192 Mo. 597 | Mo. | 1906
This is a suit in equity to cancel a transaction whereby the board of directors of the plaintiff corporation essayed to sell to defendant Boyd $12,000 of mortgage bonds issued by plaintiff, and to recover of Boyd and the trustee in the deed of trust a part of the proceeds of the foreclosure sale that is alleged in the amended petition to be in excess of the debt for which the bonds were hypothecated.
There is little if any dispute as to the material facts of the case.
The Brinkerhoff Zinc Company, the plaintiff herein, is a mining corporation in Lawrence county. Its total assets consisted of seven acres of land which were supposed to contain valuable mineral deposits, and a mining plant thereon consisting of buildings, machinery, etc. On November 1, 1897, the plaintiff was indebted to the Miners and Merchants Bank of Aurora, Missouri, in the sum of $5,500, represented by two notes executed by the plaintiff to that bank. To secure that indebtedness the plaintiff executed its 120 bonds of
Afterwards, on August 13, 1898, plaintiff executed a lease of its land and mining plant to defendant Boyd for a term of ten years, with prospecting and mining rights. The consideration for the lease was that the lessee was to carry on mining on the leased land and pay the plaintiff a royalty of ten per cent of the gross proceeds of the operation. If the lessee failed for thirty days to work the mines, the lessor could by giving him thirty days notice terminate the lease. The lessee had the right at the end of his lease, either by expiration of its term or by forfeiture, to remove all buildings, machinery and improvements he may have put thereon.
Shortly after the execution of the lease Boyd entered into possession and during the time he remained in possession he placed valuable mining machinery on the land, but he did little if any mining on it. He was at the same time interested in mining property on other land adjoining, and he carried on mining on that other land and used in that business the machinery, etc., which he had placed on the plaintiff’s land. He also subleased a portion of the leased premises to another concern that was owned and managed by relatives of his, and that other concern did no substantial mining on the land leased from the plaintiff. But the plaintiff never attempted to avail itself of the right given in the lease to declare it forfeited on account of failure to operate the mine.
Mr Boyd resided in Chicago. Shortly after taking his lease he employed F. H. Brinkerhoff as his agent resident near the leased premises, and gave him a written power of attorney to represent him in his mining operations. This Brinkerhoff was also the president of
Soon after his purchase of the- notes from the bank, Mr. Boyd obtained from the directors of the plaintiff corporation a paper writing that is called in this record a declaration of sale, which purported to convey to him the plaintiff’s right of redemption in the mortgage bonds. This document was prepared by Mr. Boyd’s attorney before he bought the notes from the M. & M. Bank, and was executed immediately afterwards. It recites that a meeting of the board was held at the company’s office, by consent of all the directors, to con
The by-laws of the corporations authorized the president to call a meeting of the board by giving notice in person or by mail. No notice of this meeting-was given. The $250 judgment in favor of Boyd, mentioned in the declaration of sale, was for that much of the $480' he had advanced to pay the interest which had accrued in 1898. There was no other consideration for the transfer of the right of redemption to Boyd beyond his payment of the $5,500 debt to the bank, and the $480-advanced to pay interest. After the execution of the declaration of sale Boyd delivered to Brinkerhoff as
The bank of Aurora, one of the defendants herein, was at the time of the above-named transactions a creditor of the plaintiff corporation to the amount of $1,050, evidenced by a note for that sum, and an agreement was made between that bank and the plaintiff through its president that $1,000 of those mortgage bonds should be given to the bank as collateral for that debt, subject to the $5,500 debt to the M. & M. Bank; that is to say, when the debt to the M. & M. Bank was paid and the collateral redeemed, $1,000 of the bonds were to be given to the Bank of Aurora on account of its debt. The cashier of the M. & M. Bank was informed of this fact when the bonds were delivered to him, and Mr. Boyd was also informed of it before he purchased the bonds from the M. & M. Bank. The plaintiff also owed other debts to various persons amounting to about $3,000.
After Mr. Boyd got possession of the bonds; the interest then being in default, he caused the trustee to advertise the property for sale to satisfy the $12,000 mortgage debt. It was expressed in the advertisement that the sale was to be subject to Boyd’s lease. When that advertisement appeared the plaintiff corporation brought this suit. The aim of the original petition was to set aside this declaration of sale of the bonds, and to enjoin the trustee from selling the property covered by the deed of trust subject to the leasehold rights of Boyd. Upon a preliminary hearing the court granted a temporary injunction as prayed. Thereupon Boyd caused the trustee to withdraw that advertisement and re-advertise the property for sale under the terms of the deed of trust, omitting the condition that the sale was to be subject to the lease. The trustee then proceeded to foreclose; the property brought at the trustee’s foreclosure sale $13,500, which the purchaser, who is a stranger to this record, paid in cash to the trustee." Out
The plaintiff alleges and introduced evidence tending to show that the failure of the defendant Boyd to work the mines was a willful scheme on his part to deprive the company of the only revenue it had to hope for by which it could pay the interest on its bonds, and that its president was intimidated into signing the declaration of sale of the bonds. On the part of defendant Boyd it is alleged and his testimony tends to prove that Brinkerhoff misused some of the money that was sent him to operate the mines. Mr. Boyd is quite strong in his characterization of Mr. Brinkerhoff. He denies that he willfully failed to work the mines on plaintiff’s land to prevent plaintiff from having means to pay its
Tbe main force of the defense on the part of Mr. Boyd is that through what he considers the unfaithfulness of Mr. Brinkerhoff (he uses very much stronger terms than that) he has lost a large amount of money in Ms mining ventures in that vicinity, and that he was. entitled to recover what he could out of the assets of 'the corporation, of which Mr. Brinkerhoff was the president, to reimburse him to some extent for his unfortunate outlays.
