267 Mo. 459 | Mo. | 1916
This is a proceeding in equity by judgment claimants of the Chester Light, Water & lee Company, a corporation organized under the laws of the State' of Illinois, to recover from the defendants, residents of St. Louis, Missouri, as stockholders of said corporation, an amount alleged to be unpaid on the stock held by them in said corporation, and to have said'amount, due on said stock, applied to the payment
The third amended petition, upon which the case was tried, alleged the incorporation of the Chester Light, "Water & Ice Company, under the laws of the State of Illinois, with an authorized capital of $35,000, divided into three hundred and fifty shares of the par value of $100 each, and that defendant George L. Edwards and one J. D. Gerlach were the original incorporators and promoters of said corporation and that all but five shares of said capital stock were originally subscribed for by A. D. Grant as a “straw man” and that said Grant paid no consideration to said corporation for said stock.
That immediately after said corporation was organized said Grant transferred 340 shares of said stock to defendant Edwards; that said Edwards, after-wards, transferred all but 147 shares of said stock to other parties, among them J. D. Gerlach, 146 shares; that an understanding existed between Edward's and 'Gerlach whereby each was to receive approximately one-half of the capital stock of said corporation; that said defendant Edwards became the owner of and holder of one hundred and forty-eight shares of stock in said corporation, and now owns and holds the same on the books of the corporation and that no consideration has ever been paid to the corporation, nor has the corporation ever received any value for the .one
The defendant Edwards, in 1901, indorsed and delivered to said J. D. Gerlach a certificate for' said one hundred and forty-eight shares of stock held by said Edwards, but that said transfer has never been recorded upon the books of the corporation, and that, at the time of the transfer, the corporation was insolvent and said Gerlach was insolvent and said transfer was made by said Edwards to avoid liability on said stock ; that under the common law of Illinois, the transferrer of stock remains liable thereon until the transfer is recorded on the books of the corporation and that such liability has not been removed by statute in said State; that there is now due and unpaid on said 148 shares of stock held by said Edwards the sum'of $14,800, for which said defendant is liable to these plaintiffs; that said defendant Grant owns five shares of the capital stock of said company, upon which there has been nothing paid, and that there is due on such shares the sum of five hundred dollars; that said defendants Grant and Edwards are the only solvent stockholders, holding unpaid stock, within the jurisdiction of said circuit court.
The petition further alleges that section 8, chapter 32, of the Revised Statutes of Illinois, provides as follows : '
“Every assignment or transfer of stocks on which there remains any portion unpaid shall be recorded in the office of the recorder of deeds of the county within which the principal office is located, and each stockholder shall be liable'for the debts of the corporation to the extent of the amount that may be unpaid upon the stock held by him to be collected in the manner herein provided. No assignor of stock shall be released from any such indebtedness by reason of any •assignment of his stock, but shall remain liable therefor jointly with the assignee until said stock be fully*468 paid. Whenever any action is brought to recover any indebtedness against the corporation, it shall be competent to proceed against any one or more stockholders at the same time to the extent of the balance unpaid by such stockholders upon the stock owned by them respectively, whether called in or not, as in cases of garnishment. Every assignee or transferee of stock shall be liable to the company for the amount unpaid thereon, to the extent and in the same manner as if he had been the original subscriber.”
The petition further alleges that plaintiff Herman Schroeder, on December 14, 1904, recovered judgment in the circuit court of Bandolph County, in the State of Illinois, against said Chester Light, Water & Ice Company, in the sum of $56.70, together with costs amounting to $4.85. That execution was duly issued upon said judgment, addressed to the sheriff of said Bandolph County, and was, by said sheriff, duly returned nulla bona. That said judgment still remains due and unpaid, and under the laws of the State of Illinois bears interest at the rate of five per cent per annum.
The judgments of the other respective plaintiffs are set forth in the same manner as the judgment of plaintiff Schroeder.
The prayer of the petition asks that the court enter a decree against said defendants, in proportion to the amount of their respective stock liability, an amount sufficient to satisfy the total claims and judgments of the respective plaintiffs.
Defendants filed a motion to strike out the third amended petition on the ground that it was a departure from the original cause of action pleaded. This motion was overruled and defendant saved an exception.
