Court Opinion

ID: 9444876
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:15:11.871782+00
Date Added: 2024-06-11T17:30:03.090760
License: Public Domain

POPE, Circuit Judge
(dissenting).
Basic to my line of reasoning is the finding in this case, which is the law of the case, that Timber, Inc. was merely the alter ego of Hoss; that this supposed corporation was only a shell and that not only this but the other corporation as well were mere conduits for Hoss’ own business. The judgment against Hoss individually is based upon this finding that it was Hoss who was doing all these acts and carrying on all this business. This finding is reflected in the judgment against Hoss individually for holding him personally could be sustained on that ground only.
It follows from this that when Purinton, the plaintiff, entered into the sawmill and lumber operation he was dealing in truth and in fact with Hoss who was the real party to the arrangement, although the latter purported to utilize the names of these corporations merely as a false front. It is therefore my opinion that since the judgment proceeds upon the theory that this was an arrangement between Purinton and Hoss, it must be considered as an arrangement between two individuals. Whether the named corporations did or did not comply with the various Alaska statutes for filing and paying the fees is therefore beside the point because whether the corporations could or could not in a proper case make a valid contract, it is not the claim of plaintiff that they did make this contract. On the contrary it is his claim that he contracted with Hoss individually.
Now for the purposes of this record it must be taken that there was a written agreement executed by Purinton. This was received in evidence but ruled void by the court. Purinton’s theory was that he had a right to declare this contract null and void because Timber, Inc., with whom it was executed, had not complied with the statute. But it is my view that plaintiff cannot ride his horse both ways. His own theory is, as accepted by the trial court, that his dealings were with Hoss, an individual, using the name Timber, Inc., as his alter ego, or as merely another name for himself. Therefore under this theory whether as a corporation Timber, Inc. might or might not have made such a contract is immaterial here because it is neither alleged nor found that it did make such a contract. Under the findings the only person who *110made the arrangements was Hoss individually. Now when that written agreement is examined it will be found that it was a rather carefully drawn arrangement for a joint venture between plaintiff on one hand and Hoss on the other, plaintiff to operate the sawmill, hire help and get $60 per thousand board feet of lumber. This $60 he was to divide into certain named proportions: $17 to the logger, $2.00 to the Forest Service, $3.33 to fuel, etc., charges, and certain units of the final $18.83 to go to plaintiff and other workmen in full for their services.
This was an apparently valid joint venture agreement so far as plaintiff and Hoss were concerned, and if it was thus executed Purinton has no ground for complaint. Assuredly he cannot sue his joint venturer otherwise than in equity for an accounting, and the record would seem to indicate that he got all he was entitled to under that contract. It is true that there was some effort on the part of Purinton to claim that this written agreement which admittedly he signed was not executed in good faith, but was a mere sham to deceive creditors of Hoss and to make them believe that the sawmill would keep operating as a going enterprise. Under the better rule such claim of sham is not a defense to a written agreement of the kind here involved when the effort is to show that the writing was designed to deceive third persons. As stated by the Supreme Court of Montana, Higby v. Hooper, 124 Mont. 331, 221 P.2d 1043, 1053, “The law does not allow parties to a contract to show that it was got up as a sham to deceive and defraud.” In so holding that court was following the views of Mr. Wigmore. See Wigmore on Evidence, 3d edition, § 2406, Vol. 9, p. 18.
It is true that some courts have disagreed with Mr. Wigmore and with Montana and the other courts which follow the Montana rule but even if the contrary rule should be accepted here for Alaska it would not help the plaintiff in this case for before it could be said that the contract was á sham, evidence on both sides would have to be received, and there would have to be a finding of fact. Of course no such issue was before the jury in this case for the court would not permit the jury to consider the written contract for reasons which I have previously indicated were completely irrelevant. I favor the adoption of Wigmore’s view that a contract of this kind cannot be impeached as sham.
As is apparent from a reading of the majority opinion, there have been inserted three paragraphs, immediately preceding the discussion of the testimony of Hoss’ former wife, in an effort to counter the position which I have here stated. That efforts lacks logic or reason.
The judgment against Hoss individually is not based on any provision of any Alaska statute. Neither § 36-1-122, relating to filing of annual reports, nor any other section, provides that for non-compliance, the stockholders or incorporators shall be individually liable. Hoss’ individual liability was based, under the court’s instructions, upon a finding that Timber, Inc. did not really function as a corporation, but was a “mere conduit” for Hoss’ own business. It followed then, that the dealings were those of Hoss, individually, acting through his “alter ego”. But what dealings were they? The dealings were those stated in writing, in the so-called Master Contract, a contract for a joint venture. In line with what became the law of this case, if a shell of a corporation like Timber, Inc. agreed to buy a carload of apples, its sole owner could be held liable upon that agreement, but he would hardly be liable upon a court-manufactured agreement to buy a carload of coal. The only contract Purinton had was one of joint venture. Granted that Hoss is liable on that, how can he be held liable for sums which neither he nor anyone else ever agreed to pay? Because the arrangement with Purinton was an express one, with definite and explicit terms, the attempt to make Hoss liable on some entirely different obligation is wholly without legal basis.
The- judgment should be reversed.