Bucklew v. Pyron
| Decision Date | 13 February 1911 |
| Citation | 134 S.W. 1064,153 Mo.App. 673 |
| Parties | SAMUEL BUCKLEW, Respondent, v. ROBERT B PYRON et al., Appellants |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. A. F. Smith, Special Judge.
Judgment affirmed.
Botsford Deatherage & Creason for appellant.
(1) This suit of plaintiff Bucklew against defendant Pyron to recover on the counts of the amended petition from No. 2 to No. 9, inclusive, based on the $ 500 notes, is an attempt to recover something for nothing. Those notes are wholly without consideration and are therefore void. There is no better defense in the law than failure of consideration. The defense of failure of consideration is based upon and is laid deeply in the jurisprudence of equity and good conscience. Besides the agreement between the promoters and incorporators of the land company, by which the stock was to be issued without the payment therefor of either any money, property or services being founded upon a consideration which was and is illegal, is void as between the parties and their privies, and, being void, neither a court of law or equity will entertain a suit brought in relation to that contract, but will leave the parties as it finds them. 6 Am. and Eng. Ency. Law (2 Ed.), pp. 757, 758; Campbell v. Joies, 2 Tex. Civ. App. 263, 21 S.W. 723. The contract between Oliver, Bucklew and Pyron was wholly without consideration, being illegal and void, such stock could not constitute a sufficient consideration for a promise by Pyron to Bucklew. 15 Am. and Eng. Ency. Law, pp. 932, 936, 937; Rue v. Railroad, 74 Texas 474, 8 S.W. 533. It is presumed that the laws of Texas, rendering void all fictitious issues of stock, are the same as those of Missouri on the same subject. Kollock v. Emmet, 43 Mo.App. 566; Waite v. Bartlett, 53 Mo.App. 378; Hard. & Mfg. Co. v. Lang, 54 Mo.App. 147; Hurley v. Railroad, 57 Mo.App. 675; Clark v. Barnes, 58 Mo.App. 667; Barhydt v. Alexander, 59 Mo.App. 188. (2) The stock of plaintiff Bucklew transferred by him to defendant Pyron and for which the $ 500 notes in suit were given, having been issued under an agreement between said Bucklew, Pyron and Oliver that said stock was to be issued as fully paid up and non-assessable, without any payment whatever in money, property or services therefor, was and is fictitious, both under the Constitution and laws of Missouri and Texas, and was therefore void, and said stock therefore could not be the basis of said $ 500 notes given therefor, and said contract for the sale of said stock by Bucklew and Pyron and said $ 500 notes given therefor and sued on herein, being illegal and without consideration and unexecuted and still executory, it results that Bucklew is not entitled to recover thereon, and that the instruction of the trial court to find for Bucklew as to those notes, which was excepted to by Pyron, was erroneous; and for that reason the verdict and judgment on those $ 500 notes should be reversed. Rogers v. Gross, 67 Minn. 224, 69 N.W. 894; Coler v. Ry. & Power Co., 65 N.J.Eq. 347, 54 A. 413; Tschumi v. Hills, 6 Kan.App. 549; Scoville v. Thayer, 105 U.S. 143; Railroad v. Dow, 120 U.S. 287-298; Hallett v. N.E. Grate Co., 105 F. Rep. 217; s. c., 119 F. 873, 56 C. C. A. 403; Altenberg v. Grant, 85 F. Rep. 345, 29 C. C. A. 185.