Defendants’ answer to said third amended petition alleged:
1st. That the court had no jurisdiction of the subject-matter.
3rd. They admit that defendant Edwards, in 1901,' sold and transferred all of his stock in said company to said J. D. Gerlach for a consideration of five dollars per share and executed to said Gerlach a power of attorney to cause said shares of stock to be transferred on the books of the company to said Gerlach, and that, by reason thereof, the defendant Edwards ceased to be a shareholder in the company, and that if the company is indebted to the plaintiffs, as alleged in their amended petition, said indebtedness accrued long subsequent to the time when defendant Edwards ceased to •be a shareholder, as aforesaid.
4th. That when the company was organized, it was mutually agreed between the incorporators thereof and all the subscribers to the capital stock that its capital stock should be paid, wholly, in services, contract and franchise rights to be rendered to and transferred to the company, or for its use and benefit, either before or after the incorporation of the company, and that all of the services and contract and franchise rights agreed to be rendered to and transferred to the company, in payment of the capital stock of the company, were rendered to and transferred to the company, as agreed, and its capital stock fully paid as agreed, all of which was known to the plaintiffs and each of them, and particularly to the plaintiff Harvey Neville, who was an incorporator of the company, shareholder, director and treasurer thereof, from its organization to its final dissolution, and that neither of the plaintiffs gave or extended credit to the company on the faith that its capital stock had been paid in money or its equivalent in property value, but well knew that the capital stock of the company was not intended to be paid in money or in its equivalent in property.
5th. That the liability of shareholders in a corporation, organized under the laws of Illinois, to said
(Section 8 is the same section as is copied in plaintiffs’ petition.)
‘ ‘ Section 25. If any corporation or its authorized agents shall do, or refrain from doing, any act which shall subject it to a forfeiture of its charter or corporate powers, or shall allow any execution or decree of any court of record, for a payment of money, after demand made by the officer, to be returned ‘No property found,’ or to remain unsatisfied for not'less than ten days after such demand, or shall dissolve or cease doing business, leaving debts unpaid, suits in equity may be brought against all persons who were stockholders at the time, or liable in any way, for the debts of the corporation, by joining the corporation in such suit; and each stockholder may be required to pay his pro rata share of such debts or liabilities to the extent of the unpaid portion of his stock, after exhausting the assets of such corporation. And if any stockholder should not have property enough to satisfy his portion of such debts or liabilities, then the amount shall be divided equally among all the remaining solvent stockholders. And courts of' equity shall have full power, on good cause shown, to dissolve or close up the business of any corporation, to appoint a receiver therefor who shall have authority, by the name of the receiver of such corporation (giving the name), to sue
That the plaintiffs have not commenced any suit as provided by.the laws of the State of Illinois to determine the liabilities and assets of the company and have not applied to the payment of the creditors of the company all the assets of the company and have not determined, in such a suit, the pro rata liability of all the shareholders of the company and, by reason thereof, are not entitled to maintain this suit.
6th. That on the-day of-, in a certain cause, entitled - -v. The Chester Light, Water and Ice Company, pending in the United States Circuit Court for the— District of Illinois, -was appointed receiver to take charge of and administer the property and effects of the company, and he, if any one, is the proper party to collect any dues or liabilities which may be owing to the company or its creditors from the shareholders or others.
7th. That under the laws of the State of Illinois a shareholder is not liable to the creditors of a corporation upon their unpaid stock, unless the overvaluation of the property turned in for said stock was fraudulently and knowingly made, with the intent of evading the statutes of Illinois.
9th. A general denial.
Upon plaintiffs’ motion, the court struck out of defendants ’ said answer the following portions thereof:
1st. The allegation that plaintiffs did not have legal capacity to sue.
2nd. The allegation that defendant Edwards executed and delivered to Gerlach proper power of attorney to transfer upon the books of the company the stock sold to him in 1901.
3rd. The allegation that, after said sale of stock in 1901, the defendant Edwards ceased to be a shareholder in the company and that if the company was indebted to the plaintiffs, said indebtedness accrued long subsequent to the time when said defendant Edwards had ceased to be a stockholder in the company.
4th. The entire portion of paragraph five of said answer.
