Court Opinion

ID: 3824380
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:58:00.90716+00
Date Added: 2024-06-11T07:39:48.827552
License: Public Domain

I am of the opinion that the record does not justify a reversal, and that the conduct of Davis was such that he is not entitled to prevail. Briefly, the record is as follows: In 1923 Davis was instrumental in organizing the Davis-Malcona Company and became its president and, with one Hibbs, its manager. Soon thereafter he fraudulently converted to his own use some $130,000 of the funds of the company. This embezzlement by Davis was followed by the insolvency and receivership of the company. On January 2, 1929, judgment was rendered against him for $169,123.47 by reason of such misappropriation, in an action instituted in February, 1924, by the preferred stockholders of said company. In 1936, Davis, being anxious to get rid of the judgment, employed Bowden as his agent to purchase some of the preferred stock of the company so that as a stockholder he could institute proceedings to procure the sale of the judgment so he could purchase it in the name of his agent and get satisfaction of the judgment. Bowden interested Valerius in the transaction. The agents so employed, with money furnished by Davis, purchased stock in the company, and in their own names sought to intervene in the original action. In February, 1937, objections by the plaintiffs' attorneys to such intervention were set for hearing. It was then charged that Bowden and Valerius were in fact representing Davis, but at that hearing both Bowden and Valerius falsely testified that Davis was not being represented by them. Bowden, in the subsequent hearing before Judge Staley, admitted that Davis furnished the money to buy the stock. Davis also admitted that he so furnished the money. The plea of intervention was denied, and then Bowden and Valerius filed an independent action, seeking the appointment of a receiver to sell the judgment, and it culminated in the sale of the judgment against Davis to Davis, through his agent Bowden. The judgment with interest then amounted to more than $240,000 and was sold for $9,120. Both the intervention proceedings and the receivership proceedings were heard before Judge Williams, who was deceived by said false testimony and by the false *Page 446 
allegations of the petition to the effect that Bowden and Valerius were acting for themselves and on behalf of all other stockholders, when in fact the proceedings were instituted for Davis and against the interest of the other stockholders. After the hearing at which the false testimony of Bowden and Valerius was given, Judge Williams, who in the meantime had resigned and been succeeded by Judge Staley, testified that the proceedings "went forward without my knowledge that Mr. Davis was concerned."
Judge Staley, from whose judgment vacating the sale and satisfaction of the judgment the present appeal was taken, found as follows:
"The court further finds that the defendant, Davis, and the said N.E. Bowden, and the other defendants herein associated with the said Davis and Bowden, including the said S.R. Thornburg, were guilty of fraud upon the district court of Tulsa county, Okla., and the receiver of the Davis-Malcona Company in the transaction wherein the said judgment was sold to the said S.R. Thornburg and that the said fraud consisted of withholding from the stockholders of Davis-Malcona Company, the district court of Tulsa county, Okla., and the receiver of the Davis-Malcona Company, the information that Bowden was acting for and on behalf of W.R. Davis and further consisted of the said Bowden's affirmative acts and declarations to the effect that he was acting for himself and not for the said Davis, when in truth and in fact he was the paid agent of the said Davis to secure the satisfaction of said judgment or to acquire the ownership of said judgment."
The testimony of Judge Williams, set out above, shows that the court was imposed upon by said perjury and false allegation, and this is sufficient, under the decisions of this court, to justify vacating the sale. Jones v. Snyder,121 Okla. 254, 249 P. 313; Federal Tax Co. v. Board of County Commissioners, 187 Okla. 223, 102 P.2d 148; 15 R.C.L. 705, 761; 34 C.J. 282.
In the present case the deception practiced was cleverly screened by following an apparently adversary legal procedure, such as making the stockholders parties defendant, giving notice of the order to show cause, and the appointment of a receiver to sell the stock, which gave an additional appearance of fairness and good faith to the proceeding. But the court should look to the substance, not to the form. I cannot escape the conclusion that the proceeding resulting in the sale of this judgment was from its inception designed to, and did, perpetrate a fraud upon the court in which it was brought, and upon the stockholders who owned the judgment. From the purchase of stock by the agents of Davis, in order that they might, as apparently bona fide stockholders, request that the judgment be sold, down to the consummation of their fraudulent purpose, every move made in the proceeding, and all the evidence produced by them, was made and done to conceal their real purpose, and to impose upon the court and the stockholders. No such deception or fraud as that contained in the record in the instant case was present in the cases relied upon in the majority opinion, on which the first syllabus is predicated.
The trial of this case consumed several days, and the trial court, having seen the witnesses and heard them testify, was in a better position to ascertain the truth than we are from the record. It judicially determined that such evidence sustained the charges of fraud. The proceeding to vacate the sale being addressed to the sound discretion of the trial court, the judgment should not be disturbed unless a clear abuse of discretion is shown. Fellows v. Owens (1936) 178 Okla. 224,62 P.2d 1215. In my opinion the record in the present case does not show an abuse of discretion. I think the trial court correctly vacated the sale for fraud, and this court should not disturb its judgment.
This cause had its beginning in 1924 in breach of trust and embezzlement and its ending in 1937 in deception, concealment, and perjury. It is my view that courts of justice have no higher duty than to see to it that parties guilty of *Page 447 
such conduct do not profit thereby. I regret to see this court render a decision that permits Davis to profit by his fraudulent scheme.
I therefore dissent to the majority opinion.