Chouteau v. Allen

• Decision Date: 31 October 1879
• Citation: 70 Mo. 290
• Parties: CHOUTEAU, Appellant, v. ALLEN.
• Court: Missouri Supreme Court

70 Mo. 290

CHOUTEAU, Appellant,
v.
ALLEN.

Supreme Court of Missouri.

October Term, 1879.

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[COPYRIGHT MATERIAL OMITTED]

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Appeal from Mississippi Circuit Court.--HON. D. L. HAWKINS, Judge.

REVERSED.

This is a suit commenced in the circuit court of Mississippi county on December 16th, 1871, by Charles P. Chouteau, praying judgment upon certain alleged bonds and coupons of the Cairo & Fulton Railroad Company of Missouri, claimed to be owned by the plaintiff, and for foreclosure of a certain deed of trust alleged to have been executed by said company to secure said bonds and coupons, and covering lands in the counties of Stoddard, Scott,

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Dunklin and Butler. The defendants are Thomas Allen, Henry H. Bedford, John Wilson, Mason Brayman, William H. Bailhache, Henry J. Deal, James H. Bethune, E. W. Hill, George Whitcomb, Joseph C. Moore, James M. Patterson, Green L. Poplin, Samuel Montgomery, James G. Nalle, Rudolph F. E. W. Webber, T. W. Johnson, James Clarkson and Henry E. Seelye.

Petition.

The petition states in substance that the Cairo & Fulton Railroad Company, being engaged in the work of constructing their road through the counties of Stoddard, Scott, Dunklin and Butler, in order to raise funds for that purpose, issued 1600 bonds of $1,000 each, bearing date the 23rd of May, 1857, having twenty-five years to run, and having semi-annual interest coupons attached, and to secure the same executed the deed of trust sought to be foreclosed whereby 400,000 acres of land in said counties were conveyed to defendant Wilson and one John Moore and one Albert G. Waterman, as trustees; that this deed contained, among others, a provision which authorized the trustees, upon the surrender of any bonds for cancellation, to convey to the bondholder their value in land; that Moore and Waterman died, and in March, 1866, defendants Brayman, and H. H. Bedford were substituted as trustees in their places, and acted as such; that plaintiff is the owner of 706 of said bonds, (setting forth a list of them by their numbers;) that he had purchased them in good faith and for value in the market without notice of any defect in any of them and without any knowlge that said company denied their liability on any of them; that on the contrary, he fully believed that each and every one of said bonds and coupons was free of any defect, dispute or question; that he was induced to purchase them with a view and for the purpose of devising a plan for combining capital and personal influence in order to build and operate the railroad which had been commenced and was important to the people of southeast Missouri; that of the said bonds and coupons so owned by plaintiff he could only produce 125, of

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which he made profert; that plaintiff had placed the remaining 581 of his bonds in the hands of the board of land trustees to be converted into land, as provided in the deed of trust; that the said trustees had failed to convey any land to him, and the bonds were still in their hands, or if not, that they had been destroyed by them; that the company refused to pay any of the bonds or coupons or to make plaintiff any conveyance of land; that said railroad track, road-bed, rails, ties, depots, stations and all other fixtures and appurtenances of the railroad of said Cairo & Fulton Railroad Company, of Missouri, were sold by the State under the lien mentioned in said deed of trust; said sale was made October 1st, 1866, and said corporation was thereby dissolved; that Green L. Poplin, Samuel Montgomery, James G. Nalle, Rudolph F. E. W. Webber and T. W. Johnson were, at the time of said sale, the only directors and managers of said corporation, and said Poplin was president, and said directors are now trustees in law to wind up the affairs of said corporation; (1 R. S. 1855, p. 375, § 24;) that said company and said trustees made default in payment of interest upon said bonds so that said lands are subject to sale; that the defendants Deal and Bethune, by proceeding under certain judgments which were void, and others which were satisfied, caused executions to be issued in 1867 against said company, then dissolved, and levies to be made on the lands in said deed of trust, and purchased said lands at sheriff's sale and took sheriff's deeds therefor; that all said judgments, executions, levies, sales and sheriff's deeds were illegal, irregular, fraudulent and void; that said Deal and Bethune conyed by quit-claim to Thomas Allen, who claims some interest in said lands under said sheriff's sales; that the defendants E. W. Hill, Henry E. Seelye, James M. Patterson, Joseph C. Moore, James Clarkson and George Whitcomb claim to own some of the bonds secured by said deed of trust; that said Montgomery, Nalle, Johnson, Webber and Poplin refuse to act as trustees for said dissolved corporation and deny it is their

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duty so to act. The plaintiff prayed that an account be taken of the bonds and coupons belonging to the plaintiff, and of any bonds, coupons or claims of any other person secured by said deed of trust; that plaintiff have judgment for his debt, the trust be foreclosed, lands sold to pay plaintiff, the pretended rights of Deal, Bethune and Allen be declared null, and for general relief.

