In re Doe Run Lead Co. v. Maynard

• Citation: 223 S.W. 600,283 Mo. 646
• Decision Date: 19 June 1920
• Docket Number: No. 20601.,No. 20602.,20601.,20602.
• Parties: In re DOE RUN LEAD CO. DOE RUN LEAD CO. et al. v. MAYNARD et al. SAME v. HOLMES et al.
• Court: United States State Supreme Court of Missouri

223 S.W. 600

283 Mo. 646

In re DOE RUN LEAD CO. DOE RUN LEAD CO. et al. v. MAYNARD et al. SAME v. HOLMES et al.

No. 20601.

No. 20602.

Supreme Court of Missouri, in Banc.

June 19, 1920.

Motion for Rehearing Denied July 12, 1920.

Appeal from Circuit Court, St. Francois County; Peter Huck, Judge.

In the matter of the dissolution of the Doe Run Lead Company, wherein Samuel R. Maynard and Robert Holmes, objecting stockholders, and the St. Joseph Lead Company, filed answers. From a decree of dissolution, the stockholders separately appeal; the appeals being consolidated. Reversed.

This is a proceeding by the Doe Run Lead Company, incorporated, for dissolution under the provisions of sections 2996 to 3000, inclusive, of the Revised Statutes of Missouri of 1909. Samuel R. Maynard and Robert Holmes, objecting stockholders, and the St. Joseph Lead Company, filed answers. Upon a hearing below, a decree of dissolution was entered, and from that decree Samuel R. Maynard and Robert Holmes have duly, but separately, appealed. The two appeals have been consolidated, however, and will be decided as one.

The pleadings are voluminous. The evidence covers some 1,200 pages. The property interests involved are large. The questions presented for our determination are numerous, and many of them are important. The petition, covering 24 pages, exclusive of exhibits, avers in substance, omitting formal allegations, that a resolution authorizing the filing of this proceeding for the dissolution of petitioner was duly adopted by the holders of more than two-thirds of the capital stock of the petitioning corporation; that, for reasons covering some 18 printed pages, it is to the best interests of its stockholders that the properties of the petitioner shall be consolidated with the properties of the St. Joseph Lead Mining Company, incorporated, which is a corporation engaged in the same line of business in the same locality as petitioner, and is a party to these actions; and that those stockholders of the petitioner, "who now desire a dissolution of said company, also desire that all the property and business of the Doe Run Lead Company be first sold" to the St. Joseph Lead Company; and it is then averred that they (that is, the stockholders of petitioner who desire that its properties be sold to the St. Joseph Lead Company) also "desire that said sale and transfer be made upon a basis which will fairly and fully compensate such minority stockholders of the Doe Run Lead Company as may object to such sale, transfer, and dissolution, by liquidating their respective interests in the Doe Run Lead Company, either in shares of stock of the St. Joseph, Lead Company or in cash," but that (in substance), if that arrangement cannot be made, then that the properties of petitioner be sold at public sale. (The italics are ours.) The prayer is for a decree of dissolution and for an order directing the proper officials of petitioner to take charge of its assets as trustees, as provided by section 2995 of the Revised Statutes of Missouri of 1909, and for such further orders as may be appropriate. A demurrer to this petition, based upon constitutional and various other grounds, including that of a failure to state facts sufficient to constitute a cause of action, was overruled, and, as above stated, defendants Maynard, Holmes, and the St. Joseph Lead Company filed answers.

The answer of appellant Maynard consisted of a general denial and the following affirmative defenses:

(1) That the dissolution had not been authorized by stockholders holding and entitled to vote two-thirds of the value of all the shares of stock.

(2) That the defendant the St. Joseph Lead Company claimed to own more than two-thirds of all the shares of stock in a Missouri corporation, and that its attempt to do so was in violation of the laws and public policy of this state.

(3) That the joint committee of stockholders which had been appointed to arrange the terms of the consolidation of the two corporations had not acted in good faith, but had been controlled by the St. Joseph Company.

(4) That the resolution authorizing the dissolution is void because in violation of the laws of this state, in that it contemplated the purchase by, the Doe Run Lead Company or its own capital stock.

(5) That the resolution of dissolution had been abandoned and had not been accepted by the St. Joseph Company, and that neither of the two corporations had attempted to proceed under or in accordance with the resolution for more than three years after the adoption thereof, and that conditions in the meantime had so changed as to make the resolution inapplicable.

