Central Mfg. Co. v. Montgomery

Decision Date06 June 1910
Citation144 Mo. App. 494,129 S.W. 460
PartiesCENTRAL MFG. CO. v. MONTGOMERY.
CourtMissouri Court of Appeals

A corporation was formed by the remaining partner of a firm, and all the assets of the old firm rightfully belonged to the new corporation. The remaining partner, in contemplation of selling his stock, which was all the corporate stock except a few shares which had been given to others who were directors, called a meeting of the corporation, not notifying one of the directors, who knew the facts, for the purpose of creating a fictitious indebtedness by having the corporation buy the good will of the old company for a stated sum. After accomplishing this, the partner, as an executor of an estate, loaned the corporation a sum of money which he deposited in the corporate name and then drew out the money and paid his individual debt. Held, in an action by the corporation, after he had sold his stock, for money had and received to recover the amount used in paying his individual debt, that it could not be contended that since the findings of a referee appointed to take proof were that defendant appropriated assets of the old company, and that the petition alleged the appropriation of money of the corporation, that the judgment against defendant could not be sustained.

8. MONEY RECEIVED (§ 6)—NECESSITY OF ACTUAL RECEPTION OF MONEY.

Held, also, that a contention that defendant had not received any money, and hence could not have converted any because the bank got the money was untenable, since he used money which, of right, the corporation should have had the benefit of.

9. CORPORATIONS (§§ 298, 317) — MEETINGS OF DIRECTORS — ACTION BY OWNER OF MAJORITY OF STOCK — NOTICE OF MEETING.

Held, also, that under the facts, though defendant was the owner of practically all the stock, he could not use the assets as he did, since there was no valid meeting; one of the directors not being notified, and since there was a fraudulent purpose to sell the stock after creating a fictitious indebtedness.

10. CORPORATIONS (§ 312) — USE OF ASSETS — AUTHORITY OF HOLDER OF ALL THE STOCK.

Generally, where one person is the owner of all the stock of a corporation, he has the right to use its assets as he sees fit.

11. CORPORATIONS (§ 314) — POWER OF DIRECTORS — PROFITS.

The directors of a corporation may not deal with themselves and for the corporation at the same time, and must account for all profits made by the use of the corporation's assets, and for moneys made by breach of trust.

Appeal from St. Louis Circuit Court; William M. Kinsey, Judge.

Action by the Central Manufacturing Company, a corporation, against Emma Montgomery, executrix. From a judgment for plaintiff, defendant appeals. Affirmed.

Frank K. Ryan, for appellant. B. N. Simpson, for respondent.

GRAY, J.

Plaintiff commenced this action to the February term, 1906, of the St. Louis Circuit Court, by filing its petition, in three counts. The first count charges that plaintiff is a corporation organized under the laws of Missouri, and that the defendant is the executrix of the estate of P. H. Montgomery, deceased; that on the 7th day of July, 1902, said P. H. Montgomery, being then the president of the plaintiff corporation, and in full and sole charge of the business affairs and accounts of said company, wrongfully appropriated to his own use the sum of $500 of the money of plaintiff; that since the aforesaid appropriation, the plaintiff herein has received no consideration, nor has repayment to said company of said $500, or any part thereof, been made; that defendant has funds and property in her hands as such executrix, sufficient for the payment of plaintiff's claim; that payment of said claim has been demanded and payment thereof refused; that the defendant is therefore indebted to plaintiff in the sum of $500 and interest thereon from July 7, 1902. The second count is the same as the first, except the amount alleged to have been appropriated is $1,500, and alleges that the appropriation was made on the 21st day of July, 1902. The third count is the same as the first, except the date of the appropriation is given July 28, 1902. To this petition in due time the defendant answered, admitting the relation of defendant to P. H. Montgomery, as stated in the petition to be true, and so far as the issues now are concerned, the balance of the answer was a general denial. In addition to the answer to plaintiff's cause of action, the defendant filed a counterclaim, asking for a judgment for $900 and interest on a note given by plaintiff to said P. H. Montgomery, and also alleging that the corporation was indebted to her as executrix in the sum of $52.50 on an account stated. The plaintiff replied, denying the counterclaim.

On December 4, 1906, by stipulation of the parties, John M. Holmes was appointed referee to try all the issues made by the pleadings. The referee heard the evidence and made his report, finding for the plaintiff on each of the counts in its petition, and finding for the defendant on the $900 item in her counterclaim, and for the plaintiff on the other item of the counterclaim. To the report of the referee, defendant in due time filed her exceptions, and which were by the court overruled, and after an unsuccessful effort to obtain a new trial, and after her motion in arrest of judgment had been overruled, the defendant appealed to the St. Louis Court of Appeals, and by an order of that court, the cause is here.

The first question for consideration on this appeal is the sufficiency of the petition which defendant first assailed by motion in arrest of judgment, and contends that it fails to state a cause of action in that it does not allege that plaintiff ever had possession of the money in controversy, or the right to its possession.

If we treat the plaintiff's cause of action as one purely in conversion, then under the following authorities defendant's point is well taken: Bank v. Tiger Tail Mill & Land Co., 152 Mo. 145, 53 S. W. 902; Golden v. Moore, 126 Mo. App. 518, 104 S. W. 481. The respondent contends that the action is not in conversion but for money had and received. The petition contains unnecessary allegations and contains allegations generally found in both conversion and assumpsit. In one part of the petition it is charged that P. H. Montgomery appropriated to his own use the sum of $500 from the money of said corporation. And it is also charged that he was in full and sole charge of the business affairs and accounts of the company, and on account of his action, the defendant became indebted to the plaintiff in the sums of money named in the different counts, with interest thereon from the dates of the appropriation. It will be noticed that no claim for damages is made in any part of the petition, but after pleading the facts, the petition alleges that the defendant is indebted to the plaintiff for the sums of money so appropriated by her husband.

No attack was made on the sufficiency of the petition until the motion in arrest of judgment was filed. While the defendant has the right to object to the introduction of evidence on account of the insufficiency of the petition, and also has the right to raise an objection to the petition by motion in arrest of judgment, this practice is one which is only tolerated, and if a petition is sufficient to sustain a judgment, the objections will be overruled. McKinney v. Northcutt, 114 Mo. App. 146, 89 S. W. 351; Heether v. City of Huntsville, 121 Mo. App. 495, 97 S. W. 239; Fisher v. St. Louis Transit Co., 198 Mo. 562, 95 S. W. 917. In this case the rule should be strictly enforced. The plaintiff's petition demanded a judgment against the defendant...

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  • Boillot v. Income Guar. Co., 19236.
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    • Court of Appeal of Missouri (US)
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