Case Name: UTAH COOPERATIVE ASSOCIATION, Plaintiff and Respondent, v. WHITE DISTRIBUTING & SUPPLY COMPANY, a corporation, Gordon P. Austin and Annell Austin, his wife, E. B. McCabe and Mary S. McCabe, his wife, and Elvira R. White, Defendants, Verdl R. White, Defendant and Appellant
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1954-10-27
Citations: 2 Utah 2d 391
Docket Number: No. 7627
Parties: UTAH COOPERATIVE ASSOCIATION, Plaintiff and Respondent, v. WHITE DISTRIBUTING & SUPPLY COMPANY, a corporation, Gordon P. Austin and Annell Austin, his wife, E. B. McCabe and Mary S. McCabe, his wife, and Elvira R. White, Defendants, Verdl R. White, Defendant and Appellant.
Judges: WADE, J., concurs in the dissenting opinion of CROCKETT, J.
Reporter: Utah Reports, Second Series
Volume: 2
Pages: 391–403

Head Matter:
275 P.2d 687
UTAH COOPERATIVE ASSOCIATION, Plaintiff and Respondent, v. WHITE DISTRIBUTING & SUPPLY COMPANY, a corporation, Gordon P. Austin and Annell Austin, his wife, E. B. McCabe and Mary S. McCabe, his wife, and Elvira R. White, Defendants, Verdl R. White, Defendant and Appellant.
No. 7627.
Supreme Court of Utah.
Oct. 27, 1954.
W. D. White, Geo, E. Bridwell, Salt Lake City, for appellant.
Gaylen S. Young, Gaylen S. Young, Jr., Salt Lake City, for respondent.

Opinion:
WORTHEN, Justice.
This Court in its decision, reported in 237 P.2d 262, affirmed the decree of the trial court holding that the judgment of plaintiff, Utah Cooperative Association, referred to herein as Utah Co-op, against White Distributing & Supply Company, referred to herein as White Company, constituted a lien against the interest of Verdi R. White, appellant, President and General Manager of White Company, in real property located at 3149 South State Street, Salt Lake City, Utah, which property was being purchased by appellant and Gordon P. Austin under a contract for sale of real property. Gordon P. Austin was a stockholder in, and one of the in-corporators of, White Company. Thereafter a rehearing was granted.
It is deemed necessary to set out the facts in come detail. Appellant and Austin entered into a contract to purchase the real property in question in November, 1945.
The White Company was incorporated February, 1946.
A building was constructed on the property being purchased by appellant and Austin in May, 1946.
So far as the evidence discloses, the White Company was in good financial condition when the building was erected. Whether the building was built by White Company or by appellant and Austin, with funds and materials furnished by White Company, is not clear.
It is alleged in the complaint that the company was induced by Verdi R. White to pay out of its own funds $4,600 cash for materials which appellant and Austin used to build the building. On the other hand, in the supplemental proceeding appellant was asked if White Company built a building at 3149 South State Street, and he answered yes.
In May, 1947, long after the building in question was erected, plaintiff sold a substantial quantity of nails to the White Company. Later the White Company became insolvent.
Plaintiff brought suit against the White Company alone (case No. 82097, District Court, Salt Lake County) and on June 25, 1948, recovered a judgment. On December 17, 1948, plaintiff filed a Notice of Judgment lien in the office of the County Recorder of Salt Lake County, claiming a judgment lien upon the real property being purchased by appellant and Austin. On May 4, 1949, plaintiff brought this action and the case was tried beginning September 26, 1950.
While the instant case was pending, appellant as President of White Company was examined on January 6, 1950, in response to an order issued in Case No. 82097, requiring the White Company to appear in supplemental proceedings.
Plaintiff's evidence to support its claim of lien against appellant's interest in the property at 3149 South State Street, consisted of testimony given by appellant at the supplemental proceeding, which plaintiff's attorney read into the record while he was testifying for plaintiff. That testimony is as follows:
"Q. State your name, Mr. White.
A. Verdi R. White.
"Q. You are President of the White Distributing & Supply Company, a corporation, that is correct?
A. That is correct.
"Q. Now, the White Distributing & Supply Company built a building at 3149 South State Street in Salt Lake City, is that correct ? A. That is correct.
"Q. Is that a brick building? A. Cinder block.
