Barrie v. United Rys. Co. of St. Louis

• Decision Date: 24 May 1909
• Citation: 138 Mo. App. 557,119 S.W. 1020
• Parties: BARRIE v. UNITED RYS. CO. OF ST. LOUIS.
• Court: Missouri Court of Appeals

119 S.W. 1020

138 Mo. App. 557

BARRIE v. UNITED RYS. CO. OF ST. LOUIS.

St. Louis Court of Appeals. Missouri.

May 24, 1909.

On Rehearing, June 22, 1909.

1. PLEADING (§ 369)—ELECTION—INCONSISTENT CAUSES OF ACTION.

In a suit by a creditor of a corporation whose assets had been taken over by defendant corporation to reach the assets and charge against them a judgment obtained against the debtor company, a petition alleging that defendant company absorbed and took over all the assets of the debtor company without paying any consideration therefor, and, further, that upon receiving the assets and in consideration thereof defendant company assumed and agreed to pay all liabilities of the debtor company, did not state two inconsistent causes of action, necessitating an election between them, but merely alleged that defendant paid no adequate consideration for the assets of the debtor company which it took over.

2. PLEADING (§ 369) — MOTIONS — ELECTION BETWEEN CAUSES OF ACTION—TIME FOR MOTION.

A motion to elect between two inconsistent causes of action in a petition comes too late, after the case is called for trial, and an answer to the merits has been interposed, and issue taken on that by a reply.

3. CORPORATIONS (§ 548)—CREDITORS' SUITS —ADMISSIBILITY OF EVIDENCE.

In a suit by a creditor of a corporation, whose assets had been taken over by defendant corporation by virtue of a tripartite agreement among the two corporations and a syndicate, which was the financial agent of both companies and one of the original promoters of the consolidation, to reach the assets of his debtor corporation and apply them to payment of his debt, an agreement among the syndicate and other persons provided for by the tripartite agreement, creating a voting trust and providing for participation by the stockholders of the two companies in the reorganization of the finances of the companies under the tripartite agreement, which subsidiary agreement had been submitted to the stockholders and bondholders in the two companies, and signed by the voting trustees, who, it appeared, acted under the syndicate's direction, and by the syndicate managers and others, was admissible in evidence as throwing light on the transaction under the tripartite agreement.

4. CORPORATIONS (§ 548)—CREDITORS' SUITS —ADMISSIBILITY OF EVIDENCE.

Certain papers relating to matters arising subsequent to the consummation of the transaction between the two companies under the tripartite agreement, throwing light on the disposition of the assets of the debtor company which did not come into the hands of defendant company, was admissible in evidence; the purpose of the suit being to trace the debtor company's assets.

5. APPEAL AND ERROR (§ 987)—REVIEW—EQUITY ACTIONS—EVIDENCE.

On appeal in an equity suit, the court must examine all the evidence, and base its conclusions on its own view thereof.

6. TRIAL (§ 377)—BY COURT—TAKING PROOF.

In an equity suit, where the appellate court is bound to act on its own view of the evidence, the best practice is for the trial court to admit all evidence offered not obviously irrelevant, or tending merely to burden the record, rather than to risk a reversal for exclusion of testimony which the appellate court may deem relevant and material.

7. FRAUD (§ 42)—PLEADING—CONSTRUCTIVE FRAUD.

When fraud in fact is relied on, the acts done must be set out, and, the intent being material, it must be averred that they were done fraudulently, or with intent to cheat and defraud; but, when an action is founded upon constructive fraud, all that is necessary is to plead the acts, from which the court will determine whether the doing of them worked a constructive fraud.

8. CORPORATIONS (§ 548)—CREDITORS' SUITS —PLEADING—CONSTRUCTIVE FRAUD.

A petition in a creditors' suit, averring that the debtor corporation, while insolvent, transferred its assets to defendant corporation, leaving his debt unpaid, sets up facts constituting constructive fraud in equity.

9. STREET RAILROADS (§ 49) — LEASE — SURRENDER — NATURE OF SURRENDER.

A corporation owning a street car system and franchise leased the entire concern for a term of 40 years to another corporation, composed of practically the same stockholders and governed by the same board of directors. The lease provided that, upon its termination for breach of covenant by the lessee, it should surrender all cars, appliances, etc., generally called "personal property," of every kind belonging to the lessor and all betterments made by the lessee. Soon after the lessee became financially involved, and it, together with the lessor and a syndicate acting as agent for both parties, and which controlled a majority of the stock in each, entered into a tripartite agreement, under which the lease was surrendered upon demand of the lessor at the order of the syndicate and the entire property turned over to the lessor. There had been no violation of the terms of the lease, and the lessor had reserved no right in the lease to cancel it, except for defaults specifically mentioned therein. Held, that the surrender was not a surrender of a tenant to the landlord, but a voluntary surrender by the one on the arbitrary demand of the other, and the lessor had no right to look to the lease for the ascertainment of what it should have received on surrender.

