Cutting v. Oliphant

California Court of Appeal Mar 29, 1915 No. Civ. No. 1489.Published

Before: Richards

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Holding. The court held that the complaint sufficiently stated a cause of action against stockholders for corporate debt and that the statute of limitations did not bar the action because the corporate obligation arose upon the receipt and use of proceeds from the sale of goods, not the initial transfer.

Issues

Whether the complaint sufficiently alleged stockholder liability for corporate indebtedness.
Whether the statute of limitations barred the action based on the date of the underlying transaction.
Whether the trial court erred in excluding evidence regarding the date of goods delivery.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Whatever doubt may arise in the construction of this complaint, from the use of the form of the common count therein in pleading the indebtedness of the corporation, amounts at most to an uncertainty, which should have been assailed by a special demurrer”

“the obligation of the Oliphant Company to the Cutting Company took its inception from the date of the actual receipt and use of the money derived from the sale of the tomatoes.”

Synopsis

APPEAL from a judgment of the Superior Court ,of Alameda County and from an order denying a new trial. K. S. Mahon, Judge presiding.

The facts are stated in the opinion of the court.

RICHARDS, J.

This is an action brought to recover from the defendants the amount of their respective liabilities as stockholders of D. D. Oliphant Company, a corporation, arising out of an alleged indebtedness of said corporation to the assignor of the plaintiff, in the sum of $2,236.97.

The facts out of which this corporate indebtedness arose are substantially these: During the year 1907 and thereafter the D. D. Oliphant Co. was a corporation doing business in the city and county of San Francisco. In the month of May of that year it became necessary for the corporation to raise a sum of money to meet certain obligations then coming due. The plaintiff, P. P. Cutting, was the secretary of the corporation, and was also the manager of the P. P. Cutting Company, another corporation. In order to raise money to meet the accruing obligations of the Oliphant Company an agreement was made with Mr. Cutting, representing the Cutting Company, which was then the owner of a thousand cases of

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tomatoes, by the terms of which the Cutting Company was to turn over to the Oliphant Company these tomatoes upon the understanding that the latter was to sell them, and use the proceeds of their sale, if necessary, to meet the obligations of the Oliphant Company as they fell due. In pursuance of this arrangement the Oliphant Company proceeded to sell and deliver these tomatoes to various customers, and to use the money collected upon such sales. There were also some other articles, such as cans and solder, bought by the Oliphant Company from the Cutting Company during that year; and on the other hand some payments made or credits given, leaving a balance due from the Oliphant Company to the Cutting Company of the sum of $2,236.97, which, being unpaid by the Oliphant Company, and being by the Cutting Company assigned to F. P. Cutting, he commenced this action against these defendants as stockholders of the Oliphant Company to recover their proportionate share of this indebtedness.

Upon the trial the court gave judgment against each of the defendants for the sum of $619.18 principal, and $240.57 interest, from which judgment and from the order denying a new trial the defendants appeal.

The first point presented by the appellants is that the complaint does not state facts sufficient to constitute a cause of action, and that their general demurrer thereto should have been sustained.

Cutting v. Oliphant

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Synopsis

RICHARDS, J.

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