197 Mo. 281 | Mo. | 1906
This is an appeal from a decree sustaining a bill of interpleader. The plaintiffs as stockholders of the Kansas & Texas Coal Company, brought suit in behalf of themselves and all other such stockholders against the St. Louis Union Trust Company to compel payment to them of what they claim is a balance of a trust fund applicable to their stock. The defendant, The St. Louis Union Trust Company, filed a cross-bill, in the nature of a bill of interpleader, admitting the possession of the fund, but averring that other parties claimed it, adverse to the plaintiffs’ claim, making those other parties defendants to the cross-bill, praying to be allowed to pay the fund into court and be then discharged with its costs, and that the plaintiffs and the other parties named be required to interplead for the fund. Upon the filing of the cross-bill the parties therein named as claimants of the fund, among which was the National Bank of Commerce, were brought in and contested the right to an inter-pleader. The cause was heard on the pleadings and proof, and a decree in conformity with the prayer of the cross-bill requiring the parties to interplead for
There is little, if any, dispute as to the facts, which are as follows:
The Kansas & Texas Coal Company, a Missouri corporation (hereinafter called the Kansas Company), owning mines and mining property, having a paid-up capital of $2,000,000' divided into 20,000 shares of stock of $100 each, par value, in 1891 increased its capital stock by adding $500,000 in 5,000 shares of $100 each. The purpose of issuing this increased stock was to obtain means to purchase other mining property, which was done. Of this 5,000 shares of increased stock 4,366 shares were purchased by the then shareholders, leaving unsold 634 shares, for which a certificate was issued to Mr. Heath as treasurer of the corporation and by him endorsed in blank and deposited in the safe deposit box of the corporation in the St. Louis Union Trust Co. where it remained until 1900', when it was cancelled and two certificates issued in its stead, one for 600 shares in the name of Mr. Hobart, who was the president of the corporation and who used it as collateral for a loan which he obtained for the corporation of $20,000, which loan was afterwards paid, the collateral redeemed and the certificate for the 600 shares was returned to the president, Mr. Hobart, who endorsed it to Mr. Heath, as treasurer, and it was redeposited in the company’s safe deposit box. In the meantime a certificate for the 34 shares had been issued in the name of Mr. Heath as treasurer, and also deposited in the company’s safe deposit box. The 5,000 shares of increased stock were carried on the books of the corporation as an asset until the sales of the 4,366 shares of the same to the then stockholders as above mentioned, after which only the 634 shares were carried on the books as the property of the corporation and so stood in 1902, when this corporation sold out to the Central Coal & Coke Company, as will be presently mentioned.
This proposal of the Central Company to purchase the assets of the Kansas Company was in writing and it specified that the Central Company would pay the Kansas Company $1,375,000' in cash and assume all its liabilities “so that there shall remain for distribution among your stockholders said cash payment of one million three hundred and seventy-five thousand dollars. ’ ’ And it was also therein specified that the Central Company would “give such bonds of indemnity as may be deemed necessary to enable you to distribute to the stockholders of the Kansas & Texas Coal Company the entire cash payment above contemplated.”
The St. Louis Union Trust Company was selected as the medium for carrying the contract into effect. The Central Company deposited with the St. Louis Union Trust Company $1,375',000, of which $1,201,650 was in
A written contract was entered into between the Trust Company and the stockholders of the Kansas Company,' reciting in its preamble the contemplated purchase of the assets of the Kansas Company by the Central Company for the price named, $1,375,000, to carry which into effect it was agreed that the stockholders would deposit their stock with the Trust Company which was made their agent and authorized to vote the same and authorized to assent to any contract the officers and directors of the Kansas Company might make with the Central Company to carry the purchase into effect, provided it should yield the stockholders at least $55 a share for their stock, and secure the payment of the liabilities of the Kansas Company; it-was also agreed that the entire net proceeds of the sale received from the Central Company for the assets of the Kansas Company should be paid and distributed by the Trust Company to these stockholders according to their respective interests.
