Bondurant v. Raven Coal Co.

• Decision Date: 02 December 1929
• Docket Number: No. 15910.,No. 15907.,15907.,15910.
• Parties: BONDURANT v. RAVEN COAL CO. et al. (two cases).
• Court: Missouri Court of Appeals

25 S.W.2d 566

BONDURANT v. RAVEN COAL CO. et al. (two cases).

No. 15907.

No. 15910.

Kansas City Court of Appeals. Missouri.

December 2, 1929.

Appeal from Circuit Court, Adair County; J. A. Cooley, Judge.

Suit by W. P. Bondurant against the Raven Coal Company, Paul Mayo, and Paul Mayo, administrator, and others, in which Sara Mills was permitted to file an answer and cross-bill. From the decree, defendant Mills and defendants Mayo separately appeal.

Reversed and remanded.

See, also, 294 S. W. 742.

John C. Mills, John M. Campbell, and M. D. Campbell, all of Kirksville, for appellants.

Murrell & Murrell, J. E. Rieger, and S. H. Ellison, all of Kirksville, for respondents.

BARNETT, C.

This is a suit wherein respondent, W. P. Bondurant, prayed for the recovery of $2,280 with interest, being the amount paid by him for fifty shares of stock in the Raven Coal Company, a corporation, upon the ground that he was induced to purchase the same by fraudulent representations. The suit was instituted against Raven Coal Company, Milton S. Mills, Charles F. Carter, Paul Mayo and Paul Mayo, administrator of the estate of S. W. Mills, deceased. Plaintiff dismissed as to Raven Coal Company before trial. The amended petition alleges that prior to June, 1920, Paul Mayo and S. W. Mills were the owners of a certain tract of rough brush land in Schuyler county, containing 482 acres, more or less, under which there was coal of an uneven thickness, and which was pockety and faulty, and not of a marketable condition, and which, on account of its faults and condition known as slips, could not be mined in any practicable manner; that on said lands there were several small buildings or sheds of little value, or use. It is alleged that the reasonable value of said property was not to exceed $15,000 and that the value of the land and the quality and condition of the coal under the surface of the same was well known to said Mills and Mayo. It was alleged that in June, 1920, or immediately prior thereto, said Mills and Mayo associated themselves with defendants Carter and Milton Mills for the purpose of cheating plaintiff and others by inducing them to buy stock in a corporation for the mining of coal which they purposed to form; that in furtherance of their plan, they incorporated under the laws of Missouri under the name of Raven Coal Company, Schuyler county, Mo.; that the company was incorporated with an authorized capital stock of $120,000, divided into 1,200 shares of the par value of $100 each, and it was alleged in the articles of incorporation that the capital stock was fully paid up in cash in the sum of $400, and by real estate of the value of $115,600, and other property consisting of a weigh office, one set of scales, five hundred feet of track and switches, one pit mule, one coal shed, one blacksmith shop and set of tools, thirty coal cars, and one thousand feet of entry of the aggregate value of $4,000; that the articles of incorporation recited that the capital was in good faith subscribed and fully paid up and that S. W. Mills owned 545 shares, Milton S. Mills owned 10 shares, Paul Mayo owned 545 shares, and Charles F. Carter owned 100 shares. It was alleged that the statements in the articles of incorporation were false and untrue and were made for the purpose of obtaining articles of incorporation from the state, and for the further purpose of afterward selling stock in the corporation to persons who would rely on the recitations therein contained and on the statements and representations of the incorporators. It was alleged that in truth and fact the incorporators did not have in their custody, as directors of said corporation, any property of any kind whatsoever; that defendants represented to him that the corporation was the owner of land and property of the reasonable value of $120,000 or more; that it was the owner of a valuable coal mine on the lands aforesaid, and that the corporation was in need of money for working capital; that the corporation had some of its own stock as treasury stock which it desired the plaintiff to purchase, and that if he did so the purchase price would go into the treasury of the corporation and be used for the benefit of the corporation, and that these statements were false and untrue. It is alleged that plaintiff relied upon these representations and was thereby induced to pay and did pay to defendants for stock, the sum of $1,000 on July 8, 1920, and on the 19th day of August, 1921, he made a further payment in the sum of $1,280. It is alleged that the stock consisted of fifty shares and did not have any value at the date of its issuance nor has it had since, nor did it ever come into possession of plaintiff; and that the money so paid by him was taken and kept by the defendants and never delivered to the corporation. Plaintiff prayed judgment for the amount so paid.

