Case ID: ohio-st_91/html/0122-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jones v. The Turney & Jones Company et al.
    
      Receivership — Creditors’ committee — Assignment of claims by creditors — Interagreement by two stockholders — Stockholders’ liability — Purchase of claims by one stockholder — Accounting in action to enforce liability — Remedies.
    (No. 14025 —
    Decided December 1, 1914.)
    Error to the Circuit Court of Franklin county.
    John S. Jones filed in the common pleas court in this action an answer and cross-petition in which, among other things, he averred that Henry D. Turney and himself were the principal stockholders and the only solvent stockholders of The Turney & Jones Company; that in 1898 said company became involved financially and unable to continue business, and suits were commenced in the courts to wind up the affairs of said corporation, convert its assets into money, and receivers of said company were appointed in said action for that purpose; that during the next two or three years all of the assets of said company were collected and distributed among its creditors, and in order to facilitate said distribution a creditors’ committee was appointed on behalf of said company and on behalf of said Turney and Jones; that most of the creditors surrendered their claims against said company and assigned the same to this committee, and that as to all the creditors who assigned their claims the affairs of said corporation have been finally settled; that at the time of the appointment of said creditors’ committee it was apprehended by said Turney and Jones that certain creditors of said company would refuse to come into said settlement and would hold all balances due on their claims, respectively, for the purpose of enforcing the stockholders’ liability against said Turney and said Jones; that if either of them was obliged to personally pay any money on said individual stockholders’ liability to the creditors refusing to come into the settlement they would account with each other and each would pay one-half of the amount that either was obliged to pay on account of these outstanding claims not paid or settled through the creditors’ committee; that said written agreement was made on or about the 26th day of August, 1899.
    That afterwards Charles C. Higgins, one of the creditors who refused to enter into this settlement or to assign his claim to said creditors’ committee, commenced this action to enforce the stockholders’ liability against Turney and Jones on behalf of himself and all other creditors, and that thereafter such proceedings were had that the following claims of creditors were approved and allowed against said The Turney & Jones Company: Charles C. Higgins, $235.22; The National Lead Company, $391.01; Trustee of Park Bros. & Co., $118.75; Samuel Butler & Company, $119.12; Henry D. Turney, $13,645.45; that the above claims were the only ones presented or allowed in this action.
    He further avers that the above claim, presented by Henry D. Turney and approved and allowed against said The Turney & Jones Company, consisted of claims of various creditors that Henry D. Turney had settled and paid in accordance with the terms of the contract in reference thereto, and that this defendant had no knowledge that said claims had been presented by Henry D. Turney until after the same had been allowed. This defendant further avers that, acting under and in pursuance of said written contract, he has personally paid and adjusted a large amount of claims against The Turney & Jones Company; that the aggregaté amount of these claims paid, settled and adjusted by the said Henry D. Turney and this defendant, respectively, are largely in excess of the money expended by either of them in the purchase and settlement of said claims, but that the said Turney refuses to account with this defendant upon any fair and equitable basis in reference to the amounts paid by each in purchasing said claims of creditors. The defendant further avers that judgment was obtained against him upon his liability as stockholder in a large sum of money, and he asks that the receiver be enjoined from collecting the same, and that there may be an accounting had between this defendant and Henry D. Turney in accordance with their rights and liabilities as stockholders of said corporation. To this answer and cross-petition a demurrer was filed, which demurrer the common pleas court sustained. Upon appeal by the defendant Jones the circuit court also sustained the demurrer, and this proceeding in error is prosecuted to reverse the judgment of the circuit court.
    
      Mr. Thomas E. Powell and Mr. Barton Griffith, for plaintiff in error.
    
      Messrs. Webber, McCoy, Schoedinger & Jones; Messrs. Morton, Irvine & Blanchard and Mr. R. J. Odell, for defendants in error.
   By the Court.

While the answer and cross-petition of John S. Jones filed in this action contains irrelevant, redundant and immaterial matter, and while there are no averments therein contained that would entitle the cross-petitioner to have the judgment against him in this action upon his liability as a stockholder of the insolvent corporation opened up and set aside or the collection thereof enjoined, and no averments therein that would entitle him to have opened up and set aside the allowance and approval of the claim of Henry D. Turney, yet if the averments of this answer and cross-petition that are copied into the above statement of facts are sustained by the proofs, then the cross-petitioner is entitled to an accounting with Henry D. Turney in accordance with the terms and provisions of the written agreement, the substance of which is pleaded in the cross-petition.

If these claims were in fact purchased by Henry D. Turney, after this written contract was made and entered into between himself and John S. Jones, notwithstanding that Henry D. Turney advanced his own money for that purpose, they were purchased for the equal benefit of himself and John S. Jones, and the same is true of all claims purchased or paid by John S. Jones. The fact that these claims purchased by Henry D. Turney under such an agreement with his associate Jones, if they were so purchased, were afterwards presented and their full face value allowed in this action as valid and existing claims against this insolvent corporation, does not divest the cross-petitioner of his joint interest with Turney therein. These claims having been approved and allowed in this action, the cross-petitioner is therefore entitled to assert his interest therein in this suit upon distribution, and should not be required to bring a separate action therefor.

It further appearing that the ascertaining of the respective rights of the cross-petitioner and Henry D. Turney in the claims presented and allowed, involves an accounting between said parties, such accounting should be had in this action as to all the transactions covered by this contract, and this would include the moneys paid and expended both by Jones and Turney under the terms of this contract in the settlement and discharge of claims against this insolvent corporation, together with all moneys that either has paid or may be compelled to pay into court in the satisfaction and payment of claims allowed, together with all costs taxed generally against the funds in the hands of the receiver, but not including any costs that are now or may hereafter be adjudged specifically against either of said parties.

For the reasons above stated the judgment of the circuit court is reversed, and the cause is remanded to that court with directions to overrule the demurrer to this answer and cross-petition.

Judgment reversed.

Nichols, C. J., Johnson, Donahue, Wanamaker and Wilkin, JJ., concur.