Defendants excepted to the action of the court in sustaining said motion. Plaintiffs thereafter filed an amended reply to the remaining portions of said answer. The reply contained a general denial and an allegation that the matters pleaded in the fourth paragraph of said answer constituted no defense to the plaintiffs’ cause of action under the laws of the State of Illinois as decided by the highest court of said State in the case of Gillett v. Chicago Title & Trust Co., 230 Ill. 373.
The record in this case is very large, but the facts shown by the evidence are not complex and may be stated substantially as follows: In 1892, one Gerlach, a resident of Chester, Illinois, having procured certain electric light and water franchises from the city of Chester, was desirous of promoting a corporation to take over said franchises and erect an electric light plant and a water plant in said city. In furtherance of this plan, Gerlach called upon defendant Edwards in
At a meeting of the directors, on January 30, 1894, a resolution was passed allowing Gerlach the sum of $14,700 in payment for his franchises and, on motion of H. Neville, George L. Edwards, defendant, was allowed the sum of $14,900 for “services as financial agent and other services.” It appears that the stock of Gerlach and Edwards was paid for in this manner and that neither Edwards, Grant nor Gerlach paid any money to the corporation for their stock and did not render any further consideration to the corporation than that above mentioned.
There was evidence tending to show that the company was insolvent in 1901, but the failure of the company did not occur until about 1903, at which time the bond-holders filed á petition to foreclose the mortgage and a sale of the company property was had in such foreclosure.
Some of the witnesses testified that the services of defendant Edwards, as financial agent, were worth $15,000; one of the witnesses stated that he did not mean to say that they were worth that much in cash. There was evidence tending to show that the company would not have been able to build its plants if it had not been for defendant Edwards indorsing the company’s paper to raise temporary funds. It also appears, from the evidence, that defendant Edwards
A number of opinions by the Supreme Court- of the State of Illinois were offered in evidence; also the statutes referred to in the pleadings. ' ■
Defendants offered in evidence an order made by the circuit court of the United States, at the city of Springfield, Illinois, on the twentieth day of November, 1903, appointing a receiver for the company. The order appointed Don E. Detrich receiver, and ordered him to take and hold the property of the company, described in the bill, until further order of the court, and' enjoined the defendant corporation, and all other persons, from interfering with any of said property and from prosecuting against said defendant corporation any suits or actions at law or equity.
The petition, applying for the receiver, is not set forth in the record, neither are any of the subsequent proceedings in said foreclosure proceeding set forth in this record, but it appears, in the evidence, that the corporate property sold for much less that the mortgage indebtedness.
All of the plaintiffs, except one, made proof of their claims by duly authenticated, certified copies of the record of the circuit court of Eandolph County, Illinois, showing -judgment for the respective amounts claimed by each plaintiff to have been rendered by the clerk, in vacation. The following is a copy of the record as to one of said judgments. All the judgments were similar as to form.
“Herman Schroeder v. | The Chester Light, Water & | Cognovit. Ice Company. |
“Now, on this 14th day of December, A. D. 1904, it being in vacation after September Term, A. D. 1904,
“And now comes also the said defendant, by Don E. Detrich, attorney, and files herein his warrant of attorney, duly executed by the said defendant, authorizing him to appear in any court of record in behalf of said defendant and waive service of process, and confess judgment in favor of said plaintiff, and against said defendant, for the amount found to be due upon said certain promissory note annexed to said warrant of attorney, besides the costs of suit, the execution of said warrant of attorney being duly proved by the affidavit of ¥m. H. Miller on file herein; and said defendant’s attorney also files his cognovit, by which he waives service of process upon the said defendant and confesses the said action of the plaintiff, and that said plaintiff, by reason of the non-performance of the promises in the plaintiff’s declaration mentioned, has sustained damages in the sum of fifty-six dollars and seventy cents, it being the amount due on said note, over and above his costs by him in this behalf expended; and the said defendant, by its said attorney, consents and agrees that judgment may be entered in this behalf in favor of the said plaintiff and against said defendant for the amount of damages aforesaid, to-wit, for the sum of fifty-six dollars and seventy cents and for costs of suit; and release all errors in entering up this judgment, or in issuing execution thereon, and consents to the issuing of immediate execution, on the same. .
“By virtue whereof and in pursuance of the statute in such case, made and provided, it is considered that said plaintiff have and recover of and from the
“Attest: W. Geo. Beever.
