Case Name: Zieverink et al. v. Kemper, Rec'r
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1893-04-25
Citations: 50 Ohio St. 208
Docket Number: 
Parties: Zieverink et al. v. Kemper, Rec’r.
Judges: Minsharr, J., dissents.
Reporter: Ohio State Reports, New Service
Volume: 50
Pages: 208–222

Head Matter:
Zieverink et al. v. Kemper, Rec’r.
Statute of Limitations—Frauds—Pleadings—When an action is commenced—Receivers— When may be appointed—Powers of— Stockholders' liabilities—Evidence.
1. When it appears from plaintiff’s petition, in an action for relief on the ground of fraud, that the cause of action accrued more than four years before the action was commenced, a general averment in the petition, that the fraud was not discovered by plaintiff until a time within four years before the action was brought, is sufficient to bring the case within the saving clause of the statute of limitations for such actions, without specifically setting out when the discovery was made, or how it was made,, or why it was not made sooner.
2. An action is deemed commenced at the date of the summons. which is served on the defendant, and although a demurrer is sustained to the petition and leave given to amend, the action remains “ commenced ”; and the averment as to the discovery of the fraud within four years before the action was brought, may be supplied in a subsequent amendment to the petition.
3. In an action to enforce payment of the statutory liability of stockholders in an Ohio corporation, a receiver may be appointed by the court to collect and distribute the fund, and such receiver may, by authority of the court appointing him, prosecute actions in his own name as such receiver to enforce payment of judgments rendered for such.statutory liability.
1 When a judgment in a former action exists against a party to another action in the same court, and upon the trial of such other action reference is made to such former judgment, admissions are made as evidence on the trial by counsel on both sides that such judgment shows certain facts, and witnesses testify as to facts said to be shown by such judgment, all without objection by either side, it is not error for the court hearing the case, to regard such judgment as in evidence, although not formally offered or read by either party. Bevington v. State, 2 Ohio St. 160, followed and approved.
(Decided April 25, 1893.)
Error to the Superior Court of Cincinnati.
John Henry Zieverink, one of the plaintiffs in error, was a stockholder and officer in The Western Furniture Company at Cincinnati, for some time before the sixth day of June, 1878, and had full knowledge of its financial condition and the fact that said company was insolvent, and on the sixth day of June, 1878, said company made an assignment of all its assets for the benefit of its creditors. The assets of said company were insufficient to pay its debts; and on the 13th day of January, 1880, an action was brought in the Superior Couit of Cincinnati, known as case No. 35,313, in said court, by Oscar F. Moore against The Western Furniture Company and its stockholders, to enforce the statutory liability of the stockholders of said company. Such proceedings were afterwards had in said action, that on the 26th day of October, 1882, judgment was rendered against said John H. Zieverink in said Superior Court on account of his statutory liability for the sum of $2,000, and execution was issued on said judgment, and said execution remained unsatisfied for want of property upon which to levy, to make any part of said execution. On October 26, 1882, said Willis M. Kemper was duly appointed receiver by said court in said case No. 35,313. and authorized to collect said judgment, and other judgments for the benefit of the creditors of said company. And on January 21, 1887, said Willis M. Kemper, as such receiver, commenced an action in the Superior Court of Cincinnati against said John H. Zieverink, Mary Zieverink, his wife, William F. Wieman, Casimir Bauman and John B. Rucas, and in his said petition set out the foregoing facts, and averred that on the 27th day of May, 1878, just prior to the assignment so made by said company, said John H. Zieverink, and Mary Zieverink, his wife, conveyed the property in the petition described, being twenty feet front on the west side of Pleasant street, in the citjr of Cincinnati, to said William Wieman without consideration, and for the purpose, and with the intent, to defraud his creditors, and to conceal his property from his creditors; and that on the same day said William F. Wieman conveyed said property to said Mary Zieverink without consideration; and that said Mary Zieverink received the same with such fraudulent intent. That afterwards, on the 9th dajr of October, 1879, said John H. Zieverink and Mary Zieverink, his wife, conveyed the said property to Casimir Bauman; that thereafter, on the 29th day of December, 1883, said Bauman transferred said property to said John B. Eucas, and on the 15th day of April, 1885, said John B. Eucas conveyed said property to said Mary Zieverink, and that there was no consideration in fact for any of the above conveyances set forth; but that ■said plaintiff did not learn of said lack of consideration and the fraudulent intent on the part of said grantors and grantees, until within four years before filing his said petition. The prayer of the petition is that said conveyance of real estate may be declared void, and set aside, and that said real estate may be subjected to the payment of said judgment; and for all further’and proper relief.
