Commonwealth Finance Corp. v. Missouri Motor Bus Co.

• Decision Date: 06 April 1923
• Docket Number: No. 23468.,23468.
• Citation: 252 S.W. 372
• Parties: COMMONWEALTH FINANCE CORPORATION v. MISSOURI MOTOR BUS CO. et al.
• Court: Missouri Supreme Court

252 S.W. 372

COMMONWEALTH FINANCE CORPORATION v. MISSOURI MOTOR BUS CO. et al.

No. 23468.

Supreme Court of Missouri, Division No. 1.

April 6, 1923.

Rehearing Denied June 8, 1923.

Appeal from St. Louis Circuit Court; Charles B. Davis, Judge.

Suit by the Commonwealth Finance Corporation against the Missouri Motor. Bus Company for accounting and receivership, in which it was sought to restrain the Tower Grove Bank from enforcing a chattel mortgage on defendant's property. A receiver was appointed and the property of defendant sold, and from an order and judgment directing the payment of the proceeds to the bank, defendant appeals. Affirmed.

See, also, 233 S. W. 167.

E. H. Wayman, of St. Louis, for appellant.

J. L. Hornsby, of St. Louis, for respondent Tower Grove Bank.

Nagel & Kirby and Everett Paul Griffin, all of St. Louis, for respondent Commonwealth Finance Corporation.

WOODSON, C. J.

The following is the statement of the case made by counsel for appellant:

The suit out of which the controversy on this appeal arises was instituted on June 8, 1920, by the Commonwealth Finance Corporation, as plaintiff, against the appellant, Missouri Motor Bus Company, and the respondent, Tower Grove Bank, as defendants. The petition alleged that the defendant Missouri Motor Bus Company had acquired motor busses and chassis by the use of money belonging to the plaintiff, which had been advanced to the motor bus company or used for its benefit by an agent of the plaintiff without the plaintiff's knowledge, authority, or consent and the plaintiff, in part, sought by this proceeding to have an accounting and to follow its funds on equitable principles into the property of the bus company. The petition also alleged that the bus company had executed and delivered to the Tower Grove Bank a chattel mortgage on certain of its property, and charged that this chattel mortgage was fraudulent and void because the defendant Tower Grove Bank knew that the property covered thereby was obtained with the use of plaintiff's money, without its authority, knowledge, or consent, and because said mortgage was not executed on the date it purports to have been executed, and was never validly authorized or issued. The petition prayed, among other things, that the Tower Grove Bank be enjoined and restrained from attempting to enforce or avail itself of the chattel mortgage it held, and that a receiver be appointed for the defendant Missouri Motor Bus Company, to take charge of all its property pending the determination of the plaintiff's rights in the premises. A temporary receiver was appointed for the bus company as prayed in the petition, and the Tower Grove Bank as also prayed in the petition, was enjoined from in any manner attempting to enforce or avail itself of the chattel mortgage delivered to it by the bus company.

The controversy on this appeal involves 11 motor busses taken into custody by the temporary receiver, consisting of 5 busses built on Packard chassis and 6 busses built on Diamond T chassis. The latter 6 busses were part of those covered by the mortgage of the Tower Grove Bank. The other 5 were not so covered by said chattel mortgage, and the Tower Grove Bank had no right or interest in those 5 busses by virtue thereof. The temporary receiver, on October 6, 1920, filed his motion for authority to sell these 11 motor busses, and on October 22, 1920, an order was entered by the court directing the receiver to sell them. When this order of sale was entered, the motor bus company sought by a prohibition proceeding to prevent the sale upon the ground that the court had no jurisdiction to order such sale in advance of a final judgment upon the merits of the case, and that the sale for the prices mentioned in the order would result in sacrificing the property and business interests of the bus company, instead of keeping and preserving the property and protecting the business interests, as the statute relating to the appointment of receivers provides should be done. A preliminary writ of prohibition was granted by this court, the matter was submitted, and finally, in June of 1921, this court handed down an opinion denying a permanent writ of prohibition.

On June 16, 1921, the receiver filed his application for instructions, in which he stated that he had an offer to sell the 11 busses at private sale for $22,000 to the person named in the application for instructions, whereupon the court ordered the receiver to sell these said 11 busses to said person at private sale for said sum, and the busses were sold by the receiver and $22,000 paid therefor. After the sale of the busses the receiver filed his application for authority to pay expenses of the receivership, and he was ordered by the court to pay out of the $22.000 received from the sale of the 11 busses the sum of $10,513.25. Then followed the petition of the Tower Grove Bank for an order on the receiver to pay to it the sum of $12,000 as and for the selling price of the 6 Diamond T busses covered by its mortgage at $2,000 each. This petition of the Tower Grove Bank was opposed by the bus company, upon the ground that the busses covered by the Tower. Grove Bank's mortgage were liable for their pro rata share of the expenses of the receivership, and that at most all the Tower Grove Bank was lawfully entitled to receive out of the funds then in the hands of the receiver was six-elevenths of the net proceeds of the sale of the eleven busses, since its mortgage covered only six-elevenths of the busses sold.

Over the opposition of the bus company, however, the petition of the Tower Grove Bank was granted on October 3, 1921, and the receiver was ordered to pay to the Tower Grove Bank the sum of $12,000, or so much thereof as remains in his hands. As no testimony was heard in support of or in opposition to the petition of the Tower Grove Bank, the whole thing was a matter of record in the court, and the only question one of law, as to whether the Tower Grove Bank was entitled to receive as much as was given to it by the court's order. The bus company all along conceded and still concedes the right of the Tower Grove Bank to six-elevenths of the net proceeds of the sale of these eleven busses, but no more. It was from this order of October 3, 1921, awarding to the Tower Grove Bank all of the money in the hands of the receiver, that the present appeal was taken. And counsel for respondent makes the additional statement:

"But the real controversy in the suit is based upon the claim of the plaintiff against the Missouri Motor Bus Company for money plaintiff claims is due it by said defendant, and for which it claims an equitable lien on all defendant's motor busses, and the Tower Grove Bank is made a party defendant to the suit solely because the bank holds a chattel mortgage on certain Diamond T. motor busses belonging to the motor bus company, and which chattel mortgage plaintiff, in its petition, alleged to be fraudulent and void. The Tower Grove Bank has no...