Bragg v. Specialty Shoe Machinery Co.

• Decision Date: 01 December 1930
• Citation: 34 S.W.2d 184,225 Mo.App. 902
• Parties: JAMES BRAGG ET AL., RESPONDENTS, v. THE SPECIALTY SHOE MACHINERY COMPANY ET AL., APPELLANT
• Court: Kansas Court of Appeals

34 S.W.2d 184

225 Mo.App. 902

JAMES BRAGG ET AL., RESPONDENTS, v. THE SPECIALTY SHOE MACHINERY COMPANY ET AL., APPELLANT

Court of Appeals of Missouri, Kansas City

December 1, 1930

Appeal from Circuit Court of Buchanan County.--Hon. J. V. Gaddy Judge.

AFFIRMED IN PART, REMAINDER REVERSED AND REMANDED (with directions.)

John C Landis, Jr., John C. Landis, III and Wm. H. Utz for respondents.

F. V Worden and Mytton, Parkinson & Norris for appellant.

BOYER C. Campbell, C., concurs. Trimble, P. J., absent.

OPINION

BOYER, C.

The character of this action and the sufficiency of the petition to state a cause of action for equitable relief are brought in question by points raised on appeal, and extended reference to the pleadings becomes necessary. Omitting caption and signature, the petition is as follows:

"Plaintiffs for their cause of action, state that they were, prior to April, 1927, co-partners, doing business in the city of St. Joseph, Missouri, under the trade name and style of Specialty Shoe Machinery Company, doing a manufacturing and general machinery repair business in the city of St. Joseph, Missouri, and were possessed of certain property, real, personal and mixed, used by them in the conduct of their said business; that the defendants George J. Riegert was, prior to April, 1927, employed by them as shop superintendent, and Frederick J. Draut as office manager of their then business and had entire charge and control of the management and affairs of plaintiffs' business, then located at 201-209 West Colorado Avenue in the city of St. Joseph, Missouri;

That the defendant Specialty Shoe Machinery Company is a trust estate organized and existing by virtue of a declaration of trust, said trust estate being organized by defendants W. W. Grow, George J. Riegert and Frederick J. Draut with the assets purchased from these plaintiffs as hereinafter specifically set out;

That the defendants Frederick J. Draut and George J. Riegert proposed to these plaintiffs to purchase the assets, consisting of machinery, real estate, patents and other personal property, and that the plaintiffs agreed to sell to the said defendants under the terms of a written contract signed by all parties thereto, in which said contract it was provided that plaintiffs should sell and defendants buy, for the sum of fifteen thousand dollars ($ 15,000), of which sum two thousand dollars ($ 2,000) was to be paid in cash and that the balance was to be paid in installments as in said contract specified;

That prior to the purchase from the plaintiffs, the defendants Draut, Riegert and Grow agreed to enter into business relations and that the defendant Grow agreed to advance such sums as were necessary to be paid to the plaintiffs in cash, and to receive as consideration therefor an interest in the business to be continued by these defendants under the same trade name and style; that it was further agreed between plaintiffs and the defendants Draut and Riegert, which said agreement was with the knowledge, consent and acquiescence of defendant Grow, that it would be to the interests of the defendants and would be to their advantage in continuing the business, if the defendants should be permitted to take over the collection of the accounts due plaintiffs, arising from the conduct of their business, and assume and agree to pay in consideration thereof the accounts owing by said plaintiffs arising from the conduct of their said business, and that at the request of the defendants herein these plaintiffs agreed that they be permitted to collect open accounts due them, amounting to the sum of seven thousand three hundred sixty-four dollars thirty-nine cents ($ 7,364.39) in consideration of the assumption by the defendants of the accounts due by these plaintiffs to others, amounting to approximately the same amount;

That the defendants Draut, Riegert and Grow, after delivery to them of the property purchased from these plaintiffs, conspired together to hinder, delay and defraud these plaintiffs by transferring all of the assets, real, personal and mixed, to the defendant Specialty Shoe Machinery Co., a trust estate, which said trust estate was by the defendants Grow, Draut and Riegert organized with a capital stock furnished solely by the property obtained by these defendants from the plaintiffs herein, and that in accordance with the conspiracy entered into by and between the defendants to hinder, delay and defraud these plaintiffs and to place their assets beyond the reach of these plaintiffs, defendants Draut and Riegert transferred all of the accounts payable, amounting to seven thousand three hundred sixty-four dollars thirty-nine cents ($ 7,364.39) to the trust estate on an agreement purported to be made by said trust estate to collect said accounts and to apply the proceeds thereof to the payment of the obligations agreed to be paid by the said Draut and Riegert;