On the 24th day of February, 1887, an answer was filed by said Zieverink and wife, in effect, a general denial, with a plea of the statute of limitations; and the case was tried in the Superior Court of Cincinnati; judgment rendered in favor of the plaintiff; petition in error filed in the general term of said Superior Court, and said judgment reversed, and caiise remanded to special term for further proceedings, and with leave to said plaintiff to amend his petition. And on the 31st day of March, 1888, said plaintiff filed an amendment to his petition, in which he avers that he reiterates all the allegations of his petition, and in addition thereto says: “that Oscar F. Moore, A. Veneman & Co., Frederick Dell, H. N. Bird, A. Walterbos and F. D. Albra & Co., are all creditors of the said company; and that none of said creditors had any knowledge of the lack of con sideration for the conveyance set out in plaintiff’s petition, nor of the fraudulent intent therein set forth, until a time within four years prior to the filing of said petition.”
To this petition, as amended, Zieverink and wife de murred; the demurrer was overruled and exceptions taken. Thereupon an answer was filed, on the 25th day of May, 1888, in which the statute of limitations is again pleaded and a general denial interposed, together with the fact that said deeds were all of record and notice to the world. And they further aver, that at least one-third in amount of said creditors, after the recovery of said judgment, released their said judgments against Zieverink, and that the judgment, to that extent, was satisfied. And pray that an account be stated of the amount of said releases, and that a pro tanto satisfaction be entered of the judgment against said Zieverink.
No reply was filed to this answer. That case was again tried at special term on the 21st of November, 1888, and judgment rendered for plaintiff, setting aside and vacating said deeds, ordering that said property in the petition described be subjected to the payment, first, of the costs; second, of plaintiff’s claim, and other debts of the said John H. Zieverink thereafter to be determind; and further, ordering that if said costs be not páid within twenty days from the date of the decree, that said property be sold by the sheriff of said county as upon execution, and make due return of his proceedings to the court for further order in the premises. To all of which exceptions were taken. A bill of exceptions was allowed, pretending to set out all the testimony; and in said bill of exceptions are found copies of the various deeds alleged in the petition to have been executed, conveying said property to said different parties.
J. J. Glidde7i and John R. Von Seggern, for plaintiffs in error.
The cause of action is complete when the fraudulent conveyance is made, and in this case, if at all, when the corporation became insolvent. Coombs v. Watson, 32 Ohio St., 234, 235; Gates v. Andrews, 37 N. Y., 657; Hawkins v. Furnace Co., 40 Ohio St.. 514.
The original petition contained an averment that the receiver “did not learn of said lack of consideration and the fraudulent intent on the part of said grantors and grantees until within four years last past.” A demurrer to this petition was overruled, a decree was taken in favor of plaintiff, which decree was reversed by the Superior Court in general term, and the cause remanded. Then an amendment to the petition was filed alleging that certain six persons, naming them, were creditors of said corporation, and that neither .of them had any knowledge of the lack of consideration nor of the fraudulent intent set forth in the petition until within four years prior to filing said original petition.
There is no allegation of any concealment by defendant. No allegation that negatives the inference that the lack of knowledge may have been caused solely by the negligence ■of, or lack of diligence upon the part of said creditors; there is no allegation showing any diligence. No facts set forth excusing the delay in making inquiry. No allegation when the discovery was made, nor, what was discovered, nor why the discovery was not made sooner. Douglas v. Corry, 46 Ohio St., 354; Wood on Limitation, 590; Wood v. Carpenter, 101 U. S., 135, and cases cited; Boyd v. Boyd, 27 Ind., 429; Stanley v. Stanton, 36 Ind., 445; Wynne v. Cornelison, 52 Ind., 312; Carr v. Hilton, 1 Curtis, 390; Taylor v. S. & N. R. R. Co., 13 Fed. Rep., 158; Credit Company v. Arkansas Central R. R. Co., 15 Fed. Rep. 58; Harwood v. R. R. Co., 17 Wallace, 78; Bohm v. Cunningham, 2 Bull., 274; Kilbreath v. Fosdick, 3 Bull., 523; Moon v. Green, 19 How. (U. S. S. C.) 69; Badger v. Badger, 2 Cliff., 137; Stearns v. Page, 7 How., 819 to 829; Moore v. Green, 19 Howard, 69; Bieubien v. Bieubien, 23 How., 190; Badger v. Badger, 2 Wall., 95.
