Buerck v. Mid-Nation Iron Products Company
| Decision Date | 28 August 1922 |
| Citation | 245 S.W. 45,295 Mo. 263 |
| Parties | FERDINAND BUERCK et al. v. MID-NATION IRON PRODUCTS COMPANY et al., Appellants. SOUTHEAST MISSOURI TRUST COMPANY, Trustee; JOHN F. GREEN, Interveners, Appellants, v. MID-NATION IRON PRODUCTS COMPANY; ODON GUITAR, JR., Receiver, Appellant |
| Court | Missouri Supreme Court |
Special Appeal in Buerck Case from St. Louis City Circuit Court. -- Hon. Charles B. Davis, Judge.
Appeal in Trust Company Case from Butler Circuit Court. -- Hon Almon Ing, Judge.
Appeal dismissed. Reversed.
William E. Cloyes and John A. Hope for appellants in Buerck Case.
(1) Appointment of a receiver without notice to defendants and without a chance to be heard in opposition is unauthorized. No such abuse of judicial power should receive any sanction. (2) The receiver was appointed May 12, upon ex parte hearing had without notice to defendants Pierce and Redhead, who were on the board of directors; also without any notice to the other defendants unless a summons to appear at 10 a. m. May 5, means 2 p. m. May 12, or unless information alleged to have been given to a member of the bar not connected with the case, or the pretense of a friendly witness that he "advised him [Clemons] today that the hearing was on" at "about 10:30" by "a telegram to the Great Northern Hotel at Chicago" was sufficient in law to give the circuit judge power to do the things he attempted in this case, namely, eviction of defendant company, its officers, directors, stockholders, and the trustee in the mortgage securing its bonds, from any and all connection with the property, removal of its officers and directors, virtual cancellation of every right of defendants Hull, Pierce, Redhead, Clemons and McPherson as stockholders and bondholders, and the vesting of the title, possession and administration of great and valuable properties, and business and affairs of the company, with its books, papers and records, in a so-called receiver under $ 1,000 bond "approved by the court." (3) If plaintiffs' petition fails to state a case in equity, appointment of a receiver is unauthorized and should be set aside. "Absent a cause of action stated in the main case, there is no ground for the appointment of a receiver." Thompson Price v. Bankers Trust Co., 178 S.W. 749; Cantwell v. Lead Co., 199 Mo. 42. (4) And the petition in this case does not state any cause of action. (a) Because the petition fails to show that plaintiffs, before filing the suit, made any effort within the defendant corporation for correction of their alleged grievances. So far, at least, as plaintiffs sue to protect their alleged rights as stockholders, it is a necessary prerequisite that they show "that all remedies within the corporation itself have been exhausted." Albers v. Merchants Exchange, 45 Mo.App. 218; Blades v. Mercantile Co., 154 Mo.App. 359; Virginia v. Fisher, 104 Va. 121; Thompson Price v. Bankers Trust Co., 178 S.W. 749. (b) Because the petition fails to show that plaintiffs had requested the trustee in the mortgage securing the bonds in question to sue and that the trustee had refused to do so. Plaintiffs sue as bondholders as well as stockholders. Their petition discloses that the bonds, which are held by others as well as themselves, are secured by mortgage on the Wayne and Butler County lands. It is to be assumed, of course, that, like all corporate mortgages securing bond issues, there is a trustee in the mortgage. Hence the petition is fatally defective in not showing refusal of the trustees to sue after request by plaintiffs so to do. 2 Perry on Trusts (6 Ed.) sec. 886; 2 Black on Rescission & Cancellation sec. 662; Morgan v. P Ry., 21 Blatchf. (U.S.) 134; First Nat. Bank v Radford Trust Co., 80 F. 574; O'Bierne v. Allegheny Co., 15 N.Y. 372, 383; Virginia v. Fisher, 104 Va. 133, 139; Young v. Haviland, 215 Mass. 122; Consolidated Water Co. v. Diego, 89 F. 272; Siemers v. Kleeburg, 56 Mo. 201; Evismon v. Evismon, 59 Mo. 370; Lilly v. Menke, 126 Mo. 214; Roden v. Helm, 192 Mo. 71, 95. (c) Because the petition fails to make the trustee in the mortgage a party to the suit. So far as the petition undertakes to state any case concerning the bonds, it seeks to compel surrender and cancellation of the bonds alleged to be held by defendants Clemons and McPherson. To such an action the mortgage trustee is a necessary party. Authorities above. And especially in this case, where it was sought to place the mortgaged property in the possession and control of a receiver, the mortgage trustee was an indispensable party. The attempt of the learned trial judge, in the absence of this indispensable party, to establish a receivership over the mortgaged property cannot be upheld in law. The presence of the trustee as party to the suit was just as necessary as if it had been an action to foreclose the mortgage. 