Bates v. Werries
| Decision Date | 03 December 1917 |
| Citation | 199 S.W. 758,198 Mo.App. 209 |
| Parties | ROBERT E. BATES and ROBERT W. BATES, Respondents, v. F. H. WERRIES and MARY A. WERRIES, PARIS J. KEYS, RAY COUNTY COAL COMPANY and JOHN M. CLEARY, Administrator, Appellants |
| Court | Kansas Court of Appeals |
Appeal from Chariton Circuit Court.--Hon. Fred Lamb, Judge.
Decree affirmed and cause remanded. (with directions).
James Shannon, Joseph S. Rust, Morrison, Nugent & Wylder and Lavelock & Kirkpatrick for appellants.
James L. Ferris, Jr., & Sons and George W. Crowley for respondents.
The litigation herein grew out of controversies between stockholders relating to the control, management and direction of the corporate affairs of the Ray County Coal Company, the title and division of certain shares of stock therein, and other matters incidental thereto. The suit was begun in Ray County, Missouri and went on change of venue to Chariton. There, upon a hearing as to the appointment of a receiver pendente lite, the court appointed The Richmond Trust Company as receiver and authorized it, upon acceptance and qualification, to take charge of the affairs of said corporation. The said receiver duly qualified and filed bond which was approved. From the order appointing a receiver pendente lite the defendants, F. H Werries, Mary A. Werries, Paris J. Keys and Ray County Coal Company, appealed to the Supreme Court of Missouri, and the case was there known as No. 18,816. Afterwards, the case on its merits came to trial and a decree was entered in favor of plaintiffs, granting, in certain respects, the relief asked for, which will appear later on. From this decree the said defendants appealed to the Supreme Court of Missouri and the case was there docketed as No. 19,490. The two causes were there consolidated and argued and submitted as one case. The Supreme Court held that, as the record did not disclose the amount in dispute exceeded $ 7500, it had no jurisdiction and transferred the case here. [See Bates v. Werries, 196 S.W. 1124.]
The Ray County Coal Company is a Missouri Mining Corporation organized in 1907. Originally there were four incorporators and the stock was paid up by the conveyance to said corporation of certain coal lands in Ray county which the corporation now owns.
In order to provide the corporation with capital whereby to develop its mines, the incorporators turned into the treasury $ 20,000 par value of the preferred and $ 20,000 par value of the common stock, with the agreement and understanding that each of said incorporators should buy one-fourth of said preferred stock at $ 5000, and, with every five shares thereof, should receive three shares of the common stock. This, when done, would leave 80 shares of common stock remaining in the treasury; but the agreement was further that each incorporator, upon performing his part of the agreement by paying his $ 5000, should also receive his equitable proportion of the said 80 shares, but if any incorporator defaulted in the payment of his $ 5000, he should forfeit to the company his part of the said remaining 80 shares. All four of them, however, performed their part of the agreement. The mine was developed and put upon a going basis with the $ 20,000 paid in; and, on December 7, 1911 the 80 shares not being needed for further development and the incorporators being entitled to said 80 shares under their performed agreement, the corporation through its board of directors ordered said 80 shares issued to said incorporators and their successors in the proportion above named, to-wit, 3 shares of common to every 5 shares of preferred stock. The record shows that the motion by which this was authorized was seconded and voted for by the defendant Mary A. Werries, then Mary A. Crawford, she at that time holding the stock originally held by her husband Charles Crawford one of the four original incorporators. These 80 shares were never issued to or divided among the incorporators as authorized and directed by the board although plaintiff Robert E. Bates thereafter demanded his pro rata share thereof. The disposition and vesting of the title to these shares was one of the matters sought to be adjudicated in this suit and is one of the things which the decree rendered therein sought to establish and determine.
The first petition in the suit, which was filed November 30, 1915, is not shown in the record. But it appears from said record that summons was issued and served on an amended petition filed January 6, 1915, and the complaints therein alleged as grounds for relief may be summarized as follows:
1. That the shares of stock held and claimed to be owned by Mary A. Werries were the property of her former husband Charles Crawford, now deceased, but from whom said Mary A. Werries had procured said shares while he was insane. .
2. That the defendants, Mary A. Werries, F. H. Werries and Paris J. Keyes, acting directors of said corporation and constituting a majority thereof, are grossly mismanaging the affairs of said corporation and have conspired together to run the said corporation, its mine and business, for their own personal ends and benefit in total disregard of the best interests of said corporation and to the great loss and irreparable injury of said corporation and the plaintiffs; that the money and bank account of the corporation was altered and changed to the personal account of one of said directors defendant Keyes, who had commingled the corporate money with his own personal funds; that they were violating the laws of the State by practicing usury in the payment of employees, charging 10 per cent interest on the pay of miners when advanced before pay day was due, thereby making said corporation an outlaw; that, in line with their purpose to wreck and ruin the corporation, they had agreed to pay one of their number $ 100 a month pretendedly as a salary for his services as superintendent, he being incompetent, inefficient, and not possessed of skill or knowledge of coal mining so as to protect the lives of the miners. He was also charged with narrowing the possible mining area of the mine and greatly hazarding and jeopardizing the interest of the corporation and the lives of those working therefor.
3. That defendants, in order to obtain complete control and domination of said corporation, had made a pretended change in the by-laws whereby they have secured such control and have used the said corporation for their own personal ends and benefit, and plaintiffs as minority stockholders have no means of protecting their interest against the same.
4. That said F. H. Werries is wholly insolvent, and the solvency of the other defendants is uncertain, the real estate owned being heavily incumbered and other property being in stocks easily transferred and hid.
5. That said defendants seek to impose upon said corporation an unjust and unconscionable contract with an unincorporated concern known as the Willow Creek Coal Company, in which defendants are silent partners; which, if carried out, would ruin the corporation and which contract is a mere gratuity to the Willow Creek Coal Company and purely for the interest and benefit of said defendants, or one of them.
6. That by reason of the conduct of said defendants and their gross mismanagement of the affairs of said corporation the assets thereof will be frittered away and lost to the stockholders.
The petition then prayed that a receiver pendente lite be appointed; that the contract with the Willow Creek Coal Company be cancelled; that Keyes be required to pay to the Receiver the money he had received belonging to the company and that an accounting therefor be had; that defendants be enjoined from interfering with the management of the mine and that they be removed as directors and that all other equitable relief be granted.
Later, but before the hearing for the appointment of a receiver pendente lite was had, another amended petition was filed which, in addition to the above, set up the following:
(a). The order of the Board of Directors, made December 11, 1911, whereby the above mentioned 80 shares were ordered distributed among the incorporators in accordance with the aforementioned agreement to purchase preferred stock.
(b). That none of this stock had been distributed; that since the institution of the suit plaintiff Robert E. Bates had, through one Guy R. Murray, purchased the stock held by Keyes, and plaintiffs were now the owners of a majority of the stock, but that the defendants, F. H. and Mary A. Werries were wrongfully claiming to own a controlling interest in the stock of said company and had elected themselves to offices in the directorate and were no longer running the mine but allowing it to be idle and to deteriorate.
(c). That said defendants refused to issue 40 shares, of the said remaining 80 shares, to plaintiff Robert E. Bates, that being the proportionate share to which he was now entitled by reason of his present ownership of stock.
(d). That plaintiffs own the controlling interest in said corporation when their rights and interests have been determined and fixed by the court.
(e). That plaint...
To continue reading
Request your trial