10. STREET RAILROADS (§ 49)—LEASES—SURRENDER —PROPERTY TO BE RETURNED.

Even if the surrender had been made in accordance with the lease for reasons set out therein, the lessor would not have been entitled to cash in the hands of the lessee, nor bonds held by it which it had received from the lessor for betterments made, the legal ownership of which was in the lessee, since, while the cash and bonds were personal property, they were not of the class of such property described in the lease and contracted to be turned over.

11. STREET RAILROADS (§ 48)—DEED OF SURRENDER OF LEASE.

An instrument, executed by the lessee of a street railroad upon surrender of the lease, reciting the execution and delivery of the lease, its acceptance by the lessee, and the tripartite agreement, under which and for the consideration therein expressed, the lessee should, whenever requested by the lessor, surrender the lease and demised property to the lessor, and reciting the ratification of the tripartite agreement by the lessor and lessee, and the demand of the lessor for the surrender so provided for, and that the lessee, in pursuance thereof and in consideration of a release by the lessor of any liability under the lease, and the payment of $5, surrenders, remises, releases, and forever quitclaims unto the lessor the lease and property demised thereunder, with the intention of canceling the lease, was not a deed of bargain and sale.

12. STREET RAILROADS (§ 48)—TRANSACTION NOT A SALE—SURRENDER OF LEASE.

The lessor and lessee companies having a common directorate originating and carrying out the transaction under the tripartite agreement, and the syndicate controlling a majority of the stock in both companies being an agent of both, the surrender of the lease did not constitute a sale, as there was no meeting of two minds, but constituted a mere abandonment of the property by the parties under one name and the taking over of it by them under another name.

13. SALES (§ 1)—DEFINITION.

A sale is a contract for the transfer of property from one person to another for a valuable consideration; three things being essential thereto—the thing sold, which is the object of the contract, the price, and the consent of the parties.

14. SALES (§ 19)—CONSIDERATION—ASSUMPTION OF LIABILITIES.

An assumption of liabilities is a good and valuable consideration for property transferred, provided the liabilities assumed bear a fair relation in value to the property taken over.

15. CORPORATIONS (§ 477)—MORTGAGES—VALIDITY —NECESSITY FOR ACKNOWLEDGMENT.

Unlike mortgages and deeds between private persons, which are good between them even without acknowledgment, mortgages and deeds by a corporation are only of force after being duly acknowledged by the proper officers of the corporation, under Rev. St. 1899, § 904 (Ann. St. 1906, p. 836), providing that any private corporation authorized to hold real estate may convey it by deed sealed with the corporate seal and signed by its presiding member or trustee, and the deed, when acknowledged or proved as other deeds of real estate are required to be, shall be recorded in the proper office and have like effect as other deeds.

16. CORPORATIONS (§ 65)—CAPITAL STOCK— ASSET OR LIABILITY.

While the stock of a corporation is a liability against the corporation, when it passes to another corporation or to individuals it becomes an asset in the hands of the owners.

17. CORPORATIONS (§ 65)—CAPITAL STOCK— EXTENT OF LIABILITY.

A corporation, as between itself and its stockholders, must always stand charged with its own stock at par; but, as between it and its creditors, it cannot carry its stock as a liability, since stockholders cannot receive property of the company until its creditors are paid.

18. CORPORATIONS (§ 548)—TRANSFER OF ASSETS —ADEQUACY OF CONSIDERATION.

In a creditors' suit, evidence held to show that, when a corporation turned over its business to another corporation, its assets exceeded its liabilities claimed to have been assumed as the consideration for the transfer by at least $750,000.

19. CORPORATIONS (§ 548) — TRANSFER OF PROPERTY—RIGHT OF CREDITOR TO FOLLOW ASSETS.

A creditor of a corporation, which has transferred its property to another corporation under the same directorate and practically the same concern, would not be precluded from following up the assets by a creditors' suit, and subjecting them to satisfaction of his claim, because of his failure to prove that the corporation receiving the assets took them without any, or adequate, consideration.

20. CORPORATIONS (§ 590) — TRANSFER OF PROPERTY — LIABILITY OF TRANSFEREE FOR...