The evidence utterly fails to show or tend to prove any effort upon the part of plaintiff or any of the creditors to ascertain the facts, does not tend to prove any diligence on their part. For this reason there was no cross-examination. Carr v. Hilton, 1 Court (C. C.) 390; Wood v. Carpenter, 140; Buckner v. Calcote, 28 Miss., 432; Nudd v. Hamblin, 8 Allen, 130; Cole v. Claretin, 9 Me., 131; McKown v. Whitman, 31 Me., 448; Rouse v. Southard, 39 Me., 404; Rice v. Burt, 4 Cush., (Mass.) 208; Wood on Limitation, 590.
The original petition stated no cause of action, and, therefore, no action was brought by its’ filing. Weidner v. Rankin, 26 Ohio St., 522 to 525; Roseborough v. Ausley, 35 Ohio St., 111. The action is upon an amended petition. Bank v. Telegraph Co., 30 Ohio St., 555. And it is decided in Coombs v. Watson, that a demurrer lay to the original petition, on the ground that it did not state facts sufficient to constitute a cause of action. It showed upon its face that the cause of action had arisen more than four years before suit brought, and the lack of knowledge by the receiver was of no consequence—-he being merely a representative to enforce such rights of the parties he represented as the court empowered him to enforce for them. And for this reason the general term reversed the judgment of special term, and ,remanded the cause.
The record does not disclose any authority to the plaintiff to maintain this action or to bring this suit. There is no order of the court empowering him to bring the action; nor does it appear that he was appointed for that purpose. And the receiver has not the power to bring the action without an order of the court. Daniels Chancery Practice 1438, 1439; Bank v. Buckingham, 12 Ohio St., 419; section 5590, Revised Statutes.
Avery & Holmes, for defendant in error.
It is claimed that the mere allegation, that the want of consideration and fraudulent intent was not discovered until within four years from the filing of the petition, is insufficient. It is claimed that in addition the circumstances of the discovery must be fully stated and the delay shown to be consistent with the requisite diligence. And that there must be an allegation of concealment that negatives the inference that lack of knowledge may have- been through negligence of the creditors. We have alleged and proved in the most positive manner a continuous attempt to conceal. We do not see how the fact could be put stronger. It is not necessary to state the conclusion of fact when we state the facts themselves. But it is .not necessary to plead the concealment, and we shall suppose for argument that such has not been done.
This raises a point of pleading under our code. Secs. 4979-4982, Revised Statutes of Ohio provides that “Civil actions—can only be brought within the following periods after the cause of action accrues: Within four years, an action for relief on ground of fraud, but the cause of action in such case shall not be deemed to have accrued until the discovery of th,e fraud.”
The allegation in the amended petition is substantially in the language of the statutes. The fact is stated (although in general terms) which saved the plaintiff from the bar of the statute. If the amended petition is good on demurrer, all that is necessary on the trial of the case is to prove its. allegations. This was done. Coombs v. Watson, 32 Ohio St., 228; Maple v. Railroad Co., 40 Ohio St., 313; 6 Rich Eq. p. 96-100 and 101: 7 Rich Eq. 430; 17 Ohio St., 485, 508.
The pleadings and the proof in this case must be regulated by the statute and rules of the state of Ohio, and are not governed by the rules of pleading and proof in equity, though the latter coincide with the former in many respects. Howk v. Minnick, 19 Ohio St., 462.
But if, as is claimed by the plaintiffs in error, that the section is the embodiment of the rule in equity, which we think goes too far, even then the amended petition and the proof under it is sufficient. The following cases show what this court has considered the rule in equity. Longworth v. Hunt, 11 Ohio St., 194; Long v. Mulford, 17 Ohio St., 485; Ormsby v. Longworth, 11 Ohio St., 653; Pratt v. Longworth, 27 Ohio St., 159; Bailey v. Glover, 21 Wal., 342; Story’s Ecp Juris., sec. 1521a; Sullivan v. Portland, etc. R. R. Co., 91 U. S., 807.
