delivered the opinion of the court:
Thе salient facts of this case are, that the appellee had a note and trust deed for $1200.00 against a man named Hayden; that they became due in January, 1901, and she took them to the office of the appellant with directions to him, or to his son in the same office with him, to collect them for her, and re-invest the money; that the money was collected by appellant, or some one of his sons in the office with him, either in his own name, or in the name of one of the corporations doing business in his office, and which he controlled and managed. The evidence tends to show that the $1200.00, belonging to appellee, went into appellant’s hands, or into the hands of some one or morе of his sons or clerks. Appellee’s money, therefore, was had and received by the appellant.
Appellant turned over to Miss Slaterly, appellee’s agent and friend acting for her while she was out of the city, a note for $1200.00 payable in three years, together with certain interest notes, and a trust deed securing the same upon a 25-foot lot in St. Louis. These notes and trust deed bore date January 19, 1901. The evidence tends strongly to show that at' that time the lot was not worth more than from $125.00 to $150.00, or from $5.00. to $6.00 per front foot. The principal note for $1200.00, and the interest notes, dated January 19, 1901, were signed by the Fidelity Realty Company by J. M. Donovan, president. They were payable to the order оf George N. Cooper, a clerk in appellant’s office, who endorsed them without recourse. The trust deed securing them was made to appellant, as trustee. The evidence tends to show that appellant controlled and managed the Fidelity Realty Company, and the trust deed being made to himself as trustee, and the notes being madе to the order of his clerk, the conclusion is almost irresistible, in the light of the facts set forth in the statement preceding this opinion, that the papers thus prepared were really the papers of the appellant, though nominally those of a corporation in his office and under his control.
The written deed of guaranty, dated January 22, 1901, was signed by the J. T. Donovan Real Estate Company, by J. T. Donovan, president. It begins as follows: “Witnesseth, that for and in consideration of the sum of $1200.00, paid to us by Miss Julia Purtell, we have assigned and transferred to her certain notes of Eidelity Realty Company, dated January 19, 1901, secured by a deed of trust,” etc. Appellant signed this indenture, and in it recites that the sum of $1200.00, belonging to Miss Purtell, was paid to “us,” meaning thereby the J. T. Donovan Real Estate Company, of which he was president. In this guaranty he also recites that “we have assigned and transferred to her certain'notes,” etc. The notes were endorsed without recourse by his clerk, Cooper, but in view of the recital thus quoted, Cooper merely acted for the appellant or his company, the J. T. Donovan Real Estate Company. Miss Cooper swears that she drew all the deeds of trust and notes and guaranties that were executed while she was in appellant’s employment from October 15, 1897, to April 7, 1903. She also swears that she drew up these notes and trust deed and the deed of guaranty, and that they were in her handwriting. She says that she drew them up at the direction of the appellant; that is to say, the appellant directed her to draw the notes to be signed by the Fidelity Realty Company, payable to the order of his clerk Cooper, and also the trust deed to be executed to himself, as trustee. She says that she did not deliver those papers, but merely turned them over to be signed. It is quite evident that these notes and this trust deed represented no consideration whatever. That is to say, there was no note for $1200.00, owned by Cooper, but the notes and the trust deed were merely drawn up to be given to appellee in return for her $1200.00. The transaction did not by any means represent a purchase of securities, amounting to $1200.00 from Cooper, the payee in the note. The fact, that they were drawn up by Miss Cooper under the direction of the appellant, and at his dictation, shows that the transaction was under his control and management.
The written guaranty stated that certain improvements were then in course of erection upon the property, described in the trust deed of January 19, 1901, but the proof shows conclusively that this statement was false. No improvements were then in course of erection upon the premises, nor were any ever made upon the premises. The evidence also tends to show that there were judgments then existing against the Fidelity Realty Company, and that it had no financial standing whatever; but that it was, as is said by one of the witnesses, “gotten up to keep the property out of judgment.” The proof shows that none of these corporations, controlled by appellant, paid their debts. One of the witnesses swears that “when any adjustment was to be made, Mr. Donovan would use the property of any of thеse companies to make it, indiscriminately; he would settle the debts of the J. T. Donovan Real Estate Company with these properties, no matter to which company it (they) belonged.” •
When the appellee discovered that the notes and trust deed, which had been turned over to her, were worthless,'the appellant began to offer hеr other property in place of'that described in the trust deed, and promised that he would pay her in eighteen months, and told her that she should lose nothing. If the debt was not his, but was really and bona fide the debt of the Fidelity Realty Company, it is difficult to understand why he should thus seek to substitute other securities for those held by the appellee, and promise to рay the indebtedness himself. The promise to pay the indebted^ ness was made as though the debt was his own, and not as though it was the indebtedness of a third person, to-wit, the Fidelity Realty Company.
