CANNON AND OTHERS, APPELLANTS

35 P. 488

9 Utah 397

PETER WILSON, APPELLANT, v. FRED J. KIESEL AND OTHERS, RESPONDENT.

PETER WILSON, RESPONDENT, v. FRANK J. CANNON AND OTHERS, APPELLANTS

Supreme Court of Utah

January 29, 1894

CROSS-APPEALS from a judgment of the district court of the fourth district and from an order refusing a new trial, Hon James A. Miner, judge. The opinion states the facts, but the following details are noticed.

The complaint alleged the incorporation of the Ogden Power Company, the amount of its capital stock, the subscriptions of defendants thereto, the insolvency of the corporation, the recovery of the judgment, the issue of execution, the return thereon and the delinquent subscriptions as its sole assets.

The answer denied the delinquency of the defendants, the insolvency of the corporation, alleged payment of subscriptions, that plaintiff was delinquent himself, that he was not the real party in interest.

Kiesel Carnahan and Anderson, by way of cross-complaint, alleged that the entry of the judgment against the corporation was unauthorized by the board of directors, but was under the direction of H. H. Henderson, who had no authority so to do and that shortly afterward Henderson and his partner Brinker purchased said judgment from said Wilson and that they were still the owners thereof, and that neither of said defendants filing the cross-complaint were ever officers of said corporation, and that if the action of Wilson against the corporation had been defended upon its merits, no greater sum than $ 2,000 would have been awarded against it, that Henderson consented to said judgment expecting shortly to purchase it, knowing that no more than $ 2,000 was due Wilson, and for the purpose of secretly defrauding the stockholders, which fraudulent purpose was well known to Wilson, that a majority of the directors were absent from the Territory, and prayer was for cancellation of the judgment.

The answer to the cross-complaint denied each and every of its allegations. The cause was referred to a referee, who tried the cause and made his findings. The findings were adopted by the court, and were as follows:

They set out the judgment and execution against the corporation, the incorporation and capital stock and number of shares of the corporation, the signing of the articles of agreement by the various defendants, that the only asset of the corporation was the unpaid subscriptions, that Kiesel, Carnahan and Anderson had fully paid, that Wilson was a subscriber for 25 shares and a balance of $ 2,259 was due on his subscription which he agreed should be credited on the judgment, that plaintiff agreed to a reduction of about $ 9,000 on the judgment, that pending the action of Wilson against the corporation Wilson executed a written assignment of his claim to Brinker, which was never delivered, and it was understood that said claims should not pass to Brinker until the amount named therein had been fully paid to Wilson and only $ 3,000 of that consideration had been paid, that in consenting to the judgment Henderson the president and the counsel for the corporation after diligent inquiry acted in good faith, and Henderson and Wilson never agreed in any way that said judgment should be entered for the benefit of Henderson or Brinker and that neither Brinker nor Henderson had any interest in the claim or to the indebtedness which was the subject of the judgment.

The next findings referred to the deed of Kiesel, Carnahan and Anderson to the corporation, the issuing of fully paid up stock therefor, the giving of the mortgage back, the foreclosure of the mortgage, the value of the land, that Wilson, the plaintiff, was a subscriber and had only paid 10 per cent. of his subscription, that Kiesel, Carnahan and Anderson had never been officers of the company, that there was nothing in the articles of incorporation that either of the subscribers should pay in anything other than money, that plaintiff never waived any unpaid subscription. The next findings referred to the taking of the judgment, which was a consent judgment for a valid claim, and was taken in good faith and execution issued thereon with the return of nulla bona, but the board of directors never authorized Henderson to consent thereto, and he instructed the regular attorneys of the company to consent. The next findings made an examination of the claim of Wilson and went into an examination of the validity of the various items, a waiver being made by plaintiff of about $ 9,000, and fixed the true amount due Wilson. The next findings set out the assignment mentioned in the opinion and found that two payments had been made thereon, that the assignment was negotiated by Henderson for himself, Garretson, Bigelow and Brinker, who had gotten a majority of the stock and desired to control the corporation. The appeal of the defendants was on the judgment roll alone. The appeal of Wilson was from order refusing new trial.

From these findings it appears that the whole question as to fraud, amount of claim, and validity of the judgment was contested before the lower court and the master found against the defendants.

Reversed and remanded.

Mr. A. R. Heywood, for the appellants and respondents, Kiesel and others.

