30 Mo. App. 15 | Mo. Ct. App. | 1888
delivered the opinion of the court.
Under the peculiar facts of this case the state of
The answer of the defendant is a general denial and no more.
The action is of an equitable nature, and was treated as such by the court and by the parties. The finding • of the court is contained in its decree, of which both parties complain ; the plaintiff contending that under the evidence the defendant became chargeable with $1,865.37, profits realized by the use of corporate funds in the venture, and the defendant contending that under the evidence he was not chargeable at all.
The decree of the court is as follows : And now .-at this day come the parties by their attorneys, and the court being fully advised, doth find that plaintiff is a
The following facts appeared in evidence : The St. Louis Paint Manufacturing Company was, at the date of the grievance complained of, a corporation with a capital stock of thirty thousand dollars, divided into three hundred shares of one hundred dollars each. One Louis Kitterskamp, held one hundred of these shares. One hundred were held by W. Gr. Mepham, the president of the company, and one hundred by the defendant, who was secretary of the company, and his mother and brother, in equal thirds. The corporation was then, and is now, solvent.
‘ ‘ St. Louis, May 30, 1884.
“For ten days from date above written I hereby agree to sell to the St. Louis Paint Manufacturing Company one hundred shares of stock in said corporation for the sum of seventy-nine hundred dollars in cash.”
“ Louis Ritterskamp.”
This option, by subsequent endorsement, was extended to June 19.
It appears that all the parties originally intended that the corporation should become purchaser of this stock. Upon being advised by counsel of the illegality of such a transaction, it was decided that the stock, when bought, should first be transferred to the defendant, and by him surrendered to the corporation in exchange for new stock to be issued to a purchaser if •found. So far ■ there is no conflict in the evidence. During the life of the option, on June 16,. the stock was bought from Ritterskamp and the seventy-nine hundred dollars paid to him in part with corporate funds ; the certificates for it were transferred by Ritterskamp to defendant, and on June 17 were cancelled and surrendered to the corporation, and a new certificate for the stock was issued to Dr. Stevens, who paid and agreed to pay for it the sum of ten thousand dollars.
As to the character of this transaction the evidence conflicts. W. Gr. Mepham and Dr. Stevens, who, it appears, are still stockholders of the corporation, claim that the benefit of the venture was to enure to the benefit of the corporation, notwithstanding the fact that the defendant was an ostensible transferee. The defendant, on the other hand, who, it appears, had ceased to be a member of the corporation, claims that the benefit.of the venture was to enure to the remaining stockholders; that he has so treated it, and has given credit for the profits realized
The only substantial difference between the two contentions is this: If the claim of W. Gr. Mepham and Stevens is correct, then defendant committed no wrong in using corporate'funds in the purchase of the stock. The transaction in that view of the evidence was sanctioned by every stockholder. The identity of a corporation with the aggregate of its shareholders, where no rights of third parties intervene, is recognized by courts of law, and courts of equity could not permit a legal' fiction to stand in the way of substantial justice, as these. courts deal more with the substance than with-the form of things. Appeal of the Third Reformed Church, 88 Pa. St. 503. In that event the wrong, if any, on part of defendant consisted in the fact that he failed to give credit to the corporation upon its books for the profits thus realized in the transaction. If, as he claims, and as the court found, he divided the profit thus realized and paid it to the various stockholders in proportion to their interest in the corporation, then the only person injured by the transaction in substance is Dr. Stevens, who being interested to the extent of one-third in the corporation would be deprived of one-third of the profit realized in this transaction.
On the other hand, if this was an individual venture of the defendant on behalf of himself., and his brother and sister, and W. Gr. Mepham, as the court seems to have found from the evidence, and if all these parties have been paid their respective shares of the profits, then the only party who can possibly complain of defendant’s conduct is Sievens, or those claiming under him. In either view of the case the corporation stands in -court substantially as the representative of Stevens alone, and but for such representation would have no standing in court whatever.
Entertaining these views we must conclude that the decree is based upon an erroneous theory and cannot stand. The substantial question is evidently not the illegal use of corporate funds, because the use made of them seems to have been made with the consent of all 'stockholders. The substantial question is, has the corporation as such any interest in these profits, whether arising from the use of its funds or otherwise, and if so, how many of these shareholders have been paid such profits ?
To determine these questions fully and intelligently, the proper parties are not before the court, nor are the pleadings in proper shape, nor has the evidence been received on a proper theory. We are, therefore, not in a position to formulate a decree. The decree of the court will be reversed and- the cause remanded, plaintiff to have leave to amend its petition, bringing in other parties if so advised ; defendant to have leave to amend his answer setting up the facts as claimed by him in detail.
We may add that, in the view that we take of the case, the representations made by W. Gh Mepham to Stevens, as to what interest Stevens would acquire in the profit of the venture if he became the purchaser of the Ritterskamp stock, are material and evidence concerning them is admissible, regardless of the fact whether they were made in the presence of the defendant or not. If the venture was a private venture of W. Gr. Mepham and defendant, then as to a third party either is bound by the representations made by the
If new parties are made as suggested then the court will be in a position to take a full account of the entire transaction and make such decree as will satisfy the demands of substantial justice regardless of mere fictitious representation. Costs to abide final disposition of the cause.
Reversed and remanded.