Anglo-American Land, Mortgage & Agency Co. v. Lombard

• Decision Date: 16 July 1904
• Docket Number: 1858-1861.
• Citation: 132 F. 721
• Parties: ANGLO-AMERICAN LAND, MORTGAGE & AGENCY CO., Limited, v. LOMBARD (two cases.) RAMSDEN v. CHESHIRE PROVIDENT INST. SAME v. KEENE FIVE CENT SAV. BANK.
• Court: U.S. Court of Appeals — Eighth Circuit

132 F. 721

ANGLO-AMERICAN LAND, MORTGAGE & AGENCY CO., Limited, v. LOMBARD (two cases.)

RAMSDEN v. CHESHIRE PROVIDENT INST.

SAME v. KEENE FIVE CENT SAV. BANK.

Nos. 1858-1861.

United States Court of Appeals, Eighth Circuit.

July 16, 1904

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

These were actions at law prosecuted by plaintiffs in error, as creditors of the Lombard Investment Company, a Kansas corporation (called herein the 'Kansas Company') against defendants in error, as stockholders of that company, to enforce the additional or double liability imposed by the Constitution and statutes of Kansas upon stockholders in corporations organized under the laws of that state, and to enforce a claimed unpaid subscription to additional stock issued by the corporation.

The petition allege, in effect, that all of the assets and property of the Kansas Company were placed in the possession of a receiver or receivers appointed in a creditors' suit commenced September 18, 1893, against that company and the Missouri Company, hereinafter mentioned, in the Circuit Court of the United States for the Western District of Missouri; that the bill in the creditors' suit prayed, in addition to the appointment of a receiver, an adjudication of the claims against the Kansas Company, a sale of its property, and the application of the proceeds upon the claims allowed; that the Anglo-American Company and the assignors of Ramsden intervened in the suit, and procured an adjudication of their claims against the Kansas Company; that the assets and property of the company were sold, and the proceeds distributed among the creditors, pursuant to a final decree entered May 22, 1895, in which the company was adjudged to have been insolvent at and subsequent to the time of the filing of the bill; that the orders and decree in the suit in the Western District of Missouri were confirmed by like proceedings in an ancillary suit in the Circuit Court of the United States for the District of Kansas; that since said proceedings and sale the company has been wholly without any assets or property of any kind; that about August 1, 1890, the company, with its officers, permanently left the state of Kansas, and removed its offices therefrom; that at the same time the stockholders of the Kansas Company transferred the entire stock of that company, amounting to $1,875,000, to the Lombard Investment Company of Missouri, a newly organized Missouri corporation (called herein the 'Missouri Company'), in exchange for a like amount of the stock of the latter company, the total of which was $4,000,000; that this transfer and exchange were merely colorable, and made for the purpose of escaping the liability imposed upon stockholders by the Constitution and laws of the state of Kansas; that the transfer and exchange were therefore void, and in nowise relieved the stockholders of the Kansas Company from such liability; that defendants were at all of these times, and are now, stockholders of the Kansas Company; that plaintiffs are severally creditors of the Kansas Company upon claims allowed and adjudicated in the creditors' suit, as before stated; and that the amounts claimed by plaintiffs are due to them, respectively, after deducting the distributive shares or dividends received through the sale made under the decree in the creditors' suit. The prayer in each case is for a money judgment.