The evidence tends to show that, although the appellant and his sons turned over to appellee these worthless securities in exchange for her money, yet thаt appellant himself received the money, and used it for his own private purposes, and sought to escape personal liability by covering up the transaction in the name of a corporation, which was entirely under his own control. This being so, the trial court committed no error in refusing to instruct the jury to find the issues for the defendant. It would have bеen improper to give such instruction, in view of the fact that the evidence tended to prove that the appellant received the money, and declined to pay it over.
This suit is not brought upon the notes, executed by the Fidelity Realty Company. Those notes and the trust deed securing them were tendered back to the appellant upon the trial, and, upon his refusal to receive them, placed in the custody of the court- for the use and benefit of appellant. The object of the suit is to recover, under the common counts, the money actually received by the appellant.
The instructions, given by the court to the jury on behalf of the appellee, submitted to thе jury the question of fact, whether the affairs of the J. T. Donovan Real Estate Company and the Fidelity Realty Company were controlled by J. T. Donovan for the transaction of his private business, and whether or not he personally controlled both of these corporations when they received the appellee’s money, and whether оr not her money was received for appellant’s own private individual uses and purposes. The instructions also left it to the jury to find, whether or not the appellant was conducting his business in the name of the J. T. Donovan Real Estate Company, and, through that company, received appellee’s money and appropriated the same to his own use and gave her, in payment of it, the worthless securities above referred to. The judgments of the lower courts, finding for the appellee, settle these questions of fact, so far as we are concerned, against the appellant.
Appellant was president of the J. T. Donovan Real Estate Company, and his son, Joseрh M. Donovan, was the vice-president of that company, and Joseph M. Donovan, the appellant’s son, was the president of the Fidelity Realty Company. Both of these concerns were controlled, managed and dominated by the appellant, J. T. Donovan. The officer or controlling manager of a corporation cannot use it, and its name, for the transaction of his own private business, and to escape personal liability on his part. The theory, upon which the appellant defends this suit, is that the liability to appellee was not his liability, but that of the corporation, known as the Fidelity Realty Company.
In Hoffman v. Reichert,
In the case of Bank v. Trebein Co.
In Cook„on Corporations (5th ed. sec. 663), it is said: “A corporation is often organized to act as a ‘cloak’ for frauds. Suсh cases as these are becoming common, and the courts are becoming more and more inclined to ignore the corporate existence, when necessary, in order to circumvent the fraud.” (See also Lachman v. Martin,
Even if the corporation be regarded as the real debtor, and the appellant as only its agent, yet inasmuch as he was guilty of the fraud perpetrated upon appellee, the law will hold him liable. In 1 American and English Encyclopedia of Law (2d ed. p. 1135,) it is said: “An agent will be held personally liable to third'persons for all damages, sustained by them in consequencе of any fraudulent or malicious acts committed by him on behalf of his principal, and, in an action against the agent for fraud, the fact, that he derived no personal profit or benefit therefrom, is immaterial.” In Reed v. Peterson,
It is claimed, on the part of the appellant, that the court below erred in permitting. appellee to prove that the appellant promised to repay the money to her. It is said that this was a promise to pay the debt of a third person, to-wit: of the Fidelity Realty Company, and that, under the Statute of Frauds, the promise to pay the debt of a third person must be in writing. The statute of the State of Missouri in relation to the Statute of Frauds upon this subject, which is almost identical with our own, was introduced in evidence over the objection of appellee. It was not pleaded as a defense ; and the general rule is that, where the statute of another State is relied upon as a defense, it must be pleaded as set out, at least in substance, and must be proved on the trial, and, if it is not pleaded, it is error to permit it to be proved. (Palmer v. Marshall,
It is said that the court erred in the admission of certain testimony, introduced by the appellee. We are satisfied with the following statement upon this subject, made by the Ap- . pellate Court in their opinion deciding this case, to-wit: “Appellant also claims that the court erred in permitting appellee to show the course of business pursued by him, his exercise of control over the various companies in the same office, and the indiscriminate manner, in which he used the money of said companies, and in admitting evidence, tending to show the reason why appellee had special confidence in him. In our opinion, this evidence was all proper, as bearing upon the question whether the appellant was really conducting his own business under the name of the several corporatiоns for his own benefit, and also whether he took advantage of appellee’s special confidence in him to use her money, and give her securities, which were practically worthless.”
The objection is made that a recovery cannot be had in this kind of case under the common counts. We are unable to concur in this contention. In Wilson v. Turner,
In First Nat. Bank v. Gatton,
In Moore v. Shields,
For the reasons above stated, we are of the opinion that the judgments of the lower courts were correct. Accordingly, the judgment of the Appellate Court, affirming that of the circuit court, is affirmed.
r , , , Judgment affirmed.