1 Wiltsie on Mortgages (3 Ed.) sec. 132; 2 Perry on Trusts (6 Ed.) sec. 873; 2 Jones on Mortgages (6 Ed.) secs. 1397, 1399; Barry v. Mo. P. Ry., 22 F. 631; Tovener v. Bennett, 21 W.Va. 656, 673; Harlow v. Mister, 64 Miss. 25; Mayne v. Cohn, 76 Miss. 590; Caylor v. Cooper, 165 F. 757. (d) Because the petition shows on its face that the property in which plaintiffs claim to be interested as mortgage bondholders, and over which they want a St. Louis receivership established, is not located in the city of St. Louis, but is in the counties of Wayne and Butler -- 25,000 acres of land. The St. Louis Circuit Court had no jurisdiction to summarily eject defendant company from the possession of these lands, located wholly outside the St. Louis Judicial District, and transfer the possession and control thereof to a receiver appointed by it. Sec. 1179, R. S. 1919; High on Receivers (3 Ed.) sec. 739, p. 686; Matter Steamboat Tow Co., 139 N.Y. 172; Mills Bros. v. Perkins, 154 Mo. 638; Carr v. Lewis Coal Co., 96 Mo. 149; State v. Railroad Co., 15 Fla. 201, 284; Atkins v. Wabash, 29 F. 161, 172; Hollbush v. Blake, 119 Ind. 349; Commonwealth v. Order of Vestal, 156 Pa. St. 172; Texas & P. Ry. v. Gay, 86 Tex. 571, 25 L. R. A. 52. (e) Because, so far as the petition discloses the case, plaintiffs have other entirely adequate remedies for the alleged wrongs of which they complain. The directors of defendant company are accused of mismanagement in vague, general and indefinite allegations. But it is nowhere pretended that any director or officer of the company is insolvent, or that any judgment for damages which plaintiffs might obtain could not be readily collected. In this situation, the petition states no case in equity, certainly no sufficient basis for an order appointing a receiver. "It is fundamental that the hand of the courts will be laid upon property of the owner and that owner evicted from possession thereof . . . only when there is no other adequate remedy" (Thompson Price v. Bankers Trust, supra), and plaintiffs "must show that there is no other road to redress" (Albers v. Exchange, supra). Alderson on Receivers, sec. 487; Blades v. Milling Co., 154 Mo.App. 350; 34 Cyc. 23, 25; High on Receivers (3 Ed.) sec. 755, p. 699; Albers v. Moffitt, 187 S.W. 903; Miller v. Scammon, 52 N.H. 609. (f) Because the petition consists merely of general indefinite allegations of fraud. This will not suffice. The specific facts constituting the alleged fraud must be stated distinctly and positively. Ennis v. Padgett, 122 Mo.App. 545; Hart v. Hannibal Ry. Co., 65 Mo. 509; Nichols v. Stevens, 123 Mo. 117; Coal Co. v. Haldeman, 254 Mo. 639; 2 Black on Rescission & Cancellation, secs. 110 and 665; Atlantic Delaine Co. v. Jones, 94 U.S. 214. (g) Because the petition, when analyzed and tested by the settled principles of equity jurisdiction, does not state any case that a court of equity can properly take any cognizance of. (5) The evidence, both that submitted on the hearing of the application for a receiver and that heard on the motion to set aside the appointment, makes it all the more apparent that the order appointing the receiver was illegal and invalid, and that the learned trial court erred in overruling the motion to revoke, because: (a) Not only is defendant company's real property beyond the territorial jurisdiction of the St. Louis Circuit Court, but so is its personal property. The habitat or domicile of defendant corporation is Greenville, Wayne County; it is thus fixed in its corporate charter, which is conclusive. Secs. 9734, 10144, 10145, 10146, R. S. 1919; Bank of Malden v. Waye Heating Co., 198 Mo.App. 606; Pelton v. Northern Transp. Co., 37 Ohio St. 450; Rossie I. Works v. Westbrook, 59 Hun (N. Y.) 345; Woods Gold Mining Co. v. Royston, 46 Colo. 191; Union Steamboat Co. v. Buffalo, 82 N.Y. 351; Oswego Starch Factory v. Dolloway, 21 N.Y. 449; Re Federal Contracting Co., 212 F. 688; First Nat. Bank v. Wilcox, 72 Wash. 473; Malmo v. Washington Co., 79 Wash. 534. And the situs of personal property is the domicile of the owner. See "Situs," 7 Words & Phrases Judicially Construed, p. 6525; Stephens v. Boonville, 34 Mo. 325. (b) Under the law as well as by reason of the terms of the mortgage and the powers and duties therein conferred upon the trustee, individual bondholders cannot bring an action to subject such additional or after-acquired property to the lien of the mortgage, unless it is shown that the trustee has been requested to sue and that it has failed or refused to do so. 3 Fletcher on Corporations, sec. 1330.
W. G. Carpenter and Chas. F. Krone for appellants in Trust Company Case.
(1) The trustee represents all bondholders as a class. In the absence of bad faith on the part of the trustee, petitioner Boll had no right to be made a party to the action nor to secure the appointment of the receiver. Rumsey v. Peoples Railroad Co., 154 Mo. 215; Farmers L. & T. Co. v. Ry Co., 53 F. 182...
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