Ball v. Peper Cotton Press Co.
| Decision Date | 22 June 1909 |
| Citation | 121 S.W. 798,141 Mo.App. 26 |
| Parties | DAVID C. BALL, Respondent, v. PEPER COTTON PRESS COMPANY et al., Appellants |
| Court | Missouri Court of Appeals |
Appeal from St. Louis City Circuit Court.--Hon. Chas. C. Allen Judge.
REVERSED AND REMANDED (with directions).
Judgment reversed and cause remanded.
Judson & Green for appellant, Peper Cotton Press; Jno. H. Overall for appellant, Annie Taylor Jones; R. L. McLaran for appellant, Fidelity & Deposit Co. of Maryland.
(1) Plaintiff's amended petition was and is demurrable on its face and should have been dismissed because it fails to state a cause of action, or to disclose any adequate grounds for equitable relief. (a) Because it appears from the petition that plaintiff is seeking to reach and hold a strict legal asset (a certificate of deposit), by an equitable proceeding in the nature of an equitable garnishment; and it further appears that the only hindrance to plaintiff's reaching this certificate of deposit by a garnishment at law under our statutes is the fact that it is held by the defendant surety company as collateral security under a contract of suretyship between it and the Peper Cotton Press, which contract was still in full force and effect at the time of the trial and would, according to its terms, continue in full force and effect until 1913. Stevenson v. McFarland, 162 Mo 159; Johnson v. Publishing Co., 122 Mo. 104; Giest v. St. Louis, 156 Mo. 643; Smith v Moore, 35 Ala. 77; Williams v. Reynolds, 7 Ind. 665; Buford v. Buford, 1 Bibb (Ky.) 307; Godding v. Pierce, 13 R. I. 532; Noyes v. Brown, 75 Tex. 458. (b) Because the petition on its face fails to set out any adequate reason for the intervention of a court of equity to assist plaintiff in reaching this legal asset. In dealing with legal assets equity follows the law, and when a legal asset cannot be reached in a garnishment at law because it is subject to conditions and contingencies of contract it cannot be reached in equity. Snell's Equity, 14; Rease v. Bradford, 13 Ala. 846; Williams v. Reynolds, 7 Ind. 665. (c) The form of decree entered by the trial court in this case clearly indicates that plaintiff was not entitled to any relief under the agreed statement of facts, that the suit was prematurely brought and should have been ordered dismissed. State ex rel. v. Crow, 171 Mo. 272; Bartholomew v. Weld, 127 Mass. 210. (d) The decree as entered also indicates that the petition should have been dismissed because it violates that rule of law and equity which requires certainty and finality in all final judgments and decrees. State ex rel. v. Crow, 171 Mo. 272. (e) The decree as entered also indicates that plaintiff's petition should have been dismissed, because it violates that rule of law and equity which prohibits the splitting of demands as it appears from the agreed statement that plaintiff's claims against this certificate if allowed in full only amount to about $ 1,775, while the certificate of deposit with interest amounts to about $ 2,200. Therefore, as a result of this decree, if it is allowed to stand, the defendant surety company will be compelled against its consent to account for a portion of this fund to David Ball, and for another portion thereof to the Peper Cotton Press or its assignee, and it is liable to suit by both of said parties on said accounting, while the Peper Cotton Press could not have split this demand or have assigned a portion of its interest therein without the consent of the surety company. Morison v. Dedonato, 76 Mo.App. 643; Bank v. Tracy, 141 Mo. 252. (2) A claim for a dividend declared by resolution of a board of directors of a corporation is governed by the five-year statute of limitations, and it appears from the agreed statement of facts that plaintiff's claim was barred at the time he filed suit. Quattrochi v. Bank, 89 Mo.App. 500; Bridges v. Stephens, 132 Mo. 555; Norman v. Sharp, 35 Mo. 283; Menefee v. Arnold, 51 Mo. 536; Wye v. Bridge Co., 1 Chancery (1896) 559. (a) Although the resolution of the board declaring the dividend may be evidenced by the written minutes of the board's proceedings, yet this fact does not bring a claim for dividends within the ten year statute of limitations. Quattrochi v. Bank, 89 Mo.App. 500. (3) It appears from the agreed statement that at the time the dividend, which is the basis of plaintiff's claim was declared, by the Peper Cotton Press, that this corporation's capital stock was impaired and it had no-surplus or profits out of which it could lawfully declare a dividend, and the dividend was therefore illegally declared. Slayden v. Coal Co., 25 Mo.App. 439; Beyer v. Trust Co., 63 Mo.App. 521. (4) Even if plaintiff were entitled to recover, and to hold this asset in this proceeding, the lower court erred in not also finding and giving defendant, Annie Taylor Jones, a judgment against the Peper Cotton Press for $ 24,218.84. (5) And being entitled to a judgment against the Peper Cotton Press for that amount, the said defendant, Annie Taylor Jones, was also entitled to share pro rata with plaintiff in proportion to the amounts of their respective claims, the proceeds of said certificate of deposit. Judson v. Walker, 155 Mo. 166; McCoy v. Insurance Co., 87 Mo.App. 73; St. Louis v. Lumber Co., 114 Mo. 74.