J. C. Rosenberger and Kersey Coates Reed for respondent.
(1) Although all of the transactions in question took place in the State of Texas and were to be performed there, we agree with the appellants that the applicatory and governing law to be applied to the questions raised by appellants in their brief is the law of Missouri, being the law of the forum. The defendants did not plead or prove any of the constitutional provisions, statutes or decisions of the State of Texas bearing on the questions raised in their brief. The general rule as laid down in this state is that where the condition of the law of another state becomes material and no evidence has been offered concerning it, our courts will presume that the general principles of the common law prevail here, but that no such presumption obtains respecting the constitutional or statutory law of the foreign state. Morissey v. Wiggins Ferry Co., 47 Mo. 525; McDonald v. Banker's Life, 154 Mo. 628; Houghtaling v. Ball, 19 Mo. 86. (2) But the State of Texas falls within an exception to this general rule, it being held that the presumption that the common law prevails in another state relates only to those states which were once parts of the English possessions and not to Texas, which was part of the Spanish possessions, and that as to the State of Texas if no evidence is introduced, the law of the forum must govern. Flato v. Mulhall, 72 Mo. 525. And the court in the case last cited applied Missouri statutes to a Texas contract, there being no plea or proof of the Texas statutes. Where no rights of creditors are involved as between a corporation and its shareholders, whatever is agreed to be payment for stock, is payment, and neither the company nor a participating stockholder will afterward be heard to say that the stock was not fully paid for. This is the law in Missouri as well as elsewhere. 10 Cyc. 466, 469; Skrainka v. Allen, 76 Mo. 384; Hill v. Coal Co., 124 Mo. 166; Standard Machine Co. v. Hills, 68 Mo.App. 249; Roll v. Milling Co., 52 Mo.App. 60; Meyer v. Milling Co., 193 Mo. 192, 196; Woolfolk v. January, 131 Mo. 634; Vogeler v. Punch, 205 Mo. 571; Scovil v. Thayer, 105 U.S. 143, 26 L.Ed. 968; Krohn v. Williamson, 62 F. 875; Callanan v. Windson, 78 Iowa 197, 42 N.W. 653; Barr v. Railroad, 57 F. 375; McCracken v. Railroad, 57 F. 375, 52 F. 726. (3) Independently of the validity of plaintiff's stock the benefit and advantage derived by Pyron in its acquisition and in thereby putting himself in sole control of the company and its assets was abundant consideration for the transfer of the stock and the notes given in payment therefore. Sec. 2774, R. S. 1909; 9 Cyc. 311; Lindell v. Rokes, 60 Mo. 249; Pitt v. Gentle, 49 Mo. 74; Carr v. Card, 34 Mo. 513; Hout v. Frisbee, 66 Mo.App. 16. (4) Even if there were merit in the contention of appellants that the stock was issued illegally to plaintiff, and there is none, there was nothing illegal in the contract made nine months afterward by Pyron for the purchase of plaintiff's stock. The series of eight notes arose out of the contract of sale, not out of the issuance by the company of its stock. The contract for the sale of the stock was made long after the issuance of the stock had been fully consummated, was for a lawful object and had no relation to the manner the stock was issued or paid for. 15 Am. and Eng. Ency. Law, 992; Hutchinson v. Dornin, 23 Mo.App. 575; Curry v. La Fon, 133 Mo.App. 163.
Plaintiff's action is based on a petition containing nine counts; each for the recovery of judgment on a promissory note executed by defendants; in the first of these counts the note is for $ 1000, and in each of the remaining eight the note is for $ 500; the whole aggregating $ 5000. The defendants answered separately. Defendant Pyron's answer to the first count was a general denial; that the note was given without consideration; that it had been fully paid; and that it was given for plaintiff's accommodation only. His answer to each of the other counts was that the notes were given without consideration; that they each had been fully paid and that the other defendant, the "Bob Pyron Land Company," had been organized in the State of Texas as a corporation dealing in the sale of lands, with a capital stock of $ 10,000, divided into one hundred shares of $ 100 each, that defendant, one W. E. Oliver and plaintiff were the incorporators of such corporation, with Oliver and plaintiff each subscribing for thirty-three shares and defendant for the remaining thirty-four shares; that $ 500 was actually paid in cash, on such subscriptions. That Oliver afterwards "contributed on his stock $ 1283," and defendant "also contributed and paid into the treasury of said company on his stock large sums of money." That plaintiff was called upon to pay the balance upon his subscription and that he paid in response the sum of $ 1000. But before making this payment he asked Oliver and the defendants to give and endorse the note to him of $ 1000 which he has sued upon in the first count, as an accommodation note for him to use in borrowing the money with which to pay the $ 1000 on his stock subscription, and that this was done, solely to favor and accommodate him. That some time after the organization of the corporation defendant bought Oliver's stock, paying him therefor $ 1283, the amount he had paid into the treasury on it, making defendant's total stock to be sixty-seven shares. That shortly afterwards, on the 28th of November, 1906, plaintiff and defendant entered into a written contract whereby defendant bought of plaintiff his thirty-three shares of stock for $ 5000, of which $ 500 was paid in cash and a note for $ 500 due the 1st of January, 1907, and eight notes, each for a like amount, one due the first of each month thereafter. These notes were secured by the certificates of stock being endorsed by plaintiff and deposited in bank and also by an assignment of certain commissions due defendant amounting to $ 2000. That the cash was paid and the first note falling due was also paid by defendant. But the others are the ones sued upon in this action. It is then pleaded that at the time of making this contract, it was understood and agreed that the $ 5000 thus agreed to be paid for the stock, included the note for $ 1000 sued on in the first count, and it was to be cancelled and delivered to defendant. But that plaintiff has refused to so cancel and deliver it and in consequence "the...
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