Acorn Printing Co. v. Brown, 8317

• Citation: 385 S.W.2d 812
• Decision Date: 17 November 1964
• Docket Number: No. 8317,8317
• Parties: ACORN PRINTING COMPANY, a Corporation, Plaintiff-Respondent, v. Leonard BROWN and Benton Whitaker, d/b/a County Directory Service, Defendants and Third-Party Plaintiffs, Respondents, v. JOPLIN INVESTORS, INC., a Corporation, Third-Party Defendant and Defendant, Appellant.
• Court: Court of Appeal of Missouri (US)

Page 812

385 S.W.2d 812

ACORN PRINTING COMPANY, a Corporation, Plaintiff-Respondent, v. Leonard BROWN and Benton Whitaker, d/b/a County Directory

Service, Defendants and Third-Party Plaintiffs, Respondents, v. JOPLIN INVESTORS, INC., a Corporation, Third-Party Defendant

and Defendant, Appellant.

No. 8317.

Springfield Court of Appeals, Missouri.

Nov. 17, 1964.

Jack Fleischaker, Roberts & Fleischaker, Joplin, for appellant.

Rex Titus, Richart, Titus & Martin, Joplin, for respondents Leonard Brown and Benton Whitaker.

RUARK, Presiding Judge.

This is an appeal by Joplin Investors, Inc., from an order overruling what the appellant in its brief terms a motion to set aside a judgment for irregularity. The judgment against which the motion is directed was rendered on January 16, 1961, in what we will refer to as 'the main case.' In that case plaintiff, Acorn Printing Company of Tulsa, Oklahoma, had judgment against Joplin Investors, Inc., in the amount of $2,463.30.

We cannot here go into the facts and merits of the main case in order to determine whether or not ordinary judicial error was committed. ¹ But for an understanding of the questions with which we are confronted, it is necessary to refer to the pleadings and relate some of the facts and circumstances which appear from the record in the main case in order to show the position of the parties, their conduct, knowledge, and knowledgeability, as such may may affect this case.

Joplin Investors was originally organized as a general business corporation with an authorized capital stock of thirty-thousand-dollars. Apparently this company was engaged in the business of publishing a county directory, which such venture was not financially successful and had resulted in a loss which the corporation (later) claimed in its income tax. At the onset of the matters with which we are here concerned, two men, Brown and Whitaker, appear to have been the sole remaining stockholders of the corporation. On or sometime prior to April 7, 1954, one Myron McIntosh, who described himself as being engaged 'in the real estate business,' approached Brown and Whitaker and the result was that on April 7, 1954, an agreement was reached whereby McIntosh became the owner of all the stock except ten (or possibly ten each) shares held by Brown and Whitaker. McIntosh was made chairman of the board, and thereafter he appears to have handled and financial affairs and to have written all the checks of the corporation. On April 30 the capitalization was increased to two-hundred-fifty-thousand dollars (McIntosh testified that he was interested in buying the corporation so that it might be operated for the purpose of making loans).

In the meantime, on April 10, 1954, an agreement was entered into between Joplin Investors as first party and Brown and Whitaker as second parties in reference to the publication of a new directory. This agreement recited in substance that the Joplin Investors was the owner of the copy-right of 'Rural Directory Service.' It employed Brown and Whitaker to operate such service under an arrangement whereby the policy and management of said service was to be determined by there votes, one each by Brown and Whitaker and one by Joplin Investors. Brown and Whitaker agreed to make annual accountings and the profits of the corporation were to be divided one-third each. Joplin Investors was to deposit to the account of 'Rural Directory Service' an initial two-thousand dollars for the purpose of buying materials and supplies, which deposit was to be accounted for by Brown and Whitaker. This agreement was signed on behalf of Joplin Investors by Myron A. McIntosh, chairman of the board, and Leonard R. Brown, as president. It was also signed by Brown and Whitaker as individuals. Thereafter, there were various financial transactions which involved checks and/or deposits by Joplin Investors to the Directory Service. Each of these checks was signed by McIntosh as chairman of the board. In one transaction Joplin Investors borrowed two-thousand dollars at the bank and put up as collateral accounts receivable of $3,226.00 of the Directory Service (consisting of contracts for advertising in the Directory Service). The major portion of this two-thousand-dollar note was later paid by receipts of payments on such contract advertising in the new directory. Acorn Printing Company of Tulsa agreed to print the new directory. On September 17, 1956, a check of Joplin Investors for five-hundred-dollars (signed by McIntosh) was issued to County Directory Service (apparently the name was changed), which check was thereafter endorsed by the Acorn Printing Company. On the same day, Brown and Whitaker gave their promissory note to Acorn Printing Company in the principal amount of $2,422.50, payable in installments of one-hundred-dollars per month. This note was actually prepared by McIntosh but was signed: 'COUNTY DIRECTORY SERVICE by Leonard Brown, Benton Whitaker.'

