Mitchell v. Jensen

81 P. 165, 29 Utah 346, 1905 Utah LEXIS 27

• Court: Utah Supreme Court
• Decided: June 6, 1905
• Docket: No. 1598
• Status: Published

Opinion

STRAUP, J.

Plaintiff, Mitchell in his complaint, for a first cause of action, alleged that the defendant, Iíeber O. and John Jensen and Thomas D. Eoche, were partners in business under the firm name of the' Southern Utah Mercantile & Lumber Company; that the defendants were indebted to Lowenberg & Co., a copartnership at San Francisco, for goods sold and delivered to the defendants to the value of $579, an assignment thereof to plaintiff, and non payment of the debt. In the second cause of action he alleged that the defendants were indebted to A. Schillings & Co., of San Francisco, for goods sold and delivered to the said defendants to the value of $40 an assignment thereof to plaintiff, and nonpayment of the debt. Defendants Jensens (the only parties served) answered, denying each and every allegation of the. complaint, and further alleged that the said goods mentioned in the complaint were sold to the Southern Utah Mercantile & Lumber Company, a corporation, and that the assignors of the plaintiff dealt with the said company as such, with full knowledge and understanding of its corporate existence, and alleged an es-toppel precluding plaintiff from obtaining a judgment against the defendants as individuals. The case was tried before the court without a jury. Upon findings and conclusions made, judgment was had against defendants Jenson individually on both causes of action for the full amount sued for. The defendants appeal.

The only evidence shown on the part of the plaintiff was that he had a conversation with Heber C. Jenson, in which he stated to plaintiff that he did not know of such a claim against the firm, and, if there was, they expected to settle it, and wanted to know whether he would take fifty cents on the dollar. Plaintiff said that he would communicate with the San Francisco firms, and, after having done so, informed Jensen that they would settle for said amount provided it was done right away, but Jensen then.declined to settle at all. He never bad any conversation with either of the defendants as to who composed the firm. The testimony of Lowenberg was that his firm “had dealings with the Southern Utah Mercantile & Lumber Company, in selling goods to them,” stating the amounts of the bills; that the goods were shipped to the Southern Mercantile & Lumber Company at Cedar City, Utah, and in making the shipment he followed the instructions of Thomas D. Noche, one of the defendants; that he had no information that the said lumber company was an incorporated company; he did not find and he did not produce any letters relating to the transactions; and that the goods were unpaid. No evidence of any kind was offered by plaintiff tending to characterize or to show what was the. Southern Utah Mercantile & Lumber Company, nor as to who composed or was connected with it. At the conclusion of plaintiff’s evidence as above, the defendants moved for a nonsuit on the grounds that the allegations in the complaint had not been proved, and that there was not any evidence of any partnership of the defendants. The motion was overruled. The defendants offered in evidence articles of incorporation, stating the corporate name of the company; the purposes for ■which it was formed; place of general business; term of existence; the number of directors to be three; their names and residences; the amount of capital stock, and all subscribed in equal shares among the said Jensens and the said Noche; providing for meetings, election of officers, and that the stockholders and their private property shall not be liable for the corporate debts; which articles were executed only by the said Jensens and Noche (three incorporators); affidavits attached, duly acknowledged; and were filed with the county clerk on the 30th day of April, 1897. It further appeared that a certified copy of said articles was sent to the Secretary of State, but was not there 'filed, and no certificate was issued by the said secretary, because the fees therefor had not been paid. The said Jensens testified that they had no dealings whatever with the plaintiff or his assignors or any one else in respect to said goods or in the conduct of said business. There is no evidence to the contrary, except such as may be inferred by reason of their signing the articles, and being officers of the so-called corporation, and attending some meetings.

