South Bend Chilled Plow Co. v. George C. Cribb Co.

Maeshall, J.

It is claimed on the part of the appellants that the intention of the pleader was to state a cause of action to enforce a trust created by the agreement made between the creditors of George 0. Cribb and George C. Cribb, whereby the property held by the latter’s assignee was turned over to the George C. Cribb Company, and such creditors took, in lieu of their claim against the assignor, the notes of the corporation for seventy per cent, of such claims. There is much in the complaint to sustain that view. Respondents claim, however, that the purpose of the complaint was to state facts entitling them to relief under sec. -3237, R. S., which provides that “the circuit court shall have juris■diction over directors, managers, trustees, and other officers ■of corporations: 1. To compel them to account for their official conduct in the management and disposition of the funds and property committed to their charge. 2. To order and compel payment by them to the corporation whom they represent and to its creditors of all sums of money and of the value of all property which they may have acquired to themselves or transferred to others, or may have lost or' wasted by any violation of their duties as such directors, managers, trustees or other officers. ... 7. To set aside ■all alienations of property made by the directors, trustees or other officers of any corporation contrary to the provisions of law, or for purposes foreign to the lawful business and objects of such corporation, in cases where the person receiving such alienation knew the purposes for which it was made.” After a careful scrutiny of the complaint in the light of the statutory rule (sec. 2668, R. S.) that in the construction of a pleading, for the purpose of determining its •effect, its allegations should be liberally construed in favor ■of the pleader, and every reasonable intendment be made in favor of the pleading (Miller v. Bayer, 94 Wis. 123), we are able to come to the conclusion that the purpose of the complaint was to state a case for a redress of wrongs to creditors of the corporation, as respondents claim. In one view of the complaint that is plainly within its scope, and its purpose in that respect may stand, notwithstanding there are many allegations introduced as mere matter of history or inducement, leading up to, and in connection with, the facts which ■constitute the cause of action. Such allegations of historical matter are, at least, not a necessary part of the complaint. The rule stated in Miller v. Bayer applies: "When the general scope of a complaint is apparent, and the language used ■will admit of a construction consistent therewith, such construction should he adopted, notwithstanding allegations introduced by way of giving a history of the cáse, which, when viewed apart from its evident purpose, may be held to state, or attempt to state, a different cause of action.

The complaint shows, by appropriate allegations, that plaintiffs were creditors of the corporation; that defendants "E. 0. Conklin, G. A. Matthews, Eobert Moscrip, John 8. BlaT&ney, and Marrgw'et A. Cribb, the directors of the company, while it was largely indebted, conveyed all its property, without consideration, to another corporation organized December 21,1894, under the name of the Cribb Implement •& Vehicle Company; that the name of such new corporation was soon thereafter changed to Cribb Om'riage Company', that there was no actual capital put into the new company; and that it was organized, and the transfer of the property of the George C. Cribb Company made to it, in furtherance -of a scheme on the part of such officers to continue the old business under a new name and put the property of the old corporation beyond the reach of its creditors; that after the new corporation was formed, Margaret A. Cribb was permitted, without consideration, to withdraw and convert to her own use $10,000 worth of the assets of the company. There are other allegations, but those above referred to sufficiently show a case calling for relief at the suit of the creditors, for official misconduct in handling corporate property, and to rescind the alienation of corporate property to Margaret A. Cribb, and to the Cribb Carriage Company. All the requisites of the statute are fully covered by appropriate allegations of facts, mixed up, however, it must be admitted, with many allegations regarding the trustee, H. JE. Miles, the Hacine Wagon & Carriage Company, and the Hoover & Allison Company, and other matters that are entirely foreign to the cause of action stated.

The foregoing covers only the demurrers interposed by the officers of the George C. Cribb Compamp and its successor, and such corporations. As to the Hacine Wagon dk Carriage Company, we are unable to find any allegation that connects it with £he cause of action referred to. When the property was turned over by the assignee of George 0. Cribb to the George C. Cribb Company, and notes were given by such company to the creditors of George 0. Cribb, such creditors did not reserve any lien on such property. They became mere general creditors of the corporation, having no greater rights than subsequent creditors obtained. What ever was done by the corporation in regard to paying particular creditors in preference to others constituted no wrong to such other creditors for which they can seek redress in either a court of law or equity, either against the corporation or such fortunate creditors. Even if the corporation were insolvent at the time the preference was made, that fact alone, so long as it was yet a going corporation, did not affect its right in good faith to pay one creditor in preference to another. Rut insolvency is not alleged, so no reason appears why the preferences were not properly made, even though the fortunate creditors were represented on the board of directors of the debtor corporation, and were personally interested in obtaining the preferences. Hinz v. Van Dusen, 95 Wis. 503; Ballin v. Merchants' Exch. Bank, 89 Wis. 278; Ford v. Hill, 92 Wis. 188. As we understand the complaint, all the payments made to the Racine Wagon & Carriage Company and the Hoover & Allison Company were made to apply on the notes held by such creditors, and were not in excess of the amount due upon such notes. If, in obtaining such payment, there was any breach of the agreement existing between the- creditors under the contract made prior to the formation of the corporation, that is a matter entirely foreign to this action.

There is no allegation in the complaint to in any way connect H. E. Miles with any wrong to the corporation. He was not one of its officers. He merely held the stock in trust for creditors. He owed the corporation no duty, and is not shown to have received any of its property. He has, therefore, nothing to account for, either in regard to official corn-duct or otherwise.

By the Court.— On the appeal of the George C. Cribb Company, the order of the circuit court is affirmed; on the appeal of defendant Margaret A. Cribb, same order; on the appeal of the defendant John S. Blakney, same order; on the appeal of the Cribb Carriage Company, same order; on the appeal of th%.Racine Wagon db Carriage Company, the order of the circuit court is reversed; on the appeal of defendant U. E. Miles, same order. The cause is remanded for further proceedings according to law.