' ■ Clerk. ’ ’
Evidence was also introduced showing that ex7 ecutions were issued on these judgments and returned . not satisfied.
It appears, from the evidence, that Gerlach, prior to the institution of this suit, had received his discharge as a bankrupt.
It further appears, from the evidence, that plaintiff Neville, who was a stockholder and a director of the company, held two shares of the company’s stock and was elected treasurer of the company; that he was the father-in-law of Gerlach and was made a stockholder and director of the company so as to help supply a sufficient number of directors for the company and that all of his acts, in connection with the company, were done at the suggestion of Gerlach. Mr. Neville was engaged in steamboating and paid very little attention to the affairs of the corporation in question. However, we think that there is sufficient evidence to show that he knew that defendant Edwards’s stock was attempted to be paid up by the financial services rendered to the company by Edwards and, in fact, Neville made the motion, at a directors’ meeting, to allow Edwards $14,900 for his services as financial agent of the corporation. This resolution was passed by the board of directors. Mr. Neville had nothing to do with the books of the company and knew nothing about the company’s affairs, except information given to him by Gerlach and information obtained by him at directors ’ meetings. Neville loaned the company money, from time to time, and, at the time the company failed, it owed him for borrowed money the sum of $5,065.71.
We will first consider the appeal of the defendants below:
Was the point sufficiently raised below? One of' the grounds of the motion for a new trial was the following: “Because the verdict and judgment is unsupported by any substantial evidence.” We think this, ground in the motion for a new trial raises the question as to the sufficiency of the evidence, which proposition,, necessarily, embraces the point now urged by appellants.
This brings us to the discussion of the questions upon its merits, to-wit, Was there a failure of proof' which rendered the evidence insufficient to support the-decree? The petition pleads the judgments- as judg--.
Discussing the subject of the presumption to be indulged concerning judgments of' a sister state, Black on Judgments, vol. 2, sec. 875, states the correct rule, here applicable, as follows:
“And it is further to be observed that if the court, rendering the judgment was one of limited, inferior, or statutory jurisdiction, or if the proceedings were in derogation of the common law, jurisdiction will not be presumed, but must be affirmatively shown by the face of the record or fully and distinctly pleaded and proved.” (Italics ours).
It would appear that the manner of pleading such judgments in this State is regulated by section 1836, Revised Statutes 1909.- The foregoing rule, stated in-Black on Judgments, supra, was, by this court in Banc,, quoted with approval in the case of State ex rel. v.
In discussing the matter of the presumptions attending judgments of a sister state, Division One of this court, in the case of Norman v. Insurance Company, 237 Mo. 576, l. c. 584, said:
“Further, no matter whether the court of common pleas [of Philadelphia] is or is not a court of general . jurisdiction, its jurisdiction in attachment and garnishment proceedings, they being special and statutory, is not supported by the presumptions which usually attend the acts of courts' of general jurisdiction. ’ ’
Applying said rule to the situation here, it, necesr sarily, follows that the evidence is insufficient to support the decree, because of a failure to prove any statutory authority for the rendition of such judgments.
Respondents, in support of their contention, rely upon the case of Dodge v. Coffin, 15 Kan. 277, which appears to be in point. It appears, however, that the court’s ruling in that case was influenced, largely, by the fact that it took judicial notice of the statutory law of the State of Illinois. That is not the rule in this State. In Missouri, the statutory law of another State must be proven the same as any other fact in the case. [Gibson v. Railroad, 225 Mo. 473, l. c. 483; Norman v. Insurance Co., 237 Mo. 576, l. c. 582.]
It appears that Edwards, the president of the comr pany, and one of its active promoters, claims to have
We think that the chancellor did not err in finding that, as against the claims of the general creditors, the services of Edwards, as financial agent, could not be given in payment of his stock. We have been unable to find a discussion of tMs exact point in any of the
The same also may be said with reference to the point that the court erred in overruling appellants’ motion requesting an election. [White v. Railroad, 202 Mo. 539, l. c. 561-562; Hanson v. Neal, 215 Mo. 256, l. c. 270-271.]