"Q. And that property is in your name as an individual? A. Partly. There are two individual owners.
"Q. Who? A. Gordon P. White, and Verdi R. White, under contract of purchase.
"Q. It is under the name of the seller. Mr. Austin and you are buying it from the seller? A. Yes.
"Mr. Bridwell: Excuse me. Mr. Young, you said Gordon P. White in one of the statements, is that correct?
"Mr. Young: That is what the reporter got.
"Mr. Bridwell: Of course, your next question was — it was in the name of Gordon Austin, so I think apparent-Iy—
"Mr. Young: Pardon me, I didn't mean Gordon P. White, Gordon P. Austin and Verdi R. White.
"The Court: Is your recollection refreshed by those notes, or are you just giving the reporter's notes?
"Mr. Young: I definitely remember this testimony. In fact I questioned him for the purpose of bringing out this particular testimony, because I understood those were the facts.
"The Court: This testimony is what you remember?
"Mr. Young: Yes.
"The Court: You may proceed.
"Mr. Young: (Reading) Q. Who is the seller ? A. Mary and E. B. Mc-Cabe. I might be wrong on that.
"Q. McCabe? Although that property is being purchased by you as an individual, the corporation did spend its own funds building the building on it ? A. That is correct.
"Q. How much approximately did the corporation spend putting the building up ? A. Approximately $4,600.00.
"Q. And so you would say that that would be the interest of the corporation in that property? A. Yes."
Upon the foregoing- testimony and notwithstanding the pleadings in this case, the trial court made the following conclusions of law:
"1. That defendants E. B. McCabe and Mary S. McCabe, his wife, have the fee interest in said real property described in paragraph 3 of the Findings of Fact subject, however, to an outstanding uniform real estate contract in which they sold the same to defendants, Verdi R. White and Gordon P. Austin and on which a balance is still owing to said McCabes of approximately $10,000.00.
"2. That defendant Verdi R. White has an undivided one-half interest in said buyer's equity in and to said real property described in paragraph 3 of the Findings of Fact, subject however, to an interest of $4,600.00 in said undivided one-half interest in said buyer's equity in favor of, and owned by, the' defendant, White Distributing & Supply Company, a corporation."
The decree of the trial, court with the addition of the description of the real property being purchased by appellant and Austin, was a restatement of .the language setspiit in the conclusions.
The trial court, and this Court as reflected in its former decision, assumed that' the admission of appellant was so conclusive as a declaration against interest that it was not overcome by testimony of the appellant given before the trial court. It is suggested that appellant's answer, "yes" to the question "And so you would say that that would be the interest of the corporation in that property?" was sufficient to authorize entry of a judgment against him, not in favor of plaintiff but in favor of the White Company.
Such an assumption was incorrect and we are now of the opinion that the lower court's judgment should be reversed. The last question asked appellant in the supplemental proceeding, together with his answer, fall far short of what is required to justify a decree that White Company has an interest in appellant's property.
It is suggested that appellant at the supplemental hearing should have explained his answer if he contended it meant something different than what the trial court and this court interpreted it to mean; and that his failure to explain his statement until the trial in this case brands it as an afterthought for the purpose of overcoming what he stated at the supplemental proceeding.
The majority opinion of this Court, reported in 237 P.2d 262, indicates that the insjant action was filed subsequent to appellant's admission given at the supplemental proceeding. Such assumption is incorrect. As pointed out earlier in this opinion, this action was commenced on May 4,1949. Yet appellant's examination at the supplemental proceeding -was not made until January 6, 1950.
With these facts in mind, not mentioned in the former judgment of this Court, the criticism leveled at appellant for not making the explanations which this Court felt he should make, has less to justify it. Moreover, appellant was not before the court in the supplemental proceeding either as a judgment debtor or as a debtor of the judgment debtor, White Company. He was there as an officer of the judgment debtor only.
Prior to that hearing, appellant had pleaded to plaintiff's complaint in this action and had denied that White Company had any interest in the property in question. The White Company had, answered plaintiff's complaint and denied that it had any interest in the property.
Gordon P. Austin and his wife answered plaintiff's complaint in April, 1950, and denied that "The White Distributing and Supply Co. has or ever had any interest in the property described in said paragraph."
In her answer, appellant's wife claimed an interest in the property, which interest the decree of the lower court as well as this Court ignores.