Sara M. Mills made application to be permitted to be made party defendant in said cause, and to file an answer and cross-bill. Her motion was sustained over the objections and exceptions of the plaintiff, and she then filed an answer and cross-bill consisting of a general denial together with allegations that on July 7, 1920, plaintiff executed to her a promissory note, due four years after date, payable to her order in the sum of $4,000 for value received, payable without defalcation or discount and with interest at the rate of 7 per cent. per annum; that plaintiff paid the sum of $1,000 on the 19th day of July, 1925, on the principal of said note, together with $280 interest thereon. She further alleged that at the time of the execution of the note, plaintiff pledged to her fifty shares of the Raven Coal Company as collateral security for the payment of said note. She prayed judgment for the balance due on the note with interest, and for the foreclosure of her lien upon the shares of stock in the Raven Coal Company.

Paul Mayo, in his individual capacity and as administrator of the estate of S. W. Mills, deceased, filed an answer which consisted of a general denial, together with an allegation that plaintiff was guilty of laches in this. That during the years of 1920 — 1, plaintiff went on and about the property of Raven Coal Company, inspected the same, participated in the purchase of additional lands for the company, and in the construction of a railroad switch and installation of mining equipment and machinery and acquired actual knowledge of the nature, character, and value of the property owned by the Raven Coal Company, and then delayed making complaint or taking any action in relation thereto until after the death of S. W. Mills, and after Milton Mills and Charles F. Carter had left the state of Missouri.

Plaintiff filed a reply in which he alleged that he objected and excepted to the joining of Sara M. Mills as a party defendant for the reason that she was not a proper or necessary party to the cause of action pleaded by plaintiff, and had no interest in the merits of the subject-matter of the action. The reply also alleged that the note sued on by Sara M. Mills was signed by plaintiff under the representations of S. W. Mills, Paul Mayo, Milton Mills, and Charles F. Carter, who were then and there the sole stockholders and officers of Raven Coal Company, that the proceeds thereof were to be working capital for the coal company; that the coal company had assets in the sum of $120,000 and that it owned 482 acres of coal land, having a good merchantable vein of coal four inches in thickness thereunder; that the statements and representations were false and untrue in every particular and were known to be untrue at the time by the said Mills, Mayo, Carter, and Mills, and were made for the purpose of defrauding and cheating plaintiff; that plaintiff believed the representations and relied solely thereon. It was alleged in the reply that the note was made payable to Sara M. Mills for the reason that plaintiff was advised by Mills, Mayo, Mills, and Carter that it would be illegal to make the note payable to the company, and that said note was so made for convenience and in order to satisfy the law. It was further alleged in the reply that Sara M. Mills was never at any time a stockholder in the company nor was the company indebted to her on any account; that plaintiff was not at any time indebted to Sara M. Mills nor to S. W. Mills, Paul Mayo, Milton Mills, or Charles F. Carter on any account, and that he never at any time received from any of them anything of value whatsoever. It was alleged that Sara M. Mills never purchased the note from the Raven Coal Company and never paid anything therefor, and that the note was not her property; that the note was procured by fraud and misrepresentation and was wholly without consideration. The reply further alleged that plaintiff repleaded and restated each and every allegation contained in his amended petition, and denied each and every allegation contained in the answer and cross-bill contained in the answer of Sara M. Mills.

There was a trial before the court with a jury and at the conclusion thereof the court rendered a decree which is as follows:

"Now on this 18th day of August, 1926, this cause coming on for trial in open court, and plaintiff by his attorney answers ready for trial and the defendant, Paul Mayo, in his own proper person and Paul Mayo, administrator of the estate of S. W. Mills, deceased, and Sara Mills appearing in open court by their representative, attorney, and the plaintiff dismisses as to the Raven Coal Company, whereupon the matters all and singular are submitted to the court and to a jury composed of twelve good and lawful men selected from the body of the county according to law sitting as advisory to the court, and a trial proceeds throughout the day, and court convening August 17, with the parties and jury as heretofore, proceeds throughout the day and on August 18th, court convening with the jury and parties as before proceeds until...