Under that contract all the stockholders of the Kansas Company deposited their respective stock holdings with the Trust Company, and each received from the Trust Company a receipt or certificate of deposit for the stock he deposited. In this receipt or certificate the contract last above mentioned was referred to and it was therein recited that the original contract between the stockholders and the Trust Company above mentioned was lodged with the Trust Company, that the holder of the receipt was a party to that contract, and the receipt or certificate concluded as follows: “The legal holder of this certificate is entitled to receive in cash the sum of fifty-five dollars per share for each and every share of stock so deposited, out of the proceeds of the sale of the assets, real estate and
Stock certificates for the whole 25,000' shares of stock were thus deposited in the Trust Company, including the two certificates for the 634 shares in question which were deposited by Mr. Heath as treasurer of the Kansas Company, he stating to the Trust Company at the time that they belonged to the Kansas Company, and he received a receipt or certificate as above described in his name as treasurer. After receiving this receipt or certificate Mr. Heath by his written endorsement assigned the same to Mr. Hobart individually, and he assigned it to the National Bank of Commerce, to whom also the Central Company assigned the 634 shares of stock, and the Bank has demanded of the Trust Company payment for the stock at the sum of $55 a share, which demand the Trust Company has refused.
Pursuant to the terms of its contract the Trust-Company has paid to all of the shareholders the sum of $55 a share for their stock so as above mentioned deposited, except the bank, the holder of the receipt for the 634 shares in question, and the Trust Company still has in its keeping the sum of $34,870-, which is sufficient to pay $55- a share for those 634 shares, if it is to be so paid, or to pay an addition of $1.43 a share for the other 24,366 shares if it is to be paid on them. The whole controversy in this case is involved in the question, who is or are entitled to that balance of $34,870? The plaintiffs who are some of the stockholders have sued the Trust Company claiming that the fund belongs to the stockholders, the National Bank of Commerce claims not only that the fund belongs to it, but also that its right to the fund is so unquestionable that the Trust Company has no right to relieve it
’ I. To entitle one to maintain a bill of interpleader in equity he must be a mere disinterested stakeholder or trustee; impartial in so far as his conduct may influence the judgment to be ultimately rendered between the conflicting claimants, he must act in good faith and he must have reasonable cause for a real doubt as to which of the claimants is entitled to the fund.
It is insisted in the brief for the Bank that the Trust Company has not acted in good faith, that it has instigated the stockholders to make this claim. The evidence in the case indicates that in the transactions under review the fact that there were 634 shares of stock unissued and belonging to the corporation was overlooked, at least that no express provision was made in reference to it. There was evidence to the effect that at a meeting of the directors of the Kansas Company while the subject of the sale was under discussion, Mr. Leighton, the vice-president, asked what disposition was to be made of the 634 shares of unissued stock, and Mr. Hobart, the president, replied that he had arranged to buy them from the Central Company. That is the only mention of those shares that was made during the negotiations and that is all that was said, nothing was done. The certificates for the 634 shares were deposited with the St. Louis Union Trust Company by Mr. Heath as treasurer by order of Mr. Leighton, vice-president, in the absence of the president. The $1,375,000 was deposited by the Central Company with the Trust Company on April 16, 1902. On that day some of the stockholders, among them Mr. Leighton, Mr. Davis and Mr. "West, directors of the Kansas Company, discussed among themselves the question as to the status of those shares, and the result was Mr. Leighton notified Mr. Orr, who was the trust officer of the Trust Company and had charge of the matter, not to pay anything on those shares. Mr. Orr, upon being
There is nothing in the facts of this ease to indicate bad faith on the part of the Trust Company or collusion with the stockholders to bring this suit. When the question was once raised, if it was deemed by the Trust Company a serious one, if the facts were sufficient to cause the Trust Company to seriously question whether it was in duty-bound to pay the money to the holder of the receipt for the 634 shares of stock or to divide it pro rata with the other shareholders, there was nothing wrong in informing the stockholders that such a question had arisen. The Trust Company was the trustee of this money, holding it for whomsoever in law was entitled to it, and if the stockholders were in law entitled to it, good faith demanded of the trustee that they should have it, even though they had known nothing of it before and had erroneously supposed that they had already received all that they were entitled
