Baker v. Harpster

• Decision Date: 05 October 1889
• Parties: HENRY C. BAKER, as Receiver of the Elevator and Mill Company of Everest, v. E. J. HARPSTER et al
• Court: Kansas Supreme Court

22 P. 415

42 Kan. 511

HENRY C. BAKER, as Receiver of the Elevator and Mill Company of Everest, v. E. J. HARPSTER et al

Supreme Court of Kansas

October 5, 1889

Error from Brown District Court.

THIS action was brought by Henry C. Baker, receiver of the Elevator and Mill Company, of Everest, against the defendants. Trial at the January term, 1887, of the district court, and judgment was rendered in favor of the defendant the State Savings Bank of St. Joseph, Missouri, and Benjamin F. Harpster. To reverse this judgment the plaintiff brings the case here; and the defendants Benjamin F. and E. J Harpster file their cross-petition praying a reversal of the judgment. Trial by the court, which made special findings of fact, which, together with the pleadings and judgment, are brought here. The pleadings and findings of fact present substantially the following facts: That in March, 1882, the Farmers' Elevator and Mill Company was incorporated, with an authorized capital stock of $ 15,000. This company was composed of all of the defendants save the State Savings Bank, and included some others. Afterward the capital stock of the company was increased to $ 20,000. B. F. Harpster was its president and chief managing officer; W. H. H. Curtis was secretary, and J. F. Harpster was treasurer. B. F. Harpster was also the owner of a bank at Severance, Kansas, and J. F Harpster was his chief clerk, and kept the treasurer's books of the corporation. In the course of the business of the corporation an arrangement was made between the officers of the corporation and its president, by which he was to advance from his bank sums of money from time to time to carry on the business of the corporation. This agreement was made and spread upon the minutes by action of the board of directors, and was agreed to and accepted by the president B. F. Harpster. This contract was as follows:

"OCTOBER 2, 1882.--The board of directors met at company's office, President B. F. Harpster in the chair. The following directors present: S. L. Ryan, Fred Harpster, A. D. Small, and W. H. H. Curtis. Minutes of previous meeting read and approved. On motion, the treasurer was instructed to borrow money for the company's use, to be paid out on orders of the parties entitled to give the same, (at a rate of interest not to exceed twelve per cent. per annum,) by over-drawing either by check or drafts on the bank of B. F. Harpster, in the city of Severance, Kansas, or by giving note or notes from time to time, signed by the secretary and treasurer of the company, and that the interest on said loan or loans be paid at the end of each and every month. All the property, real, personal or mixed, now or hereafter owned and belonging to the company, is hereby pledged to the said B. F. Harpster, banker aforesaid, for the sums of money which he may now or hereafter advance for the use of the company, pursuant to this arrangement; and that the said B. F. Harpster shall, at any and all times, be entitled to and shall have the first lien on all of said property to secure him in the payment of all such sums so advanced by him for the use of the company, and at any time he shall deem himself insecure he may on demand have all the grain shipped and sold, for the purpose of paying him such sums advanced; that he may have all grain or other farm products shipped in his name and for his benefit until the indebtedness of the company to him is paid in full. A copy of the minutes of this meeting, duly certified and signed by the secretary and vice-president of this company, and indorsed and agreed to in writing by the said B. F. Harpster, shall stand for and be binding as a contract in relation to all the matters herein.

"Approved.

FRED HARPSTER, Vice-President.

W. H. H. CURTIS, Secretary.

"I hereby agree to advance money and make loans to the Farmers' Elevator and Mill Company on the foregoing terms and conditions.

October 3, 1882.

B. F HARPSTER, Banker."

"This agreement shall stand and be in force, and shall be binding upon the successor of the Farmers' Elevator and Mill Company; and the Elevator and Mill Company, which is the successor of the Farmers' Elevator and Mill Company, is to receive funds from B. F. Harpster upon the same terms and upon the same conditions. That the Elevator and Mill Company actually takes the place of the Farmers' Elevator and Mill Company.

W. H. H. CURTIS, Secretary of both Companies."

Under this agreement B. F. Harpster advanced to the company and for it, over and above all receipts from the company and payments thereon, $ 57,974.32. This arrangement was known to nearly all the stockholders, and was within the knowledge or means of knowledge of all of them. This was the condition of the company on the 5th day of January, 1884, at which time it sought to buy an additional mill and elevator at Everest Kansas. Desiring to take in one Henry Fluke as a stockholder, it was found that in order to do so the capital stock would have to be increased, and to do this, by mutual agreement of all parties, a new company was organized, called the Elevator and Mill Company, of Everest, Kansas, with a capital stock of $ 80,000, with the understanding that such new corporation was the continuation of the old Farmers' Elevator and Mill Company. The officers of the old company were elected officers of the new, and the property of the old company, consisting of an elevator and mill at Severance, in Doniphan county, and two elevators in Brown county, and one mill at Willis, and one at Everest, with grain and feed and other personal property of the value of thirty-five or forty...