In plaintiff's complaint it is alleged that appellant, President of the White Company "caused that said defendant corporation, without consideration, pay out of its own funds in excess of $4,600 cash and materials for the purpose of erecting a building upon the real property particularly described in paragraph 3 herein. That with said funds the defendants, Verdi R. White and Gordon P. Austin, did, prior to the entry of said judgment, build a business building' on said property. That both of said defendants, Verdi R. White and Gordon ,P. Austin, knew at all times that said funds of said corporation were being used to build such structure upon real property claimed to be owned by them. That said money of said corporation was appropriated without authority of the directors and stockholders of the said White Distributing and Supply Co., a corporation, and was made in defraud of the interest of creditors of said corporation." (Italics ours.)
The answer of White Company, appellant, and appellant's wife, denied that the appellant caused the White Company to pay out of its funds $4,600 without consideration; denied that the money of the White Company was appropriated without authority of the directors and stockholders; and denied that the same was done in defraud of the interest of the creditors.
The judgment of the trial court affirmed by this court in face of the verified answer of the White Co., appellant, and his wife, held that the answer of appellant to the equivocal question asked upon supplemental proceeding, calling only for a legal conclusion, was sufficient legal evidence of an interest in favor of White Company.
We do not perceive that it would be contended that an officer of the White Company other than appellant and Gordon P. Austin, could have vested an interest in. the White Company in appellant's property by answering as did appellant; nor could the testimony of appellant that the White Company spent $4,600 in putting a building on the property of "A" have effected that result.
As we perceive this matter, appellant's admission did not vest an interest in his real property in favor of White Company nor authorize the court to do so.
The White Company makes no claim that it has an interest in the property; the White Company disclaimed in its answer that it has any interest in the property in question.
The trial court excluded all evidence of fraud and bad faith.
This case does not encompass a constructive trust.
As we view the case — it boils down to a creditor-debtor relation. The record is silent as to any written agreement between the White Company and appellant and Austin, and it must be presumed that any agreement was in parole. The trial court probably assumed that appellant had agreed to give the White Company an interest in the property because of the money and materials used.
The difficulty with this theory is that 'after implying the contract, we must imply all of its terms. Equally consistent with the statements made by Verdi White and the relationship between him and the Corporation are (1) a contract between the landlord,and.tenant that the building was to remain personalty; (2) that the building was consideration for the lease; or (3) an agreement to give a lien on the property for the amount expended.
We are of the opinion that the answer "yes" given by Verdi White to the legal conclusion propounded as a question was at most appellant's conclusion of his relationship to the White Company. The rights of the White Company must rest in contract and not on such legal conclusions.
The statement of appellant that the White Company built a building on his land costing $4,600 was the evidentiary fact of the relation between the parties. Had he answered the last question propounded at the supplemental proceeding "no," would it be taken as conclusive that the White Company had no interest, contractual or otherwise?
Appellant is criticized for not amplifying and explaining his answer. Probably like criticism may be directed against plaintiff's attorney for not inquiring further at the time appellant was being examined. It would have been a simple matter for the attorney for appellant or the attorney for plaintiff to have asked appellant if the building constructed was to belong to the White Company with the right of removal; or if he and Austin had agreed to give it a lien or mortgage on their property; or if appellant and Austin agreed to repay the White Company for the money expended.
If such further questions had been asked, this matter would not now be perplexing this court.
The trial court's judgment is a conclusion that the White Company has a lien on appellant's interest in the property in question to the extent of $4,600. It was established by the admission of appellant and against abundant uncontradicted testimony that appellant had expended in excess of $25,000 to meet obligations of the White Company, and in face of uncontradicted testimony that the White Company had failed to pay the rent due for use of the premises in the amount of more than $3,500.
The decree of the trial court fails to do equity. It is undisputed that the White Company collected from three rental units on the property on which this building was constructed, amounts ranging from $150 to $200 per month for which it failed to account to appellant and Austin.
The trial court seemed not disposed to determine the equities between the parties but considered that the statement of appellant made at the supplemental proceeding could not be overcome by any evidence.
The case is remanded for further proceedings consistent with this opinion. Plaintiff should be given an opportunity to establish by competent evidence, if able, that the White Corporation has an equitable interest in appellant's property sufficient to satisfy the judgment. Appellant to recover costs.