(6) That the resolution was illegal and void because the owners of a majority of the capital stock of the Doe Run Company had been coerced into consenting thereto by certain persons who were in control of the St. Joseph Company.

(7) That the petitioner cannot maintain an action under the provisions of sections 2996 to 3000, inclusive, of the Revised Statutes of Missouri of 1909, because the same were enacted long subsequent to the incorporation of the petitioner, and are not retroactive in their operation, and that to permit a dissolution to be decreed under the provisions of said sections would be in violation of certain sections named of the Constitution of the state of Missouri, and of certain amendments to the Constitution of the United States, particularly the due process of law provision, and those relating to taking private property for private use, and impairing the obligations of a contract.

(8) That the resolution authorizing a dissolution of the petitioner was not legally adopted, for the reason that the St. Joseph Company could not vote the shares of stock it claimed to own, and that to so construe section 2996, supra, as to permit such stock to be voted, would be in violation of sections 5 and 7 of article 12 of the Missouri Constitution.

(9) That all contracts between the said two corporations by or through which the St. Joseph Company exercised control over the Doe Run Company were made in violation of chapter 98, R. S. Mo. 1909, relating to pools, trusts, and combinations, in violation of the federal Anti-Trust Law (U. S. Comp. St. §§ 8820-8823, 8827-8830), and of the Clayton Act (38 Stat. 730), and are prejudicial to the public welfare, and that the proceeding is not a proceeding on the part of the Doe Run Company stockholders for the dissolution of that company, but is a suit by the St. Joseph Company for the dissolution of the Doe Run Company.

Certain other defenses are also set forth in this answer, and in the answer of Holmes, but need not here be stated. The issues made by the answer of defendant Maynard substantially cover all of the defenses alleged in the other answers. The answer of defendant Holmes also alleged the proceeding to be an attempt on the part of the St. Joseph Company, as owner of more than two-thirds of the stock of the Doe Run Company, to force a sale of all the property of the Doe Run Company to the St. Joseph Company.

The defendant St. Joseph Lead Company by its answer admitted all of the allegations contained in the petition, and consented that a decree of dissolution should be entered, and alleged that the defendant Maynard was estopped to object to the decree of dissolution, for the reason that, although he was at all times during the pendency of the negotiations looking to dissolution a stockholder in both companies and fully acquainted with all those proceedings, he made no objection thereto: that the St. Joseph Company had purchased more than 94 per cent. of the Doe Run Company stock in an effort to execute the proposed consolidation and merger; that those purchases were made with the full knowledge of defendant Maynard and without objection on his part; that it was now impossible to restore the status quo; and that the said Maynard was thereby estopped from opposing the decree of dissolution.

The petitioner filed a reply to the answer of Maynard, setting up substantially the same matters alleged in the answer of the St. Joseph Company. The foregoing is as much of the pleadings as it is necessary to set forth.

A detailed statement of the contents of the record would be so voluminous as to tend to confuse rather than to elucidate, and is unnecessary. For that reason only so much of the facts as may be thought to be essential to an understanding of the questions presented and decided, or which tend to shed light upon those questions, will be stated.

The petitioner, the Doe Run Company, is a corporation which was organized under the laws of the state of Missouri in 1886, for the general purpose of lead mining. Apparently all of its property is located in this state. Its capital stock originally consisted of 2,000 shares of stock of the par value of $100 each, but at the time of the institution of these proceedings it had been increased to $10,000,000. Certificates of stock had been issued and were outstanding for 65,783 shares. The par value of the stock is $100. Appellants own something more than 1,100 shares of Doe Run Company stock.

Closely allied to the Doe Run Company is the St. Joseph Lead Company, a corporation organized under the laws of the state of New York in 1884, with a capital stock originally of $1,000,000. By successive changes the capital was ultimately increased to $20,000,000, of which $10,000,000, of the par value of $10 per share, had been issued. The general purpose of the St. Joseph Company was the same as that of the Doe Run Company. At the time of the institution of this action, Clinton H. Crane was president of both companies. The St. Joseph Company claims to own 63,401 shares of the outstanding stock of the Doe Run Company. The Doe Run Company had for some time prior to the institution of this action been under the control of the original incorporators, and the affairs of the Doe Run Company had apparently been seriously mismanaged by them. The...