It is said in appellant’s brief in connection with the suggestion that the suit of the stockholders was procured by collusion, that the plaintiffs in that suit consented that this decree of interpleader should be entered. The only legitimate inference that can be drawn from that fact is favorable to appellant, that is, that the plaintiffs concede to the Bank that its claim is of such a character as fairly deserves the consideration of the court; also that they concede without detriment to their own claim, that in view of the Bank’s claim the Trust Company is entitled to the judgment of the court before paying the money to either. The Bank has no cause to complain of that. J
II. The receipt or certificate issued by the Trust Company to Mr. Heath as treasurer for this stock does not estop the Trust Company from questioning the holder’s title to the same. The receipt is not commercial paper, it is not a negotiable instrument in the sense of the law merchant. It indicates on its face that the title to the stock is in the Kansas Company — not in Mr. Heath individually — therefore the mere assignment of it by Mr. Heath did not preclude the Trust Company from questioning the title of the assignee. Besides the receipt on its face says that it was issued to “W. P. Heath, Treasurer, Kansas & Texas Coal Company . . . under and pursuant to the terms of a certain trust agreement (original of which is lodged with the St. Louis Trust Company),” etc. Therefore, an assignee taking the receipt is chargeable with notice of the contents of that trust agreement, and if, as the plaintiffs, the stockholders, claim, that agreement
III. It is contended that the Trust Company could have obtained an absolute discharge of its obligation by paying the fund over to the Bank, regard- ' less of the equities, for the simple reason that the Bank was the legal holder of the receipt. That is to say, although the stockholders may be entitled to this trust fund in the hands of their trustee, yet if the Bank is the legal holder of the receipt, the trustee would be discharged of its duty if it paid the money to the Bank. These stockholders have not selected this Bank for their trustee in this matter; they have chosen the Trust Company and have caused the trust fund to be put into its hands, and are now demanding that fund of their trustee, and there are but two ways in which the trustee can meet that demand, one is to pay them the money demanded, the other is to show that they are not entitled to it.
The receipt contains no promise to pay; it is only a certification by the trustee, as such, that “the legal holder of this certificate is entitled to receive in cash the sum of fify-five dollars per share for each and every share of stock so deposited, out of the proceeds of the sale of the assets, real estate and property of said Kansas & Texas Coal. Company as and when the same is
IY. The main insistence of appellant is that its title to the fund in question is so absolutely clear that it leaves no room for a reasonable doubt, and therefore the Bank ought not to be put to the expense of interpleading.
It will be difficult to discus's this proposition without using language that might be interpreted as expressing our opinion on the Bank’s title, which we do not intend to do at this time, because that title is not before us now for judgment, and we would not say anything that might prejudice the Bank’s case when it comes to trial. What is hereinafter said under this head therefore is only intended to show that in our opinion the question of title is a serious one and the Trust Company is entitled to have it settled in a court of equity by interpleader.
After the money had been paid into the Trust Company, a meeting of the board of directors of the Kansas Company was held, at which a resolution was adopted by which the Trust Company was directed to pay the shareholders $55 a share, in which resolution was this clause: “which payment, so made by said Trust Company to holders of said stock, shall be in final liquidation of the assets of said Kansas & Texas Coal Company, and shall be accepted by said holders as such. After making such distribution said trust company shall be authorized to transfer the certificates representing the capital stock of this company to such person, or persons, as the Central Coal & Coke Company may in writing’ direct. ’ ’
And upon payment by the Trust Company to thé shareholder of the $55 per share, each'shareholder gave the Trust Company a receipt in full and authorized it
It is said that only two-fifths of the stockholders are making this demand, while the balance recognize the Bank’s claim. Every stockholder is free to act for himself; therefore, because even a majority are willing to concede the Bank’s claim, the minority are not bound to do so. Besides, before we can give due weight to the opinion of the majority on such a question it would be necessary to know what relation the' complacent stockholders bear to the Bank. As a general rule men act in such matters as their interests prompt.
