Boulicault v. Oriel Glass Company
| Decision Date | 19 June 1920 |
| Parties | JEAN B. BOULICAULT et al. v. ORIEL GLASS COMPANY et al.; LOUIS T. MAGUIRE, Appellant |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. Glendy B. Arnold Judge.
Affirmed.
Jourdan Rassieur & Pierce for appellant.
(1) This suit, being one in equity, is practically triable de novo on appeal. That the law and facts are alike subject to review on appeal in equity is settled law of Missouri. Barrett v. Davis, 104 Mo. 549; Lins v Lenhardt, 127 Mo. 271; Robertson v. Shepherd, 165 Mo. 360. (2) In an equitable proceeding, such as this, the court has no power to enter a money judgment against a defendant. State ex rel. v. Foster, 225 Mo. 171. (3) Plaintiffs should be denied relief because they have been guilty of laches and for a long period of time have acquiesced in the conduct of Louis T. Maguire, which they now claim was wrongful and negligent. 3 Cook on Corporations, p. 2602, secs. 728, 729; 10 Cycl. on Corporations, p. 971; Loomis v. Mo. Pac. Ry. Co., 165 Mo. 469; 3 Clark & Marshall on Corporations, p. 2286, sec. 755-F; Klein v. Brewing Assn., 231 Ill. 594; Burt v. British Life Assn., 45 Eng. Rep. 62, 4 DeG. & J. 158. (4) Under the law the duty of controlling and managing the property and business of a corporation rests on its directors collectively and not upon any particular officer. Sec. 3347, R. S. 1909; Sec. 1320, R. S. 1899; Sec. 2772, R. S. 1889. It therefore avails plaintiffs nothing to say that they did not have actual knowledge that Louis T. Maguire was not auditing or checking up the accounts of the bookkeeper. Hax v. Davis Mill Co., 39 Mo.App. 458; 3 Clark & Marshall on Corporations, sec. 752; 10 Cycl. on Corporations, p. 832, sec. 8. (5) The trial court erred in its rulings on questions of evidence. (a) To permit the plaintiff to state that the bookeeper worked under the sole supervision of defendant was erroneously allowing him to state his own conclusion. Gutridge v. Mo. Pac. Ry. Co., 94 Mo. 472; Boettger v. Scherpe & Koken Co., 136 Mo. 531, 536. (b) In view of plaintiff's efforts to have Louis T. Maguire removed as a director and officer of the company, it was error to prevent an inquiry by defendants as to who would, in case of his removal, make a suitable president for the company in his place. (c) And it was also error to prevent an inquiry as to the qualifications of plaintiffs to conduct the business of the company. (d) The court also erred in permitting Witness Mare, over defendants' objection and exception, to give his own experience as to what other corporations did with reference to auditing their books, rather than show what the custom in that regard was. (6) In determining whether defendant was negligent the matter must be viewed in the light of all the circumstances of this particular case as they existed before the shortage was discovered and not in the light of subsequent events, and when so viewed it will appear that he has not been guilty of negligence. Bailey v. Babcock, 241 F. 514; In re Spering's Appeal, 71 Pa. St. 11, 10 Am. Rep. 684; Fletcher's Cyclopedia on Corporations, sec. 2443, p. 3694.
Phillips W. Moss for respondents.
(1) There never has been any want of power in a Court of Chancery to render a money judgment on an accounting. Holland v. Anderson, 38, Mo. 55; Potter v. Whitten, 161 Mo.App. 129; Powell v. Powell, 217 Mo. 585; Gill v. Eli-Morris Safe Co., 156 S.W. 811. (2) Where a court of equity has acquired jurisdiction of a cause for one purpose, it will proceed to do complete justice between the parties, and determine all matters in issue, even if this involves adjudicating matters of law. Waddle v. Frazier, 254 Mo. 403; Hogan v. Bank, 182 Mo. 345. (3) This suit was properly brought and the petition states a cause of action. Slattery v. Transportation Co., 91 Mo. 217; Pomeroy on Equity Jurisprudence, sec. 1095; 3 Cook on Corporations (7 Ed.), sec. 701, p. 2367. (4) The question of what is actionable negligence on the part of an officer and director of a corporation depends upon the facts and circumstances of each particular case. State v. Rottmann, 183 Mo. 552; Trustees v. Bosseiux, 3 F. 817; 10 Cycl. on Corporations, page 971; 3 Clark & Marshall on Corporations, sec. 755-F. (5) An officer of a corporation is personally liable for losses to a corporation occurring through his gross negligence. Marshall v. Bank, 85 Va. 676; McEwen v. Kelly, 140 Ga. 720; Ham v. Cary, 82 N.Y. 65; Rubber Co. v. Benedict, 164 A.D. 332, 338; Camden v. Virginia Safe Deposit & Trust Corp., 78 S.E. 596, 598; Fidelity & Deposit Co. v. Wiseman, 124 S.W. 621; 2 Thompson on Corporations, sec. 1268; Morawetz on Private Corporations, sec. 552; Kelly v. Farney, 145 Ill.App. 80.
