Brewster v. Stratman

• Decision Date: 08 May 1877
• Citation: 4 Mo.App. 41
• Parties: SIMON BREWSTER ET AL., Appellants, v. ERNEST H. STRATMAN ET AL., Respondents.
• Court: Missouri Court of Appeals

4 Mo.App. 41

SIMON BREWSTER ET AL., Appellants,

v.ERNEST H. STRATMAN ET AL., Respondents.

St. Louis Court of Appeals, Missouri.

May 8, 1877.

1. A president of a corporation is a trustee, and will not be permitted to create such a relation between himself and the trust property as will make his own interest antagonistic to that of his beneficiary.

2. A president of a corporation, who has voluntarily purchased a small debt against the corporation, will be enjoined from levying an execution for the payment of a balance on the same, where he has already taken valuable property of the corporation in part payment thereof.

APPEAL from St. Louis Circuit Court.

Reversed and remanded.

FARISH & GRIFFIN, for appellants: The relation between a corporation and its president is that of cestui que trust and trustee.-- Single v. Hogan, 45 Mo. 109; McAllen v. Woodcock, 60 Mo. 174. Such a president may not create such a relation between himself and the trust property as will make his interests antagonistic to that of his beneficiary.-- Kockler v. Black River Co., 2 Black, 715; Covington & Lexington R. Co. v. Bowler's Heirs, 2 Cent. L. J. 598.

J. P. VASTINE, for respondents.

LEWIS, P. J., delivered the opinion of the court.

Plaintiffs are the owners of fifty-seven out of eighty-five shares composing the capital stock of the Creve CÅ“ur Mill Company, a private corporation. Defendant Stratman owns eighteen shares, and is president of the company. The property of the corporation consists of a mill, with one acre of ground, on which it stands, and a lot of personal property used in the manufacturing and business operations of the mill, the whole being subject to a mortgage of $3,000, and worth, as estimated in the testimony, about $8,000. Thomas Krum held a note for $600 against the corporation, which defendant Stratman purchased from him after its maturity, giving his own note, payable in six months, for the face value. Stratman then caused a suit on the corporation note to be instituted in the name of the defendant Vastine, who obtained a judgment by default. Execution was issued and levied on the realty, including the mill, and Stratman purchased the whole, at sheriff's sale, for $200. The personalty was then levied upon, but its sale was restrained by a temporary injunction granted in this proceeding. The petition, setting forth these facts, substantially, prays that the judgment and execution sale be declared null and void, and that the defendants be perpetually enjoined from further enforcing the execution. The Circuit Court, upon a hearing of the pleadings and proofs, dismissed the plaintiffs' bill. This disposition of the cause was clearly erroneous.

The fiduciary position held by the president of a corporation does not admit of his speculating in either its assets or its indebtedness, for his own benefit, at the expense of the corporation. He is a trustee, and, as such, can never be permitted to create such a relation between himself and the trust property as will make his own interest necessarily and effectually antagonistic to that of his beneficiary. In Covington and Lexington Railroad Company v. Bowler, 9 Bush, 468, a director had purchased, at a judicial sale, the railroad belonging to his corporation. It was held, upon the principle just stated, that the corporation had a right to have its road surrendered to it upon placing the director in statu quo. In Lingle v. National Insurance Company, 45...