Barrie v. United Railways Co.

125 Mo. App. 96 | Mo. Ct. App. | 1907

BLAND, P. J.

(after stating the facts.) — 1. The agreement between the Syndicate and the United Railways company provides, that the Syndicate should undertake to procure the exchange of the United Railways common stock for Transit stock and when the latter was acquired by the Syndicate it should turn it over to a trustee for the benefit of the United Railways Company. This stipulation formed a part of the consideration of the contract between the United Railways Company and the Syndicate, wherein the latter company agreed to issue, and did issue, to the Syndicate seven million six hundred and fifty thousand dollars par value of its common stock, in consideration of which the Syndicate turned over to the United Railways Company seven million dollars par value of the preferred stock of the United Railways Company and about one hundred and sixty-six thousand six hundred and thirty-one shares of the Transit Company stock acquired by the exchange. The market value of the United Railways common stock at the time of the exchange, according to the evidence of Mr. Carleton, was about eighteen dollars per share. Taking the rate of exchange of the United Railways common for Transit stock (two for five) the Transit Avas worth about seven dollars and twenty cents per share, and the value of the one hundred and sixty-six thousand six hundred and thirty-one shares turned over by the Syndicate to the United Railways Company would be about $1,199,000. This calculation is based upon the assumption that United Railways common was worth eighteen dollars per share at the time, as testified to by Mr. Carleton, and not upon evidence of the market value of Transit stock, if it had any, for there is no evidence in the record that it had a market value. If the stock had a value, the United Railways Company should be charged with it. Possibly the stockholders who exchanged it for United Railways common are liable to account to the creditors of the Transit Company for what they received by the exchange but they are not parties to this suit, and the United Raihvays Company is not concerned in any controversy that may arise between the creditors of the Transit Company and the stockholders who made the exchange, provided the United Railways Company, in good faith, paid value for the stock of the Transit Company. [Cora Hagemann v. Southern Electric Railroad Co., and United Railways Company of St. Louis, — Mo. —, 100 S. W. 1081.]

2. For the reason the directory and chief officers of both corporations are practically identical, the presumption is that the tripartite agreement, as between the two corporations, is fraudulent, and hence the assets acquired from the Transit Company by the United Railways Company, under said agreement,' are .held by the latter company in trust for the benefit of creditors of the former. But this presumption is not an irrebuttable legal presumption. It is a presumption of fact which may be overcome by clear and convincing proof that the- officers and directors acted with impartiality and absolute fairness, so that no advantage was given one corporation over the other in the terms of, or in the performance of the contract. [Noyes on Intercorporate Relations, sec. 124, p. 195; Alexander v. Williams, 14 Mo. App. 13; Kitchen v. Railway, 69 Mo. 224; Sweeney v. Sugar Co., 30 W. Va. 443.]

'3. The doctrine that the property of a corporation is a trust fund for the benefit of its creditors, does not go to the extent of giving the creditors a lien upon the property. It means only that the corporate debts must be paid before there can be a distribution of its property, or any part of it, to the stockholders, and that equity will follow the property into the hands of the stockholders, or of a fraudulent grantee and apply it, or its equivalent, to the payment of the corporate debts, in a proper proceeding for that purpose. But it does not prevent a transfer of the corporation’s property made in good faith and for a valuable consideration. When this is done a creditor has no just ground to complain of the transfer, and in no instance where the transfer is, in fact or in law, fraudulent as to creditors will the transferee be held to account to them by an amount greater than the assets taken over under the fraudulent conveyance. [Noyes on Intercorporate Relations, p. 191, sec. 123; Powell v. Railroad, 42 Mo. 63; Railroad v. Evans, 66 Fed. 809; Hollins v. Brierfield Coal & Iron Co., 150 U. S. 371; Kelly-Go odfellow Shoe Co. v. Prickett, 84 Mo. App. 94; Bank v. Iron Co., 97 Mo. 38, 10 S. W. 865.]

4. The admission of the tabulated statements of assets received and liabilities assumed by the United Railways Company as evidence was error. These statements were the baldest hearsay; presumably, they were taken from the books of the two corporations. The books themselves should, have been produced by the officer having them in charge. We cannot consider these tabulated statements as evidence, nor can we assume the role of experts and fix the value, if any, of the Transit Company’s leasehold, as we are asked to do by. the plaintiff. In this state of the record, the evidence is wholly insufficient to enable us to pass upon the merits of the controversy.

The judgment is reversed and the cause remanded for retrial.

G-oocle, J., concurs in reversing the judgment. and remanding the cause for the reason stated in paragraph 4 of opinion. 'Nortoni, Jdid not sit in the case.