Radies is not to be imputed to a suitor in a court of law who has not brought himself within the statute of limitations, if there had been no laches up to that point—he is not affected by any imputed laches in a court of equity. Waterman v. Sprague Mfg. Co., 55 Conn., 554; Bray v. Tofield, 18 Raw Reps., Chancery Div., 551; Quinby v. Blackey, 63 N. H., 77; Rosenthal v. Walker, Assignee, 111 U. S., 185.
In defendant’s brief, the objection is raised, that the receiver had no power to sue, and collect judgment. The court will observe that the petition makes the following statement, viz: “Plaintiff further says that on or about October 26, 1882, in Case No. 35,313 of this court, by consideration of said court he was appointed receiver, to collect said judgments for the benefit of said creditors, and that he was duly qualified as such receiver.” The entry showing the appointment of the receiver and power to sue had been in evidence in the first trial of this case.
In the second trial the defendants dictated the following admission: “It is admitted by counsel for defendants that Willis M. Kemper was appointed receiver in the case No. 35,313, Superior Court, October 26, 1882.”
We claim that the admission dictated is substantially an admission of the allegation of appointment as made in the petition.
The defendants claim that the original petition stated no cause of action, and therefore no action was brought. They cite 26 Ohio St., 522, and 35 Ohio St., 111. We cannot see how these cases apply to the case at bar; the original petition did state causes of action. The additional allegations of the amended petition were made necessary by demurrer to petition. There is no new cause of action set out in the amendment, but only additional facts in support of the original cause of action. The original petition was in such terms that the defense of the statute of limitations could be raised by demurrer; if defendants had not wished to make this defense, the petition would have been good upon which to found a judgment. Voss v. Woodford, 29 Ohio St., 245, 250; Johnson, Receiver v. The A. & S. Ry. Co., 54 N. Y., 416; Pollock on Contracts, new edition, 599, 600: B. O. & C. R. R. Co., v. Gibson, 41 Ohio St., 145, 146.

Opinion:
Buricet, J.
The first claim made by plaintiffs in error is, that the court erred in overruling the demurrer to the amendment to the petition, for the reason that said amendment contains the averment that said creditors had no' knowledge of the lack of consideration for the conveyance set out in plaintiff's petition, nor of the fraudulent intent therein set forth, until a time .within four years prior to the filing of said petition; and it is claimed that this is not a sufficient averment to avoid the statute of limitations; that the amendment to the petition should have contained a statement of the time at which the discovery of the fraud was made, and how it was discovered. This is a matter of pleading under our code and must be determined by the rules of pleading under the Code of Civil Procedure, and not by the rules of equity pleading as administered by the courts of chancery in England and this country. Hence the Indiana cases cited by counsel, as well as the cases in equity in the federal courts, are not applicable to the question here presented.
The complainant in equitj7 was permitted to state in his bill, as well the facts constituting the cause of his action, as the evidence of those facts, and the circumstances tending to establish them. But these rules of pleading were expressly abolished by our code; and, as if to emphasize the matter, the code provides that the forms of pleading and the rules by which their sufficiency shall be determined, are those prescribed by this code.
Whatever may have been necessary when the chancellor refused to give relief against wrongs of long standing, unless the plaintiff disclosed in his bill, due diligence in not only ascertaining his rights, but also in discovering the fraud of his adversary, and when, therefore, the conduct of the plaintiff was as important as that of the defendant in determining plaintiff's right to relief, we think no such rule of pleading obtains under our Code of Civil Procedure.
The statute fixes the limitation, and it is not left, as formerly, to the discretion of the chancellor. It is not a question of diligence or conduct in the discovery of the fraud, but a question of time as to the discovery of the same, that is, not as to the specific day of discovery, but as to whether the fraud was discovered within four years before the action was brought.
The ultimate facts should be averred in a petition under the code, and not the circumstances and evidence from which such facts might be inferred. The ultimate fact in this class of cases is, that the fraud set out in the petition was not discovered until within four years before the action was brought. As the petition shows that the cause of action accrued more than four years before the action was brought, it is necessary for the plaintiff, in order to bring himself within the saving exception of the statute, to plead the facts which bring him within the exception, viz: that he did not discover the fraud until within a period of four years before the action was brought.