Answers.

The defendants Poplin, Montgomery, Nalle, Webber and Johnson answered, denying that they were directors of the company at its dissolution by the sale to the State on October 1st, 1866. Moore and Patterson answered setting forth their claim to ten bonds which they alleged were secured by said deed of trust and prayed judgment therefor. Deal and Bethune answered, admitting that they purchased the lands mentioned in the deed of trust and sold them to Allen; but averring that the judgments, executions, levies and sales were fair and valid. Hill and Clarkson answered, each claiming to be the owner of certain bonds and coupons, for which they prayed judgment and foreclosure. Seelye answered, claiming fifty-one bonds with their coupons, for which he prayed judgment and foreclosure.

Allen's answer.

Defendant Allen answered separately. His answer denies that said corporation at and prior to the time of execution of said alleged deed of trust, was the owner of the lands mentioned, save and excepting that portion thereof the title whereto was derived by said corporation under and by virtue of the act of Congress entitled “An act granting the right of way and making a grant of lands to the States of Arkansas and Missouri to aid in the construction of a railroad,” &c. Approved February 9th, 1853; and the acts and joint resolutions of Congress amending and extending the provisions of said act, and the acts of the General Assembly of the State of Missouri, accepting and passed in pursuance of the same. Alleges that the defendant is the owner of all said lands described in said original and supplemental deeds of trust, under and by

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virtue of said act of Congress and acts of the General Assembly, before mentioned, and of conveyances from the counties respectively; that he is the owner of 17,520 shares of the capital stock of said company, and that only about 1,200 shares are owned by all other persons; that he also owns all the stock, property and interest ever held by the counties of Butler, Dunklin, Scott and Stoddard; and also all the claim, interest and estate which Henry J. Deal and James H. Bethune ever had in said property. Denies the execution and delivery of the bonds and deed of trust.

The answer further alleges that after the sale by the State to this defendant in 1866, the plaintiff combined and confederated with Bedford, Brayman, Bailhache and Webber to defraud the stockholders of said company, and this defendant, who was the owner of said lands and property, by corruptly, wrongfully and without the assent of said corporation, or of this defendant, procuring possession of said 581 bonds, and obtaining deeds of lands therefor, without any adequate consideration therefor to the company or to this defendant, from Bedford, Brayman and Wilson, who then assumed and pretended to be trustees of the lands under the deed of trust; that, in pursuance of such corrupt and fraudulent combination and purpose, the plaintiff paid to Bedford and Brayman $10,000 in cash, and thereafter he delivered to Brayman, who pretended to be and act as president of the board of land trustees, the 581 bonds mentioned in the petition as being in the possession of the trustees, and received five conveyances of lands in exchange for and in full payment, satisfaction and redemption of said bonds; that plaintiff had no right to said bonds, and said trustees no power or authority to execute said pretended conveyances; that each party to said fraudulent acts well knew of the wrongful and iniquitous conduct and purposes of all the others, and all equally participated in it.

As to the remaining 125 bonds, the answer alleges that they were never made nor issued by the company; that they

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were wrongfully pledged by Brayman to Schuschardt & Gebhardt, of New York, to secure a note of Brayman for $12,000, given for money borrowed by him, individually; that the money for which the note was given and the pledge was made, was borrowed and used by Brayman personally, and not by or for the use and benefit of the company, and that the company never received any benefit from nor used any of said money, and did not in any manner authorize or ratify said pledging of said bonds, or any of them; that Schuschardt & Gebhardt, at the time of receiving said bonds knew that Brayman had no right to pledge the same; that afterwards the plaintiff bought said note of Brayman from Schuschardt & Gebhardt, and therewith received from them the 125 bonds, as collateral for the same, and not otherwise; that they never became the property of said origin pledgees nor of plaintiff; that plaintiff well knew all of said facts when he bought said note and received said...