Arnold v. Parkening

HANSON, J. pro tem. The complaint alleged that the plaintiff and the defendant Parkening entered into an agreement, partly in writing and partly oral, for the formation of a corporation to carry on a real estate business in which each was to share, equally; that pending its formation plaintiff deposited $1,000 in a checking account in the joint name of the parties; that the parties as lessees entered into a lease for certain premises to be occupied by them as the office of their business; that they purchased in their joint names certain fixtures and personal property at the time located in the [643]office; that the parties acquired certain properties for their use and benefit and of the corporation; that articles of incorporation were prepared and filed and a charter was issued by the state in the corporate name “O. H. Parkening, Inc.”; that' defendant Parkening represented to plaintiff that he was interested in purchasing plaintiff’s interest in their joint venture and in the corporation, and that pending negotiations therefor plaintiff agreed with Parkening that no application for a permit to issue stock should be made; that the parties continued their joint venture thereafter until September 9, 1940, when without the knowledge of plaintiff Parkening procured a permit from the Commissioner of Corporations authorizing the corporation to issue all its stock to defendant McElroy for the sum of $1,000 in cash; that McElroy had knowledge of all the facts as alleged, and conspired with Parkening to prevent the issuance of one-half of the corporate stock to plaintiff, and thereby prevented him from participating in valuable interests which the corporation had acquired. The prayer, among other things, asked that the defendants be required to account for any profits received by them for or on account of the corporation.

The trial court found that appellant McElroy conspired with the defendant Parkening to defraud the plaintiff, and that in the course of the conspiracy McElroy received certain properties and moneys from Parkening, or at the instance of Parkening, in which plaintiff was entitled to an undivided one-half interest. Accordingly the court entered judgment against McElroy for $900 and the costs of suit, and in addition decreed that he held certain real property in trust for plaintiff.

The appeal is on the judgment roll by McElroy alone. He is here contending that no cause of action was stated against him and so his demurrer on that ground should have been sustained. Moreover, he contends that the complaint did not charge him with having improperly procured any properties or moneys belonging to plaintiff, and that as a consequence the finding is outside the issues.