OPINION
In Banc
This is a suit by minority stockholders of the Oriel Glass Company to recover from Louis T. Maguire the amount of certain sums embezzled from the company by a bookkeeper. It is alleged the losses resulted from the negligence of Maguire, who was for many years president, manager and treasurer of the company. Judgment went in favor of the company for such sums as had been taken within five years prior to the bringing of the suit. Since this appeal was taken Louis T. Maguire has died and the cause has been revived in the name of his executors.
Jean B. Boulicault learned the business of glass manufacturing in his youth, in his native land. He came to America from France when he was about twenty-two years old. His brother, Leon C., was a blacksmith and came to America about 1884. In 1889 Jean B. determined to establish in St. Louis a plant for the manufacture of bent glass. Search for a location brought him into contact with William A. Maguire, who suggested a partnership in the glass business. Eventually this suggestion was accepted, and William A. Maguire, Louis T. Maguire and Jean B. Boulicault began manufacturing glass. Each owned a one-third interest. The Maguires furnished the capital and Boulicault the technical knowledge and experience. Louis T. Maguire looked after the business and finances of the partnership, and Boulicault took charge of the work of manufacturing. In 1891 Leon C. Boulicault began working in the plant with his brother. The business prospered from the first. Until 1892 Louis T. Maguire kept the books of the partnership. In that year a corporation was formed with a capital stock of $ 20,000, divided into 200 shares. Of these Louis T. Maguire, William Maguire and Jean B. Boulicault took 60 shares each and Leon C. Boulicault 20 shares. Louis T. Maguire then procured a bookkeeper, whom he had known from youth and with whom he had worked for the Haydock Carriage Company for some years, to keep books for the new corporation. Louis T. Maguire, William A. Maguire and Jean B. Boulicault were elected directors. Appellant was secretary, treasurer and manager. William A. Maguire was president and Jean B. Boulicault was vice-president and superintendent of the manufacturing plant. In 1895 William A. Maguire sold 41 shares of stock to Louis T. Maguire and 19 shares to Chas. J. Maguire. Thenceforward the directors have been Louis T. Maguire, Chas. J. Maguire and Jean B. Boulicault; Louis T. Maguire has been president, treasurer and manager; Charles J. Maguire has been secretary, and Jean B. Boulicault has been vice-president and superintendent of the actual work of manufacturing. Leon C. Boulicault has assisted his brother in the plant. When the partnership was formed it was agreed that Louis T. Maguire should "handle the soliciting and sales end and the financial end of this business," and Jean B. Boulicault was to superintend the manufacture of glass. This division of duties and responsibilities continued until this suit was brought. The business office of the company was kept down town and at a considerable distance from the plant. There Louis T. Maguire had his headquarters, and there the books of the company were kept. In 1908 Louis T. Maguire lost the use of his lower limbs, and thereafter he seldom visited the office or the plant, but retained his official position and transacted the business of the company mainly from his residence. He kept in touch with the office by occasional trips thereto and by telephone and through his son Francis, then employed by the company. Most of the company's business was transacted by mail. As treasurer of the company Louis T. Maguire drew the checks on the company's bank account. In March, 1915, he "looked over the check book" and found some discrepancies. He called for the cash book and found others. He then asked the bookkeeper for a trial balance. When this was furnished Maguire pointed out the discrepancies he had found. The bookkeeper said it must be a mistake. Maguire told him that "it occurred pretty often" to be a mistake, and said he would get an accountant to go over he books. That night the bookkeeper committed suicide.
The man's reputation had been good. His habits were apparently economical, and no one, in or out of the company had felt any suspicion of him, so far as the record shows. An accountant was employed and the books and affairs of the company were examined. It was discovered that the bookkeeper commenced in 1892 to abstract the company's funds. From that time forward until his death every month showed an embezzlement of some amount. The total shortage for the twenty-three years was $ 87,345.69. The whole of this sum was taken from the bank account of the company. The bookkeeper was not authorized to draw checks on this account, and drew none. Neither did he forge Maguire's name. His opportunities came from the custom of Maguire, the treasurer, to draw and sign checks, usually payable to the bookkeeper, in which the amounts to be withdrawn were...
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