Consolidated Produce Co. v. Pieper

DORAN, J. The complaint herein charges that respondent Pieper while secretary and treasurer of appellant corporation, on June 10, 1940 “secretly and without authority and without the knowledge or consent or acquiescence of the plaintiff or its board of directors . . . withdrew $5,000.00 from the assets of the plaintiff, and with said sum of money, . . . purchased 2,500 shares of the preferred capital stock and 1,354 shares of the common capital stock of the- Consolidated Produce Company, Ltd., from the estate of A. M. Klein and from Mrs. Jessie Klein and caused said shares of stock to be reissued by plaintiff in defendant’s own name.” It is then alleged that on April 1, 1946 the preferred stock was called for redemption, respondent receiving $26,250 therefor; that prior to redemption respondent had received $20,125 in dividends on said preferred stock. Respondent is alleged to havOreceived $28,434 in dividends on the common stock so acquired, which common stock still stands in the respondent’s name.

The complaint then alleges that respondent concealed the facts from the corporation and its directors who had no information concerning “such use of Plaintiff’s funds by defendant until the month of March, 1947” when, “an- audit of the plaintiff’s books of account revealed the aforementioned transaction.” The prayer is that “defendant be declared the. constructive trustee of said 1,354- shares of the common stock of the plaintiff for the use and benefit of the plaintiff, ’ ’ and that plaintiff recover all dividends paid to defendant together with interest, and the redemption price of the preferred stock paid to defendant. The answer contains a denial of the alleged fraud and pleads various statutes of limitation. There was also a cross-complaint to recover certain dividends withheld by appellant company.

After a trial consuming several days, the matter was submitted to the trial court upon briefs and judgment rendered in favor of the respondent, quieting title to the stock held in respondent’s name, and awarding to respondent the sum of $33,850.00 with interest, representing withheld dividends. There was no motion for a new trial. It is the appellant’s contention that the trial court’s findings to the effect that no fraud was committed by respondent, that no unauthorized or illegal use of corporate funds was made, etc.' are not supported by or justified by the evidence.

The record discloses evidence' indicating that at the time the stock' was purchased, Mr. Evans, president of Consolidated Produce Company recommended that respondent Pieper buy [633]