Thereafter, various checks were issued by Joplin Investors (signed by McIntosh) to the Directory Service. Some of these checks were endorsed by Acorn Printing Company, and there seems to be no question that they were for payments on the Acorn note. Finally default was made, and there followed an interlude of dispute as to whether or not Brown and Whitaker were liable on the notes personally or whether, as they contended, the note was signed by them as agents for Joplin Investors. Finally Acorn brought suit for the balance on the note against Brown and Whitaker. That is the main case with which we are involved.

The petition was signed by Max Patten as attorney for Acorn. Brown and Whitaker responded by answer filed by Attorney Titus charging that Joplin Investors was the owner of the Directory Service and the note was signed by them as agents of Joplin Investors, which agency was disclosed and known to plaintiff Acorn. Accompanying such answer was a third-party petition which charged that Joplin Investors was owner of the Directory Service; that Brown and Whitaker executed the note as agents for the corporation, which had received the benefits thereof; that Joplin Investors acknowledged the indebtedness and thereafter made payments totaling five hundred fifty dollars on such note. The petition prayed that if judgment be obtained against Brown and Whitaker they have judgment over in equal amount against Joplin Investors as the principal debtor.

Thereafter, on October 28, 1958, Joplin Investors filed its answer in which it denied agency; and also in effect asserted that the contract between Joplin Investors and Brown and Whitaker in reference to Rural Directory Service was ultra vires. This answer was signed by Max Patten, who was also attorney for plaintiff Acorn. On June 5, 1959, Mr. Patten, as attorney for plaintiff Acorn, filed amended petition in which he alleged that Brown and Whitaker executed the note as individuals 'and/or' acting as agents for Joplin Investors, and prayed for judgment against all three defendants. To that pleading Brown and Whitaker again responded with an answer, as before, that they had signed the note as agents of Joplin Investors, which was liable for the note. They also included a cross-petition against Joplin Investors praying for seven-hundred-dollars expense required in defending the action and, in event of judgment against them, for judgment over against Joplin Investors in equal amount. Joplin Investors filed separate answer denying agency and asserted that the employment agreement hereinabove referred to was void as to it because it was signed by defendants Brown and Whitaker while officers of the defendant Joplin Investors; the answer also asserted that the contract was ultra vires. This answer also was filed by Max Patten.

The case was tried to the Court. Early in the trial, the following colloquy was had:

'Mr. Patten: There are defendants Brown and Whitaker, and then there is another defendant, Joplin Investors, and we are fighting among ourselves here and not with the plaintiff in the case.

'The Court: In other words, Mr. Titus represents the defendants Brown and Whitaker and Mr. Patten represents the defendant Joplin Investors, Inc.

'Mr. Patten: That is right.

'The Court: And also the plaintiff Acorn Printing Company?

'Mr. Patten: But nobody has any controversy other than who is stuck.'

Patten called a witness for plaintiff Acorn. Then defendants Brown and Whitaker were called and examined by their attorney Titus and cross-examined by Patten. Then McIntosh (who is principal owner of Joplin Investors) was called and examined fully in behalf of Joplin Investors by Patten and was cross-examined by Titus. It was the contention of Mr. McIntosh that Joplin Investors had no actual ownership of or interest in the Directory Service; that the moneys paid to or on behalf of the Directory were loans, and Brown and Whitaker were not authorized as agents of the corporation. On January 16, 1961, the court rendered judgment showing appearances of plaintiff Acorn by Pattern, of defendants Brown and Whitaker by Titus, and of Joplin Investors (designated as third-party defendant) by Patten. The judgment was in favor of plaintiff Acorn and against Joplin Investors. Brown and Whitaker were discharged of liability.

Thereafter, plaintiff Acorn filed motion for new trial as to defendants Brown and Whitaker. The basis of the motion was that the evidence showed Brown and Whitaker had agreed to stand personally responsible on the note and that they were not authorized to sign it for Joplin Investors. This motion was signed by Patten. Joplin Investors filed a motion for new trial, the basis of which was (1) Brown and Whitaker had informed plaintiff Acorn that they would stand personally liable, (2) the corporation had no authority to engage in the type of business involved, (3) Brown and Whitaker knew they had no authority to execute the note for the corporation, (4) the business involved was ultra vires and...