275 Mo. 113 | Mo. | 1918
This is a proceeding in prohibition against the judges of the St. Louis Court of Appeals, the Sterns Tire & Tube Company, William L. Burgess, Otto L. Menzing, Adam M. Joerder and Arthur E. Koerner.
A bill in equity had been filed in the circuit court of St. Louis County by Sherman E. Smalley and Ephrim S, Garrett, relators herein, against the corporation
The bill in equity is set out át length in the petition for prohibition filed herein. The material allegations of same having been admitted by respondents’ demurrer, constitute the facts for the determination of relators’ right to a permanent writ. Such allegations therefore, as are necessary to an understanding of the case, and are determinative of the Court of Appeals’ jurisdiction, will be embodied in the statement of facts.
Hon. Gustavus A. Wurdeman is one of the judges of the circuit court of St. Louis County. The bill in equity was filed in his division of that court. When the writ of prohibition was sued out in the Court of Appeals he was named therein as one of the respondents. Hence, his appearance as one of the relators in the case at bar. The relators, other than Judge Wurdeman, are Sherman E. Smalley and Ephrim S. Garrett-Their interest in the proceeding is as stockholders in the Sterns Tire & Tube Company, the corporation respondent. Smalley owns 28 shares of the capital stock of same, and Garrett 55 shares. Each of these shares has a par value of $100, or a total value of $8300. It was to protect their respective interests as stockholders of said corporation that the suit in equity was instituted.
Of the respondents, Burgess is the president of the said corporation; Menzing is its vice-president and sales manager; and these two, with Joerder and Koerner, are the sole directors.
The petition or bill in equity charges at great length and with much particularity, that Burgess, the president, who is paid, as such, a salary of $10,000 per year, directs and dominates the other directors and thereby has the complete control of the business and affairs of the corporation; that the management of same by said Burgess and the other directors is characterized by deceit, fraud and waste, in disregard of the best interests of the corporation, and to the damage and irreparable loss of all its- stockholders, except its directors; that for a number of years the statements made by these directors of the business affairs of the corporation show that it is being conducted at a great loss during each month and year covered by the term specified, up to the date of the filing of said bill, and that it has no income except that arising from the sale of its stock. This is followed by the usual formal allegations of a lack of other adequate remedy, the necessity for the protection of all of the stockholders, of the appointment of a receiver, an accounting, and for such other and further orders, etc., as may be necessary within the authority of the court.
As is evident from the character of the pleading of respondents, the issuance of the writ herein, except incidentally, is not questioned on account of the technical insufficiency of the petition or bill. It is contended, in effect, that what it does show, rather than what it does not, constitutes grounds ample for the refusal of the writ.
The other respondents, Sterns Tire & Tube Company, William L. Burgess, its president, Otto L. Men-' zing, Adam M. Joerder and Arthur E. Koerner, all of whom are directors thereof, for their return, demur to the petition, and writ of relators in that they say: first, that the matters and things therein stated are not sufficient in law or equity to entitle relators to the relief asked for in said petition or to authorize the issuance of the writ of prohibition by the Supreme Court; second, that the record in the prohibition proceeding in the St. Louis Court of Appeals, which relators here assail, does not disclose such facts as to bring the said proceeding within the jurisdiction of the Supreme Court, but that such record on its ;faee discloses that said cause is within the jurisdiction of the St. Louis Court of Appeals; third, that there is nothing before this court from or by which it is made to appear that the money value or “the amount in dispute” exceeds the statutory jurisdiction of the Court of Appeals; fourth, that, in the petition or bill in equity, filed in the circuit court of St. Louis County, which is the basis of this action, the plaintiffs therein pray that the said court require (1) defendants Burgess, Menzing, Joerder and Koerner to account to the defendant corporation for all moneys made by means of secret profits, as therein mentioned, for the benefit of the corporation and all of its stockholders; (2) that said Burgess, Menzing, Joerder, and Koerner be removed as officers and as directors
Buled otherwise, we would have presented the incongruous spectacle of the Courts of Appeals’ appellate jurisdiction being limited to $7500, and having
Here the value of the right of relators, necessarily involved, is that of $8300. The actual value of the tangible property, real and personal, of the. corporation, admitted by respondents. (State ex rel. v. Reynolds, supra), is $25,000. Leaving out of consideration the value of the capital stock other than that belonging to the relators, the definitely stated value of the right involved is far in excess of the jurisdiction of the Court of Appeals. The conclusion is therefore authorized, in harmony with the reasoning in the cases cited, and as definitely declared in State ex rel. Sale v. Nortoni et al., 201 Mo. 1, that “the Court of Appeals has no jurisdiction by original writ of prohibition to prohibit a circuit court from proceeding in a case where the appeal from a judgment in such case is to the Supreme Court.”
