Lupton v. American Wholesale Corp.

Urner, J., delivered the opinion of the Court. By his demurrer to the hill of complaint in this case the defendant ¡asserted that a court of equity was without jurisdiction, 'and that the plaintiff had an adequate remedy at law, with respect to. the 'alleged cause of action. The appeal is from .an order ovetmiling the. demurrer. In effect the hill .avers that the plaintiff is a corporation engaged in the business of selling dry goods, notions, clothing, and general merchandise to retail merchants throughout the United States; that the defendant was employed by the plaintiff as. the ’head of the credit department of its business for the states of North Carolina, S'ouith Carolina, Kentucky, Tennessee and Mississippi, by virtue of which employment the defendant had authority and discretion to allow, increase, restrict or refuse credit to merchants in the designated territory who desired to become, or continue to he, customers of the plaintiff, and in the course of •this1, service 'the. defendant had charge of the hooks of the plaintiff1 containing the accounts of its customers in the states mentioned, and supervised the bookkeepers by whom the accounts: were kept and directed them as. to. the various entries; that the defendant also had charge of all collections in his department, and was required to account for and p:ay to the plaintiff the proceeds ³³⁵ of such collections.; that one of the plaintiff’s customers was the Eairview Department Store, Inc., of WinstomSalem, Eorth Carolina., which originally was extended a credit of $2,000, but this was largely increased by the defendant, who had become interested as .a stockholder in the business of that customer, of which fact the plaintiff was mot then aware; that the Eairview Department Store, Inc., became financially embarrassed while indebted to the plaintiff to the amount of $37,773.78, and the defendant, without the plaintiff’s knowledge, caused the assets of the .debtor company to he sold and transferred to u purchaser who agreed to remit to its. treasurer sufficient funds: to pay its debts; that in: pursuance of this agreement the J. W. Frazier Company, which succeeded to the rights and liabilities of the original purchaser of the assets and business of the.

Fairview Department Store, Inc., remitted to its treasurer more than $12,000 for payment to its creditors, of which the defendant received, and refuses to pay to the plaintiff, sums aggregating $7,000; that by defendant’s direction the plaintiff’s account for $37,773.78 against the Fairview Department Store, Inc., was transferred to the amount of $30,773.78 to an account opened against the J. W. Frazier’ Company on the plaintiff’s books, and tile remaining $7,000 of the former account was subsequently charged to “profit 'and loss,” and by a similar entry, which the defendant directed, the account debited to the brazier Company was reduced to the extent of $4,082.49,, all of which entries were made without the plaintiff’s knowledge or consent. There are allegations in the hill describing’ the defendant’s employment by the plaintiff’ as being of a fiduciary nature and charging that the fund of $7,000 to which the bill refers, as having' been collected by the- defendant, is held by him under a constructive trust for the plaintiff’s use. It was averred that the defendant concealed from the plaintiff the nature of his relations: with the Fairview Department Store, Inc., and failed to disclose the amount of ³³⁶ his investment in the stock of that Corporation, and that hy reason of his fiduciary relation to the plaintiff, and of his concealment of his personal interest in the debtor company, he was chargeable as a trustee for any profits which he may have made hy the use of his fiduciary position and for “any amounts which he received in payment for his interest in the company hy subordinating the prior rights of the plaintiff as a creditor.” The hill prays for a discovery as¡ to the defendant’s transactions with the Eairview Department Store, Inc., and its successors, in regard to all sales and collections made by him while in the plaintiff’s service; for an accounting hy the defendant as to all sums received hy him from the sources just indicated; for ra decree declaring the sum of $7,000 collected by the defendant, as mentioned in the bill, to be impressed with a trust in favor of the plaintiff, and requiring the defendant to pay that sum to the plaintiff, 'as well as any other amounts received hy him from the same source for which he may he 'accountable, 'and for general relief. As to a part of the case presented hy the bill of complaint there would plainly be an adequate remedy at law.

The recovery of the fund of $7,000 claimed in the bill could he readily accomplished in a legal action upon proof of the facts which are here alleged. The items of that claim are definitely known to the plaintiff, and do not need to be ascertained through discovery