George Lawrence v. Brodie Et Al‪.‬

COX, Justice. The defendant Donovan demurred to the plaintiff's bill in equity, which alleged that the defendant Alexander H. Brodie, Jr., the plaintiff's president (hereinafter referred to as Brodie), agreed with Donovan in 1933 to form a corporation to be known as Lawrence Auto Spring Service, Inc. (hereinafter referred to as the corporation); that Brodie was to receive one half of the stock of the corporation, for which he was to pay in full by furnishing the machinery, equipment, tools, and inventory necessary to start the corporation in business; that in reliance upon the agreement Brodie furnished 'to the defendant Donovan the necessary * * * inventory'; that Donovan, who was to cause his attorney to organize the corporation, but never did, operated a business under the name of the corporation for nearly three years. The bill recites further that the plaintiff, at Brodie's direction, furnished Donovan 'springs for the original inventory to the value of $701.63,' which it charged on its books to the corporation, and that the plaintiff, also at Brodie's direction, furnished Donovan 'merchandise to the value of $3,624.26, which it charged on its books to Lawrence Auto Spring Service, Inc.' 'The plaintiff was informed and believes that the defendant Donovan had undertaken to pay to it said sum of $3,624.26. * * * The defendant Donovan, however, promised to pay said amount, not to the plaintiff which had furnished the consideration therefor, but to the defendant Brodie, and is indebted to the defendant Brodie for said sum and for $701.63 for the original inventory furnished by the plaintiff at the defendant Brodie's direction.' There are concluding allegations that Brodie has not paid the plaintiff 'said amounts,' and that, by reason of his fiduciary relation to the plaintiff 'and of the foregoing facts,' the defendant Brodie in equity and good conscience holds his claim against the defendant Donovan upon a trust for the benefit of the plaintiff. The prayers are that the amount of Brodie's indebtedness be established, that the amount owed by Donovan to Brodie be determined, and that Donovan be ordered to pay to the plaintiff the amount so determined. The demurrer was sustained by interlocutory decree and a final decree was entered dismissing the bill as against Donovan. The plaintiff appealed from both decrees.