Plaintiffs further allege that the defendants Draut and Riegert are insolvent in that they are possessed of no property, money or effects from which plaintiffs can enforce their claim against them;

Plaintiffs further state that in pursuance to the fraudulent conspiracy and agreement, as above set out, that the said Specialty Shoe Machinery Co. immediately began to collect the accounts and have collected same, but that, wholly disregarding their obligation and the obligation of the defendants Draut and Riegert, which said obligation was assumed by the said Specialty Shoe Machinery Company and was the only consideration purporting to pass from the trust estate to the defendants Draut and Riegert, used the proceeds of said money for its own purposes;

That these plaintiffs have been called upon to pay and have paid some of the obligations which the defendants contracted to and agreed to pay, amounting to the sum of one thousand dollars ($ 1,000); that judgments have been rendered against these plaintiffs on suits to enforce payment of such accounts; that the defendants have paid some of the accounts but have failed and refused to pay others and that the defendants have collected in and received from the accounts a sum in excess of five thousand dollars ($ 5,000) over and above the amounts paid out to persons, firms and corporations to whom plaintiffs were indebted and which said indebtedness was by these defendants to be paid from the proceeds of these collections;

Plaintiffs further allege that others are threatening suit against them and that by reason of the failure on the part of these defendants to pay in accordance with agreement, they have been compelled to incur and become liable for expenses of attorneys' fees and court costs.

Wherefore, all premises considered, plaintiffs pray that an accounting may be had and that judgment be given them against the defendants and each of them for the amount found to have been paid by plaintiffs, which by the terms of said contract, defendants should have paid. And that the court direct the defendants to apply the remainder collected by them of the accounts originally belonging to plaintiffs in payment of the bills originally owing by plaintiffs, as provided in contract of sale aforesaid; and for all other proper relief."

Defendant Grow filed separate answer in which all allegations of the petition are denied except facts specifically admitted. He admits that plaintiffs entered into the contract attached to plaintiffs' petition with Draut and Riegert April 9, 1927, and states that all the rights of the parties to the contract were fixed by it. And further answering, states that on April 20, 1927, defendants Draut and Riegert entered into a contract with defendant Specialty Shoe Machinery Co., by which they agreed to sell to said defendant the open accounts theretofore sold to the defendants Draut and Riegert by the plaintiffs. The contract is made a part of the answer. That on June 2, 1927, defendants Draut and Riegert executed a bill of sale to said defendant Specialty Shoe Machinery Co. "conveying said property to them." Said bill of sale is attached to the answer. That on April 9, 1927, plaintiffs executed a bill of sale conveying the accounts referred to to the defendants Draut and Riegert. Said bill of sale is made a part of the answer. This defendant specifically denies the charge that he conspired with the defendants to hinder, delay, and defraud plaintiffs as charged in the petition, "but asserts the truth to be that the transfer of all of said assets, including the open accounts by defendants Draut and Riegert to said trust estate was made with the knowledge and acquiescence of the plaintiffs herein, and that said plaintiffs, knowing the facts aforesaid, in furtherance of said transfer, executed the bill of sale on April 9, 1927, to said defendants Draut and Riegert."

"Defendant further states that in purchasing the accounts from said Draut and Riegert, he relied solely upon the evidences of title thereto hereinbefore set out, particularly the contract of April 9, 1927, between said defendants Draut and Riegert and the plaintiffs herein, and the bill of sale executed by the plaintiffs herein on said date to said defendants Draut and Riegert; that all the rights and obligations of this defendant are fixed by the agreements hereinbefore set out, and that he has never obligated himself to these plaintiffs to pay any accounts payable owing by said plaintiffs to any creditors."

Defendants Specialty Shoe Machinery Co. and Riegert filed separate answers in which they reiterate, in effect, the matters contained in the answer of Grow, and further plead that the matters and issues arising under the pleadings in this case had been adjudged in a previous suit. There was a dismissal as to defendant Draut for lack of service.

The...