1. The principal errors assigned are that the court erred in overruling defendants’ motion for nonsuit, that the findings are not sustained by the evidence, that the court failed to find on some material issues, and, in effect, that the findings are not sufficient to support the judgment. [Respondent asserts the bill of exceptions does not disclose that it contains all the evidence before the trial court, and therefore it will be presumed there was sufficient evidence to support the findings, and that the court had sufficient evidence justifying the overruling of the motion for nonsuit. And in support of which is cited (Hecla Min. Co. v. Gisborn, 21 Utah 68, 59 Pac. 518; Olson v. Ry. Co., 24 Utah 460, 68 Pac. 148; and Fields v. Min. Co., 25 Utah 76, 69 Pac. 528.) This doctrine is well established in this court. And while we have no disposition to relax it, we are disposed to treat this record as containing all the evidence. The bill of exceptions is a transcript of the official stenographer’s notes, containing the testimony of the witnesses by questions and answers; in like manner, depositions, documentary evidence, and remarks of court and counsel; and the transcript is accompanied with a certificate from said stenographer certifying that “the foregoing is a full, true, and correct transcript of the testimony and other proceedings had on the trial of the foregoing entitled cause.” The transcript, with the said declaration of the stenographer, is certified to, allowed and settled and signed by, the court, as and for the bill of exceptions. While, no doubt, it is the better practice to have the declaration either in the body of the bill, at the close of the evidence, or in the certificate of the court, in clear terms, to the effect that the bill contains all the evidence in the cause or bearing on the points illustrating the assigned error, yet we think the foregoing substantially shows this fact. With the statement in the bill that the “foregoing is a full, true, and correct trans-script of the testimony and other proceedings had on the trial,” it is somewhat difficult for us to indulge in presumptions that there was something more by way of evidence, and yet it is not conclusive that there was no more. The term “testimony” is not as comprehensive as “evidence,” and in fact is but a species or kind of evidence; but, when coupled with “other proceedings,” we think the parties and the court here treated the whole matter as synonymous with “evidence,” and meant to convey the idea that it was all the evidence. Where parties settle a bill of exceptions, if they desire to show that it contains all the evidence, the record should be made to so state it in clear terms. There is no reason why matters of this kind should be left open to uncertainty and conjecture, when with a few words" it can be made certain (Crooks v. Harmon, 29 Utah 304, 81 Pac. 95.)

2. The court found that the goods were sold and delivered to the defendants. But there is no evidence showing that the goods were sold and delivered to the defendants Jensen, or either of them. The evidence conclusively shows that the dealings and transactions had in respect to said matters were with Boche, in the name of the Southern Utah Mercantile & Lumber Company, and the one who had charge of said business ; and, so far as the record discloses, the defendants Jensen were unknown in said transaction, except only as they may have been members of said firm, or were obligors arising from their connection with an abortive corporation. It therefore became necessary and was material for the court to find upon that issue raised by the pleadings, and to find what connection or relation the said Jensens had with such company, or what they had to do therewith, or what they had to do with the business and dealings carried on in said name. This the court did not do. The finding “that the Southern Utah Mercantile & Lumber Company was not a corporation, either de jure or de facto, such as to enable the defendants to bind creditors,” is all there is on the subject. Treating such a finding as sufficient that the said company was not a corporation, still there is a total want of finding as to what the defendants had to do with the business or dealings carried on under such name, or what their relations were with the same. It is true, the defendants Jensen may be liable and held as partners by reason of their unsuccessful attempt to organize a corporation which in fact had no existence, because of noncompliance with conditions precedent to effect such organization, yet, to do so, it is necessary for the court to find what they had to do with the said supposed or attempted corporation, or what they had to do with the dealings and business carried on under such name, in the absence of any evidence showing that the goods were sold and delivered to them or their agent. It is also true that the evidence shows that the defendants Jensen were signers of the articles, one a president and director, 0and the other a director, and both were prospective stockholders of an attempted corporation, and attended meetings of such so-called corporation, from which it may be said and it may be inferred that they were connected with the said transactions and dealings, and were participating in or authorizing the conduct of the same. But the court did not find any such facts, nor any facts whatever connecting these defendants or showing their relation therewith. In a law case we are not at liberty to find facts or to draw deductions from them, and treat as found that which might have been found. It may be said that it was not necessary for the court to find upon these matters, inasmuch as the court found that the goods were sold and delivered to the defendants. But the evidence does not support such a finding. And so far as relating to the second cause of action, there is a total want of evidence of a sale or delivery of goods of any kind to any one. As the record now is before us, it may be said with some force that the Southern Utah Mercantile & Lumber Company was not a corporation, for the reason that the articles of incorporation were executed only by three incorpora-tors, when the statute required at least five, and because a copy of the articles of incorporation was not filed with the Secretary of State, and no certificate was issued by him, and that ten per cent of the capital stock was not paid in as required by the statute, especially when coupled with the lack of sufficient evidence that the business was carried on in a corporate capacity, or by a company exercising corporate functions. (Thomp. Cor., sec 508; Jackson v. Crown Point Min. Co., 21 Utah 1, 50 Pac. 238, 81 Am. St. Rep. 651; Abbott v. Omaha Smelting Co., 4 Neb. 416; 1 Cook, Cor. [5 EcL], sec. 233, and cases.) And in case where parties merely assume a corporate name, and merely pretend to be a corporation which is such neither de facto nor de jure, the incor-porators may be held liable as partners. But the difficulty here is, the court has not found that the defendants Jensen were incorporators or even stockholders of such pretended corporation, or that they had anything whatever to do with the same, or with the business or dealings carried on or conducted under such name. And the evidence showing that the goods were not sold or delivered to them or their agent, or upon any dealings or transactions had with them or any agent representing them, but showing that all the dealings or transactions were had in the name of said company with Noche, who had charge of and ran the business in said company name, therefore, in order to hold the Jensens liable, it was necessary for the court to find some agency or relation existing between Noche and the said defendants, or, if sought to hold them liable by reason of their connection or relation with some mere pretended corporation, to find such fact and their connection therewith, or with the business and dealings carried on in such name .or the fact of some partnership, or some other fact, showing a joint and several liability. And for guidance of the court on a retrial of this case, it may not be out of place to observe that if it sought to find and hold tké said defendants Jensen liable alone by reason of their connection with a mere pretended corporation, which in fact had no existence, and was neither a de facto nor a de jure corporation, the court should find more than the bare fact of their having signed articles. It should also find facts showing their participation in or authorization of the conduct of the business carried on in such name, or some holding out in respect thereto as principals in the business, or facts from which such matters may be inferred. (Rutherford v. Hill [Or.], 29 Pac. 547, 17 L. R. A. 549, 29 Am. St. Rep. 596; 17 Am. & Eng. Ency. L. 866; Ward v. Brigham, 127 Mass. 24; Johnson v. Corser, 34 Minn. 355, 25 N. W. 799; Blanchard v. Kaull, 44 Cal. 440; Humphreys v. Mooney, 5 Colo. 282.

