Granoff v. Yackle

California Court of Appeal Oct 11, 1961 No. Civ. 25038Published

Before: Ford

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Holding. The court held that while the plaintiff was estopped from disregarding the corporate entity, the individual defendants were personally liable for the conversion of assigned accounts receivable that were diverted to the corporation's use.

Issues

Was the plaintiff estopped from denying the existence of the corporation?
Are corporate officers personally liable for misappropriating or converting assigned accounts receivable to the use of the corporation?

Disposition. reversed

Quotations verified verbatim against the opinion

“the trial court’s refusal to disregard the corporate entity was justified inasmuch as there was substantial support in the evidence for a determination that, in the present action, the plaintiff was estopped to deny that there was an effective corporate existence.”

“the officers of a corporation are personally liable to one whose money or property has been misappropriated or converted by them to the uses of the corporation, although they derived no personal benefit therefrom”

FORD, J.

Thisis an appeal from a judgment in favor of the defendants.

[254]

In his complaint the plaintiff alleged that he had loaned the defendants sums of money for their use in the operation of their business and that as security therefor the defendants had assigned to him all moneys due or to become due from their customers; that the defendants agreed to forward to the plaintiff such collections within 24 hours after their receipt; that the defendants “proceeded fraudulently and illegally to collect monies and accounts without the knowledge and consent” of the plaintiff; that such collections were in the sum of $4,382.74 and “were used by and for the benefit of the defendants.” By their answer the defendants denied such allegations.

At the pretrial conference, the parties submitted a joint statement which was made a part of the order.

In that statement it was said that the only matter of fact as to which the parties agreed was the following: “That on and after August 18, 1958, the plaintiff Leon L. Granoff advanced sums of money to the All American Auto Body Shop Inc. and received notes and assignments of accounts signed by Albert J. Tackle and Margaret Tackle as officers of said corporation.”

It was further stated therein that the “Issues of Fact in dispute are: . . . 2. Was there in fact a corporation? 3. Are the defendants personally bound by the assignments made ? 4. Did the defendants have the right to use the amounts they collected on the assigned accounts for their benefit or for the benefit of the corporation ? ’

’

The trial court found that the allegations of the complaint to which reference has been made were not true. No specific findings of fact were directed to the issues which, as noted above, were set forth in the joint pretrial statement.

At the trial, the plaintiff Granoff testified that he had discussions with the defendants, Mr. and Mrs. Tackle, about the operation of the business. A letter dated August 19, 1958, was addressed by the plaintiff to “Mr. Al. Tackle, President, All American Auto Body Shop, Inc.” In the opening paragraph the plaintiff said that such writing contained what he considered to be the terms of their agreement. Thereafter, the administrative and financial services to be rendered by

Granoff v. Yackle

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FORD, J.

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