We think the case of Combs v. Watson, 32 Ohio St. 228, states the true rule, and that all that is necessary, in such case, is to state that the fraud was not discovered until within four years before the action was brought; and that it is not necessary, as against a demurrer, to state the exact date at which the fraud was discovered, nor what acts of diligence plaintiff used to discover the fraud, nor what acts of concealment the defendant practiced to prevent a discovery of the fraud. The conclusion here arrived at is sustained by the decisions of other states having codes similar to ours. Sublette v. Tinney, 9 Cal. 423; Boyd v. Blankman, 29 Cal. 20, 44; Carpentier v. City of Oakland, 30 Cal. 444; K. P. Ry. Co. v. McCormick, 20 Kans. 107; Ryan v. Railway Co., 21 Kansas, 365.
It is said by this court in Combs v. Watson, 32 Ohio St., on page 235' that "The saving clause of the statute in question, is a substantial embodiment of the rule applied by courts of equity, in suits for relief on the ground of fraud." And counsel for plaintiff in error contended, that having adopted substantially the rule in equity, that we have also adopted with it the rule of equity as to the pleadings in such case. The answer to this is, that the same statute which adopted this rule in equity as to the discovery of the fraud, also prescribed the rules of pleading, and expressly abolished the rule of equity pleading, and provided that the rules by which the sufficiency of a pleading should be determined, were the rules prescribed by the code.
The case of Douglas v. Corry, 46 Ohio St. 354, is cited and relied-upon by plaintiffs in error; but it is sufficient to say that the section of the statute here in question was not involved in that case, and received no construction, either in the syllabi, or in the opinion of the court.
It is urged that the four years within which the fraud was discovered, must be the four years next before filing the amended petition. An action is deemed commenced, as to each defendant, at the date of the summons which is served on him; and although a demurrer be sustained to the petition, and leave given by the court to file an amended petition, which is done, yet the action remains " commenced" so as to stop the running of the statute of limitations; and an averment, in such amended petition, that the plaintiff, or other party in interest, did not discover the fraud until within four years prior to the filing of the original petition, has the same force and effect as if contained in such original petition.
Complaint is also made by counsel for plaintiff in error, that the averments of the petition, even if regarded as sufficient, are not sustained by any evidence. And it is said that the deeds complained of were all of record, and should have enabled plaintiff, with fair diligence, to have discovered the fraud many years before this action was begun. But an inspection of the deeds shows that each deed recites not only full and ample consideration, but also recites the fact that said consideration has been paid by the grantee, and received to the full satisfaction of grantor. There is, therefore, nothing on the face of the deeds to excite suspicion, unless it be that the second deed was to the wife of Mr. Zieverink. But even the sting of that suspicion is taken out of the case, by the further fact, that when the first action was brought against Mr. Zieverink on January 13,1880, and when the first judgment was rendered against him on October 22, 1882, the title to the lot had been conveyed away by Mr. Zieverink and his wife to Casimir Bauman, and stood in his name all that time, and until April 15, 1885, when he conveyed it to John B. Rucas.
It further appears that the deed to Mr. Bauman was, in effect, a mortgage to secure one thousand dollars, and that the deed to that extent was valid, and inquiry would not, likely,.have resulted in the discovery of any fraud.
The deeds are admitted to be without consideration, except the one thousand dollars, and that was paid back by Mr. Zieverink, and the only defense relied upon to defeat the action in the court below, was the statute of limitations.
We have examined the evidence, and while it is a little meager as to the exact time of the discovery of this fraud by the different parties in interest, there is no evidence whatever, that any of them discovered the fraud more than four years before the action was brought; and there is some evidence that, as to all of them, the fraud was discovered within four years before the action was commenced. We cannot say therefore that there is total failure of proof to sustain the judgment.
