198 F. 961 | 8th Cir. | 1912
John W. Lowe was originally a farmer in Missouri. Before leaving that state and early in 1901 he bought a half interest in a stock of goods of M. F. Tyler at Ft. Collins, Colo. Maytl, 1901, the Tyler-Lowe Mercantile Company was incorporated with a capital stock of $30,000 to take over the business. Shares of stock for $100 each were issued fully paid and nonassessable. Stock to the amount of $15,000 was issued to Mr. Tyler, $14,000 to John W. Lowe, $500 to Fount L. Lowe, and $500 to James E. Lowe. Mr. Tyler was the first president. The stockholders remained unchanged until February 1, 1904, when Mr. Tyler sold $10,000 of his stock to Frank Loveland, with an agreement that his remaining $5,000 should be taken up within a year, which was done by the Lowes. After the sale by Tyler, John W. Lowe became president of the company. January 28, 1907, Mr. Loveland sold out to the Lowes, and from that time the stock was owned one-half by John W. Lowe and one-fourth each by Fount L- Lowe and J. E. Lowe. Fount L. Lowe was about 20 years of age in 1901, and was secretary and bookkeeper of the corporation until its failure. The business was very prosperous until some time in 1907, when it began to run behind and lost heavily until July 27, 1910, when the corporation- was adjudged an involuntary bankrupt, and Fermor J. Spencer ivas appointed and qualified as trustee. All the parties interested in the store were active in its management, John W. Lowe having moved to Ft. Collins shortly after his purchase, but he never took any part in the details of bookkeeping. It is undisputed and indisputable that he loaned the-corporation on its notes October 30, 1908, $1,500, November 17th $3,000, and February 3, 1909, $1,500. It is not claimed these notes have ever been paid, but a set-off is claimed. Mr. Lowe made other loans not represented by notes which in the view taken of this case it is unnecessary to enumerate. He filed a claim for the amount of the notes and for his account. To his claim the Wheeler and Motter Mercantile Company filed the following objections:
“Comes now Wheeler & Motter Mercantile Company, a corporation organized and existing under and by virtue of the laws of the state of Missouri, a creditor and party in interest in the estate of the Tyler-Lowe Mercantile Company, and objects to the allowance of the claim of John W. Lowe filed herein for the sum of eleven thousand nine hundred thirty-nine ($11,939.73)*963 and 7S/100 dollars on tlie following grounds; that said claim is not listed for said amount in the schedules of liabilities filed herein as sworn to by an officer of the bankrupt corporation; that at divers times said bankrupt corporation have issued financial statements purporting to give the amount of its liabilities, and in such statements no amount is stated as owing John W. Lowe; that the books of the bankrupt corporation do not show that the Tyler-Lowe Mercanlile Company to be indebted to the said John W. Lowe in the sum aforesaid; that the said John W. Lowe has received moneys at different times from said bankrupt cor]¡oration sufficient to offset any claim that he may hare against the estate of said bankrupt, the Tyler-Lowe Mercantile Company. Wherefore your objector prays that a hearing be had. and that the claim of John W. Lowe against the estate of the Tyler-Lowe Mercantile Company be disallowed.”
The claim was allowed by the referee in the sum of $6,760.50, being the amount of the notes, but was rejected as tq the account. Later upon application of the Wheeler & Motter Mercantile Company and other creditors a rehearing was granted, and the claim was wholly rejected. On review the District Court reversed the referee, and ordered him to allow the claim in the sum of $4,864.12. The trustee having determined not to appeal, the majority of the creditors were permitted to do so, but no appeal has been taken on behalf of John W. Lowe. The amount allowed is less than the amount of the notes, and for this reason many of the questions which would otherwise be material need not-be considered.
' “There is nothing in the act or the rules in bankruptcy directing the form of such objections. They should be in writing, and the specifications doubtless should be sufficiently explicit to indicate to the claimant the nature and character thereof.”
The additional question remains whether when a party puts his objections in writing he can afterwards in an appellate court rely upon wholly different objections not shown to have been urged in the court below.
More than $11,000 was thus credited to M. F. Tyler and all paid
“Dividends. The board of directors shall have power to declare dividends upon the capital stock of this company to be paid out of the money in the treasury or property belonging to the company not needed for other purposes, when, in its judgment it would be proper and for the best interests of the company.”
“Though the record does not show that, as forma! action was taken as would bo shown by the records of a carefully conducted corporation, we think it cannot be said that dividends were not authorized and declared. It must be remembered that; no question of the right of creditors is involved. See Cook on Corporations, 534; Hartley v. Pioneer Iron Works, 181 N. Y. 73, 73 N. E. 576; Rorke v. Thomas, 56 N. Y. 559; Reading Trust Co. v. Reading Iron Works, 137 Pa. 282, 21 Atl. 169, 170; McKusick v. Seymour, etc., 48 limn. 172, 50 N. W. 1116. Penn. Iron Works v. Maekensie, 190 Mass. 61, 76 N. E. 228: ‘A resolution will he construed as equivalent to a dividend where any other construction would amount to an illegal prefer*966 ence among tlie stockholders.’ Redhead v. Iowa National Bank, 127 Iowa, 572, 103 N. W. 796: ‘A dividend may be legal, even though not formally declared, it being paid by common consent, and hence cannot be recovered back on that ground after being actually paid.’ Berryman v. Bankers’, etc., Co., 117 App. Div. 730, 102 N. Y. Slipp. 695: ‘The stockholders may agree among themselves informally to distribute a eertian sum as dividends without going through the form of corporate action. No formal declaration is necessary, either by the stockholders or board of directors, and a distribution of profits by a unanimous consent without corporate action is legal.’ Groh’s Sons v. Groh, 80 App. Div. 85, 80 N. Y. Supp. 438. A division of profits is a dividend, even though not called such and not considered such by the directors or stockholders. Cook on Corporations, p. 1445, and cases cited. A scrip dividend is resorted to where company has profits not in cash. Cook, Bar. p. 1446.”
In Northwestern Marble & Tile Company v. Carlson, 116 Minn. 438, 133 N. W. 1014, where the board of directors adopted a resolution, “Moved by Darelius, seconded by Hedwall, that a dividend of 6 per cent, be declared on the common stock, payable in common stock or in cash, at the option of the stockholder, at such time as the finances of the firm will in the judgment of the board of directors warrant,” it was held,that, upon a showing that the finances of the company would warrant it, recovery could be had by a stockholder in the absence of any further resolution upon the part of the board of directors. See, also, Stoddard v. Shetucket, 34 Conn. 542.
We hold that when all the stockholders, including all the directors of a solvent corporation, meet and agree to a division of profits, and they are credited to the several individual stockholders upon the books of the company, and subsequently some of the stockholders withdraw their shares in whole or in part, that is the equivalent of a dividend. The claimant was therefore entitled to the dividends credited to him which did not impair the capital' stock.
It is contended that these would be illegal because in making up the statement of the condition of the company they took into consideration a small amount of bills. receivable.
We next come to the question of the charging of losses. There was no reference to this at the stockholders’ meetings in 1908 and 1909, and the evidence quite clearly shows that the claimant never knew that any losses were charged to him. The alleged meeting of 1910 was never in fact held, and the evidence fairly shows that there was due to the claimant substantially the whole of the amount claimed by him, but even if the charges of losses made in 1908 and 1909 stand there was still due Lowe exclusive of interest on his notes according to their terms in excess of the amount awarded him by the court below.