In addition to a set-off pleaded in two cases, three defenses presented by the answers are insisted upon: (1) The relief sought by plaintiffs is equitable in character, and cannot be had in actions at law. (2) The Anglo-American Company and the assignors of Ramsden accepted the benefits of the transaction of which the transfer of stock was part, and, with full knowledge of all the facts, acquiesced in, consented to, and affirmed, the transfer. In connection with this defense, the answers allege: 'The Missouri Company bought and acquired all the stock of the Kansas Company and its entire assets and interests of every kind, nature, and description, and assumed all of its liabilities, with the same force and effect as if it had originally on its part created the obligation, and each and every creditor of the Kansas Company, including the then owner of the debt sought to be enforced in this action agreed thereto, and consented to substitute the Missouri Company as the debtor in lieu of the Kansas Company, and to discharge and release the latter from any obligation upon its part. * * * In substance, the transaction of 1890 took the form of the stockholders in the Kansas Company, who made the exchange, subscribing for stock in the Missouri Company, and paying therefor by a transfer of their stock in the Kansas Company. For all the stock in the Missouri Company in excess of the amount of the capital stock of the Kansas Company the subscribers paid a premium in case in an amount exceeding the fact value of the stock, aggregating about $2,200,000, all of which was paid into the treasury of the Missouri Company upon the faith of carrying out the plan hereinbefore stated, succeeding to the business of the Kansas Company, and having the owners of the stock of the Kansas Company transfer their stock to the Missouri Company. As a part of the consideration for the transfers hereinbefore set out, and for the subscription for the $4,000,000 of stock to the Missouri Company by several hundred investors, the Missouri Company agreed in writing to save the Kansas Company and all its stockholders harmless from any and all liability, no matter how arising, growing out of the business of the Kansas Company. This arrangement was consummated August 1, 1890, at which time the Kansas Company ceased to do business, being then superseded and succeeded by the Missouri Company, which from that date until the appointment of receivers, as hereinafter mentioned, transacted all the business theretofore carried on by the Kansas Company, and performed all of its obligations, met all of its liabilities, and succeeded to and enforced all of its rights; but the organization of the Kansas Company was kept alive for the purpose of aiding, if desired, the Missouri Company in its business by the execution of numerous deeds and transfers, as from time to time became necessary, but said Kansas Company did no business, and performed none of its obligations. * * * The receivers voted, controlled, and acted as owners of the stock of the Kansas Company, including the shares transferred by the defendant herein to the Missouri Company. The receivers officered the Kansas Company, and required these officers to join in the execution of deeds and conveyances, making title, and creating assets to be distributed in said proceedings.' (3) The claims are barred by the statute of limitations. In their replies to these answers, plaintiffs fully put in issue the allegation that they agreed to the transfer, and consented to substitute the Missouri Company as the debtor in lieu of the Kansas Company, and to discharge and release the latter from any obligation upon its part. The replies also contain these allegations: 'That the business of the Kansas Company was thereby transferred from the state of Kansas to the state of Missouri, and carried on by the same officers and in the same manner, pursuing the same course of business and the same character of business as had been theretofore pursued by the Kansas Company; the said Missouri Company representing and acting for and in behalf of the said Kansas Company in respect to all of its previous business, carrying the same on and continuing it without break or change in any manner or respect whatsoever. * * * That in making the said change of said corporation from the state of Kansas to the state of Missouri, the said Lombard Investment Company did not provide for the payment of the debts and obligations of the Kansas Company in any respect whatsoever, except the assumption of the indebtedness of the Kansas Company by the Missouri Company. * * * That the alleged transfer of all the assets and property of the Lombard Investment Company of Kansas to the Lombard Investment Company of Missouri, the exchange of the capital stock of the Kansas Company for stock of the Missouri Company, the alleged purchase of all of the stock of the Kansas Company by the Missouri Company, were carried on and conducted by the officers and directors and others interested in the Kansas Company. That said transfers and transactions upon the part of the said Kansas Company, as well as upon the part of the said Missouri Company, were without authority conferred upon said corporations by the laws of the state of Missouri and Kansas, respectively, * * * and each and all of said acts were ultra vires of said corporations and of each of them, and were wholly null and void. * * * Replying * * * particularly with reference to the bar of the statute of limitations of the state of Kansas, the plaintiff avers that at all times during the said transactions the said defendant was a nonresident of, and absent from, the state of Kansas.' It was stipulated in the cases against James L. Lombard and B. Lombard, Jr., that plaintiff's recovery, if any, should be $15,000, with interest, in each case; that the statute of limitations of Missouri should apply in the case against James L. Lombard, and that of Massachusetts in the case against B. Lombard, Jr., these being the states of their residence, and their submission to the jurisdiction of the court below being voluntary; and that the action against the former should be deemed to have been commenced July 18, 1898, and the action against the latter May 27, 1898. The cases were tried together to the court, the parties having filed written stipulations waiving a jury. There was no general...