The result of this ruling, expressed in general terms, is, that while the Constitution gives courts of appeals co-equal authority with the Supreme Court in the issuance of original writs and in the superintending control over inferior courts, it. does not mean that the courts of appeals shall issue such writs, or have such superintending control, in cases in which the Supreme Court would have jurisdiction by appeal or writ of error.
The relief sought by relators as plaintiffs below, as applied to a domestic corporation, is well within the purview of a court of equity. A cogent reason exists for the denial of such relief when asked in the supervision of a foreign corporation where the facts are such that the decree, if rendered, is impossible of enforcement. This condition existed in the case of State ex rel. Life Ins. Co. v. Denton, 229 Mo. 187. In that case, this court prohibited the circuit court from inquiring into the business of a foreign insurance corporation for the purpose of correcting certain alleged mismanagement. The bill, so far as its formal sufficiency in equity and the right of plaintiffs to relief, under an effective state of facts, was not questioned; but it appearing that except for the transitory transaction of business here, the corporation was not only created in a foreign jurisdiction, but had its
So far as this declaration may appear from its terms to be g-eneral, it might be held to support the conclusion that a foreign insurance company could not be supervised by our courts in regard to the matters therein mentioned. The ruling, however, must be interpreted in the light of the facts upon which it is based. They are, that the corporation, as in State ex rel. v. Denton, supra, in addition to its creation elsewhere than in the State, had no other local existence than to transact business here. This ruling, therefore, may be said to be in complete harmony with that in the Denton case. The rule announced in these cases does not militate against the conclusion
Elsewhere, the rule is announced under like limitations, viz., that the right of supervision by the courts will not be exercised over a foreign corporation where the location of its officers, property and accounts are without the State, and the orders and decrees of the courts cannot, as a consequence, be enforced. [Sauerbrunn v. Hartford Life Ins. Co., 220 N. Y. 363, and cases cited p. 372; Eberhard v. Northwestern Mut. Life Ins. Co., 210 Fed. 520, and cases cited, pp. 522 & 523.]
The right of a court of equity to appoint a receiver for, and otherwise supervise the affairs of a foreign corporation, is elabotately discussed with the citation of many cases in the report of Low v. R. P. K. Pres. Met. Co., 91 Conn. 91, in L. R. A., 1917D, pp. 291-306. There is a contrariety of conclusions in regard to subordinate matters in these cases, but the general doctrine, in harmony with that announced herein, prevails.
While independently of statute a court of equity has power to entertain a bill against a domestic and, in accord with our rulings, a foreign corporation as well, under the facts in the instant case (Cantwell v. Lead Co., 199 Mo. 1; Thompson v. Greeley, 107 Mo. 577; Greeley v. Bank, 103 Mo. 212; Cox v. Volkert, 86 Mo. 505), we are not without legislative authority.in that behalf.
Under Section 3037, Eevised Statutes 1909, foreign corporations doing business here are subjected to all of the liabilities, restrictions, and duties of corpora
V. Notwithstanding our conclusion as to the sufficiency of the bill as a whole, we have considered respondents’ special contentions in regard to the lack of certain averments, regardless of the fact that the complete lack of jurisdiction of the Court of Appeals may render these contentions beside the case. Respondents insist, with that technical minuteness characterized by an argument in support of a demurrer, that the bill is insufficient in failing to embrace the necessary allegations to sustain an order for an accounting. The established rule is that courts liberally construe pleadings for accountings, and when the allegations in regard thereto substantially make out a case this will suffice. [1 Enc. Pl. & Pr., p. 97, note 2.]
The charge in the bill that Burgess, a director and president of the corporation, purchased 300 shares of the stock of the company from Sterns for the use of the company, at $40 per share, and resold 100 of such shares to one Meyer, at $60 per share, at a profit to himself of $2000, for which he should account to the company, is a plain and specific charge for an accounting, even good as against, a demurrer.
In addition, there is the 'charge in the bill that Burgess and his co-defendant directors, co-operating, purchased a calendar for the company at $17,500 and then caused entries to be made on the books showing an expenditure of $22,000 on that account. This will authorize an accounting, because in the concluding paragraph of the bill, prefatory to a prayer for general relief, an accounting is called for on all of the charges of fraud and waste theretofore specifically pleaded.
This bill is in nowise similar to that considered by this court in Albers v. Moffitt, 262 Mo. 645. There were no data set out in that case on which an accounting might be based. There is in the case at bar.
But even though no accounting can be had on the bill save on the $2000 item alone, it is nevertheless sufficient, for it seeks to remove Burgess, the president, from his office as director, on an allegation that he
Our conclusion is that the preliminary rule in prohibition issued by this court should be made absolute, and it is so ordered.