Up to the date of the sale of its assets of the Kansas Company to the Central Company these 634 shares of stock had never been sold, never issued; they remained the property of the Kansas Company and the certificates were held in its treasury; the title to them therefore passed with the other assets of the Kansas Com-to the Central Company, and appellant says, the Central Company having sold the stock to Mr. Hobart and he to the Bank, that is the end of the controversy. And so it would be if the controversy was over the ownership of the 634 shares of stock, but that is not the controversy; the stockholders who have brought this suit against the Trust Company are not claiming to own that stock, but are claiming what they think is their share of the money which the Central Company paid the Kansas Company for that stock. Their theory is that the $1,375,000 paid by the Central Company was the purchase money of all the assets of the Kansas Com
We cannot say that that theory is so void of reason that the Trust Company has not the right to have the courts to settle the controversy.
Appellant says that the Bank by the assignment from Mr. Hobart is a stockholder to the extent of 634 shares and entitled as such to share with the other stockholders the proceeds of the sale. But since the Bank in this instance must stand in the shoes of Mr. Hobart, and he in the shoes of the Central Company, the following questions arise: Can an assignee by his assignment acquire a greater right than the assignor had? could the Central Company who bought this asset and paid $34,870 for it retain the asset and recover back the purchase money? what right has the Central Company to the stock if it is entitled to take back the money it paid for it? and if it has no such right can it impart such right to its assignee? Again, if there had been no intervening trustee employed, if the Central Company had paid the $1,375,000 directly into the treasury of the Kansas Company and the Kansas Company had thereupon, as was the purpose of the sale,
For some reason the Central Company seems to have desired to acquire all the stock of the Kansas Company and therefore in the receipt taken by the Trust Company from each stockholder on payment to him of tne $55 a share is a clause authorizing the Trust Company to transfer the stock to whomsoever the Central Company should designate, but that was not intended to authorize the Central Company or the person designated by it to withdraw from the Trust Company any of the purchase money paid by the Central Company for the assets of the Kansas Company.
Y. The remaining question in the case is, can the stakeholders or trustee maintain a bill of interpleader when the facts are practically undisputed and the only question is one of law? Appellant’s contention is that when the facts are undisputed it is the stakeholder’s duty to consult- his counsel learned in the law and decide the question of law at his peril. That doctrine in its unlimited scope would impose a very onerous burden on a stakeholder and give a very harsh force to the doctrine that every one is presumed to know the law. Courts of equity do not administer justice with so harsh a rule. A bill of interpleader is an invention of equity jurisprudence, and is designed to relieve a party who holds in trust a fund to which there are several claimants and who in good faith is in doubt, and has reasonable grounds to doubt, as to whom it should be paid. Appellant cites Sullivan v. Knights of Father Mathew, 73 Mo. App. 43, and Funk v. Avery, 84 Mo. App. 490, as holding that in order to sustain a bill of in:
In Woodmen v. Wood, 100 Mo. App. l. c. 658, the precise question was discussed and decided; the court, per Ellison, J., said:
“It has been sometimes suggested that the doubt as to which of the claimants is entitled to the thing claimed by them must be a doubt as to the facts upon which their claims are founded and that a doubt as to the law would not justify an interpleader. A remarle in Supervisors v. Alford, 65 Miss. 63, seems to justify the suggestion. But when it is considered that the object of a bill of interpleader is to save the debtor or other party in possession of the thing claimed, from the hazard of paying to the wrong party, as well as the harassment of suits, it seems to be clear that a doubt of the law as to the opposing claims should justify a bill for an interplea as well as a doubt of fact. And so it has been decided. [Crane v. McDonald, 118 N. Y. 648.]”
In Hayden’s Exrs. v. Marmaduke, 19 Mo. 403, this court, per Gamble, J., said: “Any trustee placed in circumstances in which he may have reasonable doubt as to the proper disposition of the funds in his hands, has a right, for his own safety, to apply to a court of equity for directions, making the persons interested parties to the proceeding.”
We hold that a bill of interpleader may be maintained not only when the conflicting claims depend on a question of fact but also when they depend on a question of law, when, as said by the New York Court in the case above cited, there is ‘ ‘ sufficient doubt and hazard to justify the protection which is afforded by the beneficent action of interpleader.”
The trial court took the right view of this case. The judgment is affirmed.