What we have here said on the question of this company not being a corporation is, of course, to have application only to the specific facts before us. Here there is a total want of evidence that the assignors of plaintiff dealt with said company as a corporation. The only evidence on the subject is that of Lowenberg, who said he did not know the company was an incorporated company which if anything tends to the contrary. The evidence is but scant and meager that the company was transacting business in a corporate capacity, or exercising corporate functions under a bona fide effort to organize under the law, and a belief that such organization had been effected; and, moreover, the court wholly failed to find on this issue presented by the pleadings. “It is the duty of the trial court to find upon all the material issues made by the pleadings, whether evidence be introduced or not, and, if there be no finding on a material issue, the judgment cannot be supported.” (2 Spelling, New Tr. and App., sec. 591; Speegle v. Leese, 51 Cal. 415; Golson v. Dunlap, 78 Cal. 161, 14 Pac. 576.)

We do not wish to be understood in any manner as saying anything conflicting with the doctrine laid down by this court and supported by the great weight of authorities, that “where there has been a bona fide attempt to create a corporation, and an assumption and exercise of corporate functions sufficient to constitute a corporation de facto, as a general rule, its legal existence cannot be called in question collaterally,” and especially where the complaining party has dealt with the company as a corporation. (Marsh & Olsen v. Mathias et al., 19 Utah 350, 56 Pac. 1074; 1 Cook, Cor. (5 Ed.), sec. 234, and numerous cases there cited and collected.)

The court not having found (and, besides, there not being any evidence thereof) that the assignors of plaintiff dealt with the said company as a corporation, nor as to its assumption or exercise of corporate functions, or doing business in a corporate capacity under a bona fide attempt of incorporating ■under tbe law and belief that sucb organization bad been effected, we are not called upon to, and we do not bere, decide whether, if sucb bad been found to exist, tbe omissions or irregularities of tbe said company herein complained of are of sucb nature as to preclude a bolding that tbe company was not even a de fado corporation.

Tbe order of this court, therefore, is that tbe judgment of tbe court below be, and tbe same is hereby, reversed, and tbe cause remanded for a new trial; tbe costs of this appeal to be taxed against respondent.

BAETCH, C. J., and McOAETY, J., concur.