The error that runs through the whole case on-the part of defendant Boyd is that the plaintiff corporation is responsible for the acts of Brinkerhoff because he was its president, although the acts were committed, not in the line of his duty as president, but in Ms capacity as servant or employee of the defendant Boyd. The very lease which' defendant Boyd held placed in his keeping all the property of every kind whatsoever that belonged to the plaintiff corporation, and reduced its whole business operations to receiving- the royalty that he agreed to pay. On executing that lease the Brinkerhoff Zinc Company practically went out of business as a mine operator, and there was nothing in that line of work for its president to do. But Mr. Boyd was going into the business on his own account and saw fit to employ Mr. Brinkerhoff as his chief agent and active business manager. In his capacity as agent for Boyd,managing Boyd’s individual business, Brinkerhoff could not involve the corporation of which he was president, whether he acted wisely or unwisely, faithfully or unfaithfully, whether he obeyed or disobeyed his master’s orders. It is argued for the plaintiff that Brinkerhoff was intimidated into executing the so-called declaration of sale of the bonds by threats of holding him to account for Ms alleged misuse of defendant Boyd’s money. The pleadings and evidence on the part of
The evidence shows that defendant Boyd did put
It is one of the grounds of complaint against Brinkerhoff that he misrepresented the value of the ore deposits on the plaintiff’s land, and the excuse offered for not working the mines is that there was not sufficient ore there to pay for mining. We do not know from this record what the fact was in that particular, because the work that was done in that way on the land leased from the plaintiff was not sufficient to amount to a fair test, but the seven acres of land had no extraordinary value except for this mineral deposits and that value is to some extent indicated by the fact that it brought $13,-500 in cash under the trustee’s hammer. It is therefore safe to say that the $12,000 of bonds were worth their face value when the declaration of sale was executed.
Those directors may have then believed that the corporation was liable for the losses that defendant Boyd sustained, or claimed to have sustained, though the mismanagement of Brinkerhoff because Brinkerhoff was president of the corporation and that idea was doubtless pressed upon them as it is now pressed upon -this court, but if they acted under that idea they acted under an erroneous idea, if they transferred the corporation’s equity of redemption in those bonds for that consideration, they transferred it for no consideration, the transfer was in violation of their duty as trustees and beyond their authority as directors.
The fact that the notes were surrendered to Brinkerhoff as president and accepted by him on the execution of the document in question and that the bonds were likewise delivered to him after the foreclosure sale are immaterial; what the plaintiff corporation was entitled to was the money for which its property sold, not
There was no notice given of a meeting of the board of directors, there was really no meeting called and none held when this document is said to have been authorized. The board consisted of three directors, two of them came together and signed the paper, the third was out of town, when he returned, how long afterwards is not shown, the paper was shown to him and he signed it. When the law authorizes an act to be done only by a board of directors at a stated or called meeting the act cannot.be done by the members acting severally at different times and places, nor can validity be given to the act by the members all signing a paper falsely reciting that they were all present at a meeting of the board and consented. But even if this act had been done at a regular meeting of the board it would have been invalid, because it was in effect giving away the whole estate of the corporation without any lawful consideration.
It is contended by respondent that the claim of the Bank of Aurora to $1,000 of the bonds cannot be maintained because the alleged contract is within the Statute of Frauds and is not in writing and that there was no consideration to support it. That, however, is no concern of the respondents; if the proportion of the proceeds of the sale applicable to the amount of the bonds claimed by the Bank of Aurora is not to be paid the Bank of Aurora, it would have to be paid to the plaintiff and it would then be a matter of adjustment between the plaintiff and the bank. The plaintiff in its petition states that the Bank of Aurora is entitled to that amount of the bonds and the bank assents to that statement ; that is, therefore, sufficient to justify the court in decreeing as between the plaintiff and the bank that the bank is entitled to that amount.
The defendant Brown, the trustee in the deed of
The judgment is reversed and the cause remanded to the circuit court with directions to enter a decree cancelling the document called the declaration of sale of the bonds in question of date December 25, 1899, and rendering judgment against the defendants Charles L. Boyd and Will T. Brown in favor of the plaintiff, the Brinkerhoff Zinc Company, for $6,370.30 and interest at six per cent per annum from July 13, 1899, and decreeing that the plaintiff out of that sum, when collected, pay to the Bank of Aurora $1,000 together with interest at six per cent per annum from the date last named.