Stewart, Eliot, Chaplin & Blayney for respondent.
(1) The bill is not demurrable. (a) The interest of Peper Cotton Press in the certificate of deposit for $ 2,000 after it was given to the surety company must be either an equity redemption, Fisher v. Patton, 134 Mo. 54, or a legal title burden with a lien in favor of the surety company. (b) Whether such interest be one or the other a judgment creditor of Peper Cotton Press cannot reach it by legal garnishment or attachment, or on execution. (c) Whether such interest be one or the other a creditor can reach it by an equitable creditor's bill. 1 Pomeroy's Equity Jurisprudence sec. 97; Bispham's Principles of Equity, sec. 525; Frazier v. Barnum, 19 N.J.Eq. 316; Pendleton v. Perkins, 49 Mo. 565. (d) A creditor in a garnishment proceeding or in a creditor's bill may be placed in the shoes of the debtor, and acquire all rights the debtor has as against his debtor. Stevenson v. McFarland, 162 Mo. 159. (e) If a debtor owns an equity of redemption or owns the legal title subject to a lien in favor of a third person in an asset he still may assign, sell and convey his interest in said asset, and equity in favor of debtor's creditor may compel an equitable assignment of the same. Bell v. Mulholland, 90 App. 618; Dunlap v. Insurance Co., 12 Hun 627. (f) In equity assignments of part of a fund are valid. 3 Pomeroy's Equity Jurisprudence, sec. 1280; Johnson Co. v. Bryson, 27 Mo.App. 341; Shubert v. Herzberg, 65 Mo.App. 578. (2) (a) A dividend declared by a corporation creates a relationship of debtor and creditor. McLaran v. Planing Mill, 117 Mo.App. 40. (b) Under the laws of Missouri, a dividend must be declared by the board of directors. R. S. 1899, secs. 1320, 1322. Transactions of the directors are to be kept in writing. R. S. 1899, sec. 1322. (c) Thus, a declaration of a dividend is an action by the board of directors of the corporation, formulated in writing, wherein the directors have created an indebtedness on the part of the corporation to the stockholders; and the resolution declaring the dividend is a writing for the payment of money, and comes within the ten-year Statute of Limitations. Reyburn v. Casey, 29 Mo. 129; Carr v. Thompson, 67 Mo. 476; Howe v. Mittelberg, 96 Mo.App. 490; Turnpike Co. v. Wickliffe, 100 Ky.App. 531; McLaran v. Planing Mill, 117 Mo.App. 40. (d) While it is true that the directors may orally declare a dividend, still this is irregular and not in compliance with the statutes of Missouri requiring that the transactions of the directors be kept in writing. Where such dividend is regularly declared by a resolution of the directors, recorded in the directors' minutes, the resolution itself is the promise on the part of the corporation to pay, and not the mere evidence of that promise. Wigmore on Evidence, secs. 1661, 2451. (3) (a) A dividend once declared, and creating the relationship of debtor and creditor between the corporation and its stockholder, establishes a debt, and the corporation, without the consent of the creditor, cannot revoke this relationship. McLaran v. Plaining Mill, 117 Mo.App. 49. (b) Even if the corporation has the right to revoke the declaration of the dividend, it cannot do so where it has paid the dividend to all but one of the stockholders, and its action of revocation affects only one stockholder and is intended by the corporation to be a revocation as to that stockholder. (c) A corporation in attempting to set aside a dividend once declared, because it was illegal, for want of profits to justify it, can only so act, if at all, to protect the interests of two classes of persons: first, its stockholders, and if all of the stockholders have acquiesced in the declaration of the dividend, either by accepting the payment of the dividend or by suing for it, manifestly the corporation cannot on behalf of the stockholders claim the dividend to be illegal; second, on behalf of the creditors of the corporation, but if, as in the present case, there be at this time but two creditors of the corporation--one the plaintiff and the other defendant Jones, and the plaintiff acquiesces in the declaration of said dividend, and the defendant Jones is estopped to deny the legality of the dividend, then the corporation in this case has no creditor to protect by asserting that the dividend is illegal. (d) A subsequent stockholder taking her stock, with the knowledge of the declaration of this dividend, and that it had been paid to all of the other stockholders, and that...
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