George Fishbaugh, Inc. v. Beeler

ROSS, J. Suit on two notes and to foreclose mortgage securities executed in favor of George Fishbaugh by appellees, dated March 24, 1908, and August 31, 1908, for $1,500 and $1,000, respectively, due three years from dates, bearing ten per cent interest. Notes indorsed March 18, 1909, and before due, by payee Fishbaugh to George Fishbaugh, Incorporated, plaintiff and appellant herein. [120] Defendants, appellees, admit the execution of notes and mortgages and corporate capacity of appellant, and deny all allegations of complaint not specifically admitted; allege that notes and mortgages were given for future advances to be made, and that only $970 was paid them on first note, and only $375 on second note, and that appellant corporation took notes with full and actual knowledge of deficiencies in consideration paid by George Fishbaugh; allege that George Fishbaugh, original payee of notes, and who was also president and sole manager of appellant corporation, made an agreement with appellants to accept and apply on said notes in payment certain services and materials, at their reasonable value, to be performed and furnished by appellee, and that said corporation had actual notice of all things done by its president and sole manager, and that Fishbaugh had actual notice of all things done by the corporation, that services and material were furnished George Fishbaugh under said agreement of the reasonable value of $2,2é8.92,. giving items of service and material; allege one cash payment September, 1909, to Fishbaugh in the sum of $161. Appellant corporation moved that defense of payment be stricken as being redundant, uncertain, immaterial, and irrelevant, for the reason, as we gather, that payments to Fishbaugh, payee, after notes were assigned to Fishbaugh, Incorporated, and before due, could not be applied in satisfaction of notes; also demurred for same reason, and that answer failed to state a defense, and denied payments as set forth in answer. Motion to strike was disallowed, and demurrers overruled. The case was tried to the court without a jury, and judgment entered that appellant take nothing, and appellees have their costs. Appeal from judgment and order overruling motion for new trial. Ordinarily payments made to an officer of a corporation in his individual capacity, or services rendered him or material furnished him in such capacity, may not be charged against the corporation, and this is especially true when pleaded as an offset to negotiable paper owned and held by the corporation. This, in the absence of any agreement by the corporation, is the rule. [121] But it is pleaded in the answer that the corporation appellant had actual notice of the agreement between its president and appellees that any payments made to Fishbaugh and services and material rendered and furnished him would be applied on the notes. If George Fishbaugh, Incorporated, had full knowledge that George Fishbaugh, as an individual, had made such an agreement, and that appellees were actually making payments as agreed to George Fishbaugh, the latter being the sole manager of the corporation, it would seem that the corporation would be estopped from denying the binding effect of such agreement, and bound by its terms in so far as fulfilled before a disavowal of the contract. The immaturity of the notes in such circumstances does not affect the situation. There is no legal reason why the corporation could not substitute Fishbaugh for its debtor, and through him collect the amount of the notes found to be due, rather than proceed directly against the appellees. That is the effect of the agreement as pleaded in the answer, and we think the court correctly ruled on the motion to strike and demurrers. Complaint is made that the answer did not set forth with sufficient particularity the items of offset, with amounts and dates. If the answer was defective in this respect, it could have been corrected by a motion to make more definite and certain. No such motion was made. Several assignments are based on the findings as made by the court; but they are directed more to the form and minor inaccuracies of the findings than to their substance. Based upon proper and legal evidence, the court found that appellees had received from Fishbaugh on the two notes only the sum of $1,799.75, instead of their face value of $2,500; that they had paid Fishbaugh in cash, services, and material the sum of $2,396.92. The evidence discloses that the George Fishbaugh, Incorporated, was George Fishbaugh’s alter ego or other self, that it was incorporated by him to assist some of his poor relatives, and that he had indorsed the notes sued on to the corporation for “love and affection.” It also shows credits allowed on notes by the appellant after they were assigned, thereby demonstrating clearly that the question was not one of authority and power in George Fishbaugh to bind the corporation, but a dispute between Fishbaugh and appellees as to the [122] amount of credit that should be given. There is a sharp conflict in the evidence as to the credits appellees should have. The trial court found against appellant’s contention, and we do not feel justified in disturbing that finding. Judgment affirmed. FRANKLIN, C. J., concurs.