Nix v. Miller

ON PETITION EOR REHEARING.

In support of appellant’s petition for a rehearing, new counsel-has appeared, and in his brief, discussed some propositions not touched upon at the original hearing. After carefully studying the argument directed against our former conclusions, we see no reason for changing them; but in the light of-the criticism of the opinion and the vigorous dissent from the- soundness of our-views, we submit these additional observations :

1. The objection, -now urged for the first time, under the head that the complaint does not state facts-sufficient to constitute a cause of action, conies too late. The defects pointed *211out are only such as might be the ground of a special demurrer or motion. But if as serious as appellant contends, evidence was introduced in support of the complaint and received without objection, upon the assumption that its allegations were sufficient to constitute a cause of action. Having once treated the complaint as sufficient, defendant may not thereafter question it.

2. Upon the plea of more fully getting before the court the facts of the case at bar, counsel has not been satisfied with the facts appearing in this, but has invoked the aid of another record, viz, in the case of Nix v. First National Bank, decided by this court and reported on page 511, 23 Colorado reports. We must not be understood as countenancing the practice of giving counsel a roving commission to aid his case by borrowing facts from another; yet as, in the two cases, there are some common phases, we do not feel that the present excursion is altogether inappropriate, particularly as we ourselves cannot, and should not, shut our eyes to the facts of that case. But what possible aid counsel can derive therefrom, we are at a loss to conceive, for there Nix escaped liability upon the ground that, as a member of the new firm of Home & Company, composed of Home and Nix, he did not assume any of the debts of the old firm of Home & Company, composed of Home & Hartwell, while in the case at bar, one of the points made upon this rehearing, though not before, is that included in the debts assumed by the corporation were those of the old copartnership.

It is a sufficient reply to the present contention to say that parties are not allowed to change front upon an appeal. Appellant’s defense in the trial court, and his position at the original hearing, were not based upon the claim that the corporation assumed the debts of the old firm. Escape from liability was sought upon other and entirely inconsistent theories. See Orman v. Ryan, 25 Colo. 383.

But if the appellant was in a position to urge the new claim that the old firm’s debts were assumed, the findings of the court (and the evidence supports them, particularly when *212the facts of the Bank case, supra, are considered) are conclusive against it.

3. No particular stress was laid upon the statement in the opinion that the assets of a corporation are a trust fund for the creditors. It is not necessary here to rely upon that doctrine except, only, in the sense that it is applicable to the assets of every insolvent debtor. If the rule for disbursing the assets of an insolvent corporation is, as appellant maintains it to be, the same as that governing the disposition of the assets of-an insolvent copartnership, it is quite clear that defendant is liable to this plaintiff, for hi equity — -and this is properly cognizable as an equitable cause of action — the assets of a copartnership firm must be devoted to the payment of the joint indebtedness before they can be used to pay the debts of the individual members. When, therefore, the directors of the corporation applied its corporate assets to the payment of the individual debts of one of the directors, which act necessarily rendered the corporation insolvent, it was as palpably a fraud upon the creditors of the corporation who are in a position to question the act, as would be the act of the member of a copartnership who paid his individual debts witli the assets of the firm, when, by so doing, the firm creditors were left without any assets out of which to make their claims.

4.. We did not lightly make the statement in the original opinion-that the acts of the directors of the corporation were intended to work a fraud upon its subsequent creditors. We did so because the findings of the trial court are to that effect. We rightly assume that those who conducted its affairs were men of intelligence, capable of reasoning from cause to effect; and when they deliberately formed a scheme, and consistently carried it out, that necessarily must, and did, result in defrauding the creditors of the corporation, we could come to no other conclusion than that they intended the natural and inevitable consequences of their acts.

5. The statement is made in the brief, and also at the former hearing, that, whereas the only fraud charged in the complaint is that defendants caused the insolvency of the cor*213poration by improperly declaring and paying dividends to the stockholders, the finding of the trial court was that the fraud consisted in misapplying the assets by paying the debts of one of the directors. Concerning this the point sought to be made is that the fraud charged was not proved, but the finding, on an issue not in the case, was that plaintiff had committed another fraud. In other words, there is a variance between the allegations and the proof. Counsel are in error in saying that the only fraud charged is the one just referred to. The allegation of the complaint is that the fraud was perpetrated “by way of unauthorized dividends and otherwise.” This is broad enough to permit evidence of an unlawful diversion of the assets, other than by way of payment of unlawful dividends.

6. Aside from the foregoing considerations, as we said in the concluding part of the opinion, the court below would have been justified in finding, and we are entirely borne out by the evidence in saying, that, after the plaintiff became a creditor of the corporation, assets that came into its possession after such time, and sufficient to cover plaintiff’s claim, were diverted by the directors, and no explanation or accounting thereof was attempted by the defendant.

Other and additional reasons might be given for the conclusion which we have reached, but those already submitted are sufficient. We'are satisfied that justice has been done in this case. The petition for a rehearing should be denied, and it is so ordered.