But it is further urged that the petition avers that the receiver was appointed to collect the judgment against Zieverink for the benefit of creditors, and that he duly qualified as such receiver, that this is denied by the answer, and that the only proof on this point is the admission by counsel on the trial, that Willis M. Kemper was appointed receiver in case No. 35,313, Superior Court, October 26,1882, and the further admission, by counsel, that a judgment in case No. 35,313, was rendered October 26, 1882, against J. H. Zieverink on his stock-holder's liability for $2,000,00. From these admissions by counsel it appears that the receiver was appointed by the court the same day that the judgment of $2,000.00 was rendered against Mr. Zieverink; and in the ordinary course of proceedings the appointment of the re ceiver, and the rendition of the judgment, would be in the same journal, and in the same entry on the journal. Hence, admitting the judgment, and the appointment of the receiver, was admitting all that appeared in the record of that case; and was, in effect, bringing the record before the court as testimony. But still it is insisted, that as the record of the judgment is not carried into the record of this case, that this court cannot know what its contents are. The answer to this is, that the record before us shows • that the record of the judgment in case No. 35,313 was a part of the records of the court trying this case below, that said judgment was referred to by counsel for both parties; that admissions were made on the trial as to matters shown by said judgment; that witnesses testified to matters in said judgment, all without objection by either party. In such case, the trial court is authorized to regard the judgment as part of the evidence in the case, although not formally offered or read by either party. Bevington v. State, 2 Ohio St. 160.
In the case just cited the court say, on page 163: "When an instrument in writing is produced by a party on a trial as evidence, and witnesses examined in relation to it, without objection to its admissibility from the other- side, it is not error for the court to regard it as in evidence, although not formally offered and read by the party producing it."
Again, as the judgment in case No. 35,313, was referred to, and admissions made by counsel of both sides with reference thereto, so as to authorize the court to regard it as in evidence, it ought to have been incorporated into the bill of exceptions, and as it is not found there the record is not complete, and the fourth syllabus in Armleder v. Leiberman, 33 Ohio St. 77, is applicable.
With the judgment in case No. 35,313 in, as evidence in the trial of this case in the court below, and said judgment not appearing in the bill of exceptions in this case, it will be presumed, on error, that there is sufficient evidence contained in said judgment, to warrant the finding and judgment of the court below in this case.
But it is urged finally, by attorneys for plaintiffs in error, that as this is a statutory action for the recovery of the statutory liability from a stockholder in an Ohio corporation, that there is no law in Ohio authorizing the appointment of a receiver in such case, that the appointment of the receiver was therefore void, and that the receiver could not maintain this action, even though appointed for that purpose, and ordered to do so by the court.
The appointment of the receiver, and the order to bring this action, having been made in an action in which said John H. Zieverink and Mary Zieverink were parties, they cannot now be heard to complain, as they acquiesced in the judgment, and took no steps to reverse or modify the same by proceedings in error or by appeal. High on Receivers, page 35, section 37.
We think there is abundant authority in the statutes for the appointment of a receiver in an action to collect the statutory liability of stockholders, and that such is the usual and better practice. But the judgment against the several stockholders must be rendered in the original action brought by a creditor or stockholder as provided in section 3260 Revised Statutes.
Such an action is equitable in its nature, and the statutory liability of the stockholders is a trust fund inuring to the equal benefit of all the creditors of the corporation, and this fund is made up from different amounts of money, to be collected from many different stockholders, and to be distributed among many creditors, and no one creditor is more interested in the collection than another. As no preference can be obtained by diligence, no one would be specially interested in prosecuting suits for the equal benefit of himself and others; and in such cases, it is the usages of equity to appoint a receiver to collect and distribute the fund under the order of the court, for the equal benefit of all the creditors. The fact that the right of action is given by statute, makes it none the less an equitable action, and being an equitable action, in its nature, requiring the service of a receiver, it is one of those in which receivers have heretofore been appointed by the usages of equity, as pro vided in section 5587 of the Revised Statutes. This case also comes within the letter, as well as spirit, of the third subdivision of said section 5587, which provides that a receiver may be appointed, "after judgment to carry the judgment into effect."
The judgment being made a charge on the real- estate in question, the court properly ordered it sold, in case the judgment and costs should not be paid by a day named.
The judgment provides that if the costs be not paid in twenty days, that the property be sold as upon execution by the sheriff, and that he make due return of his proceedings to the court for further order in the premises. When that return shall be made, or when the case gets into the probate court under section 6844, the rights of the plaintiffs in error as to the accounting prayed for, in their answer, will doubtless be protected.
We fail to find any error in the-record, and the judgment will therefore be
Affirmed.
Minsharr, J., dissents.