His brief argued at considerable length whether Kiesel, Carnahan and Anderson had paid up their stock, but since that point is not passed upon by the court, that part of the brief is omitted. The brief then proceeded to argue: That the judgment having been consented to by the attorneys under the instructions of the president without authority from the board of directors was invalid. Wait v. Nashua Armory Association, 14 L.R.A. 361; Busenbak v. Busenbak, 7 P. Rep. 245; Schuster v. Rader, 22 P. Rep. 505. The conduct of the president was fraudulent; Richards v. McMillan, 6 Cal. 419; Potts v. Wallace, 146 U.S. 689; Page v. Naglee, 6 Cal. 241; Mills v. Scott, 43 F. 455. The remission of part of the judgment does not help the plaintiff. Central Trust Co. v. Bridges, 57 F. 768. The plaintiff being a delinquent subscriber cannot maintain this action, for a set-off as to his unpaid subscription is not allowed. Thompson v. Reno Savings Bank, 7 P. Rep. 71; Sawyer v. Hoag, 17 Wall. 623. Wilson was not and is not the real party in interest. The assignment so shows on its face and parol evidence cannot modify it, and this is fatal to the action. Dubbers v. Goux, 51 Cal. 153; Davis v. Mayor, 14 N.Y. 506; Smith v. Railway Co., 23 Wis. 267; Galpin v. Lamb, 29 Ohio St. 529; Clark v. Clark, 20 Ohio St. 128. Pomeroy on Remedies, secs. 127, 128.

Mr. Ogden Hiles, Mr. J. H. Macmillan and Messrs. Sutherland and Howatt (of counsel), for the respondent and appellant Wilson.

This brief argued most fully the question as to the stock of Kiesel and others being paid up, but that is omitted. The brief in reply argued: This appeal is from the judgment roll alone and the findings must control as to the appeal of the defendants. The issues as to the insolvency, as to the amount of Wilson's claim and as to its fraudulency, as to the assignment of this claim, as to the good faith of Henderson, were all settled by the findings against the defendants, and those ultimate facts having been found, no finding of evidentiary facts tending to impeach the finding of an ultimate fact, including for its decision such evidentiary facts, will avail. Smith v. Acker, 52 Cal. 217; Lucas v. Richardson, 68 Cal. 618. Other points as to the execution were discussed and it was argued that no execution was necessary where a corporation was insolvent. Enright v. Grant, 5 Utah 334; Camden v. Doremus, 3 How. 533; Hodges v. Mining Co., 9 Oregon, 200. The return of the officer is conclusive. Baines v. Babcock, 95 Cal. 581.

SMITH, J. BARTCH, J., concurred.

OPINION

SMITH, J.:

This is an action by plaintiff who claims to be a judgment creditor of the Ogden Power Company against the defendants who are alleged to be delinquent subscribers to the capital stock of that company. It is alleged that the Ogden Power Company is a corporation and is insolvent; that plaintiff's judgment is unpaid; that this action is brought on behalf of plaintiff and the other creditors of the corporation.

Defendants Kiesel and twenty-six others answered denying the material allegations of the complaint and alleging by way of affirmative defense that plaintiff was a delinquent subscriber to the capital stock of the Ogden Power Company. Kiesel, Carnahan & Anderson also plead payment of their subscription, and by way of cross-complaint defendants alleged, in substance, that plaintiff's judgment, on which this action was founded, was fraudulently obtained by collusion with the president of the Ogden Power Company, who with one Brinker, had purchased the claim on which the judgment was rendered and who consented to the judgment fraudulently.

It was further alleged that no more than $ 2,000 was due the plaintiff on the claim sued on, whereas the judgment was rendered for $ 22,405.15. Defendants asked that plaintiff's judgment be cancelled and that he take nothing. Plaintiff answered the cross-complaint.

The cause was tried by a referee, who reported findings of fact and conclusions of law on which judgment was entered, dismissing the cross-complaint and giving judgment for plaintiff against all of the defendants except Kiesel, Carnahan and Anderson and as to those three the judgment was against the plaintiff on the ground that they had paid their subscription.

Plaintiff appeals from the judgment in favor of Kiesel, Carnahan and Anderson, and defendants Cannon and twenty-three others appeal from the judgment against them.

The history of the transactions out of which this litigation arose, as disclosed by the record, is in brief as follows:

The Ogden...