There were many portions of the answer stricken out by the court and, with the aid only of the foregoing, it is difficult to ascertain what the point is, upon which appellants rely. The above statement under “Points and Authorities” is, in fact, nothing more than a mere assignment of error. Rule 15 of this court provides that ‘ ‘ all briefs shall be printed and shall contain, separate and apart from the argument or discussion of authorities, a statement in numerical order,
In the recent case of Harrison v. Cleino, 256 Mo. 607, l. c. 608, in discussing this rule, Woodson, P. J., said:
‘ ‘ Clearly the meaning of the rule is, that the statement of the points shall he clearly and fully stated, in order that the court may comprehend therefrom the facts upon which the legal propositions presented for determination are predicated.”
Por the foregoing reasons, therefore, we will not attempt a discussion of this assignment of error.
Y.. We will now consider the appeal of the plaintiff, John D. Gerlach, administrator of the estate of Harvey Neville, deceased.
The points involved in this appeal do not differ, materially, from those discussed in the foregoing appeal, except in one important particular.
Appellants contend that the court erred in so holding and that the decree should have been in favor of plaintiff Neville’s claim, in accordance with the rule of-law announced in Gillett v. Chicago Title & Trust Co., 230 Ill. 373, which rule of law was pleaded by plaintiff in the reply. Respondents contend that the case of Gillett v. Chicago Title & Trust Co., supra, is not in point.
“If the facts in judgment in the Sprague case were like the facts in judgment here, this court might feel bound to enforce the interpretation placed upon the Illinois statutes by the court of last resort of that State, but the decision in the Sprague case imposes no such obligation on this court; and as such a result as is here sought is directly contrary to the rules that obtain in this State, this court will adhere to the rule heretofore announced by it in cases like this, until a similar case has been brought before the 'Supreme Court of Illinois and that court has otherwise declared the law in that State upon similar facts. ”
Appellants contend that the above mentioned case of Gillett v. Chicago Title & Trust Co., is such a case, and that, since the facts involved in the Gillett case are similar, in effect, to those held in judgment in the Meyer ease, the Gillett case should control. If the principal facts underlying the Gillett case were the same as those discussed in the Meyer case, the position of appellants would be sound. But, after a careful consideration of the Gillett case, we are unable to discover that the facts discussed were similar. The discussion of this point in the Gillett case appears to he confined merely to the effect that the creditor’s knowledge of the unpaid stock has upon his rights to recover against the stockholder. [Gillett v. Chicago Title & Trust Co., supra, l. c. 414-415.] The opinion, in no manner, undertakes to discuss- the legal proposition passed upon in the Meyer case and now presented in the case at bar. In the Gillett case, it does not appear that either of the original incorporators who agreed that the capital stock should he paid up by certain prospective patents, etc., were creditors, as is the case of creditor Neville in the case at bar.
It, therefore, follows that the trial court was correct in following the Meyer case and in finding against plaintiff Neville.
VI. By reason of the conclusions reached in the foregoing discussion concerning the respective appeals, it follows that that portion of the judgment disallowing the claim of plaintiff Neville should be affirmed, and that the portion of the judgment finding in favor of the claims of the remaining plaintiffs and
It is so ordered.
PER CURIAM. — The foregoing opinion by Williams, C., is adopted as the opinion of the court.
ON MOTION TO MODIFY.
PER CURIAM. — Herman Schroeder et al., respondents in the above entitled cause, have duly filed a motion to modify the foregoing opinion so the retrial of the cause, when remanded, shall be confined to the single issue as to whether or not there was statutory authority in Illinois authorizing the entry and rendition by the clerk of the circuit court,-in vacation, of the various judgments relied upon by the respective plaintiffs (respondents herein), as a basis of their respective claims.
It appears that all other issues in the cause were ^properly tried and determined before and that the motion to modify should be sustained. [McLure v. Bank of Commerce, 252 Mo. 510, l. c. 524.]
It is therefore ordered that the foregoing opinion be modified so that instead of remanding the cause generally for a new trial, the cause be remanded with directions that the new trial shall be confined to the single issue as to whether or not there was statutory authority in Illinois authorizing the clerk of said circuit court to enter or render the' respective judgments upon which said respondents base their respective claims. Either party may, if they so desire, so amend the pleadings as to more clearly draw the issue upon this question.
After a determination of this single issue, the circuit court will thereupon enter its judgment or decree, in accordance with the facts heretofore found and the facts then found upon this issue.