Descombes v. Wood
| Decision Date | 28 February 1887 |
| Citation | 4 S.W. 82,91 Mo. 196 |
| Parties | Descombes, Plaintiff in Error, v. Wood et al |
| Court | Missouri Supreme Court |
Appeal from Johnson Circuit Court. -- Hon. Noah M. Givan, Judge.
Affirmed.
S. P Sparks for plaintiff in error.
(1) A corporation cannot make an assignment for the benefit of creditors, without the consent of the stockholders. Such an act is ultra vires, and void. Eppright v. Nickerson, 78 Mo. 482; Bank of Commerce v. Bank, 1 Harr. Ch. [Mich.] 106; Field on Corp., sec. 151; Abbott v Hard Rubber Co., 33 Barb. 520; Price v. Insurance Co., 3 Mo.App. 159; Buford v. N. Line Packet Co., 3 Mo.App. 262. (2) A single stockholder may maintain an action to annul a transaction ultra vires, and may sue for himself and those similarly situated. Angell & Ames on Corp. 330; Dodge v. Woolsey, 18 How. [U.S.] 331; Hawes v. Water Co., 21 Am. Law Reg. 252, 262; March v. Railroad, 40 N.H. 549; Peabody v Flint, 6 Allen [Mass.] 52; Brown v. Boston Theatre Co., 104 Mass. 373; Davidson v. Reed, 111 Ill.; S. C., 53 Am. Rep. 613. (3) An act which is ultra vires is not the subject of ratification and cannot be ratified by the whole body of the stockholders; is a clear case of excess of power. Green's Brice's Ultra Vires, p. 43, prop. 12; 12 Cent. Law Journal, 336; Leake on Cont. 582, et seq.; Railroad v. Railroad, 11 C. B. 775. (4) This deed was not made in compliance with the provisions of the assignment law of the state (R. S., 1879), for that expressly declares that every such assignment shall be proved or acknowledged and certified and recorded in the same manner as is prescribed by law in cases wherein real estate is conveyed. R. S., 1879, p. 54, sec. 354. (a) A deed of a corporation, in order to convey the real estate of a corporation, must be sealed with the common seal of the corporation, signed by the president and acknowledged by such officer to be the act of the corporation, etc. The deed in controversy was not so signed or acknowledged. R. S., sec. 743. (b) We respectfully ask the court to review its decision in Eppright v. Nickerson, supra, holding this a valid deed under the assignment law of this state; for the general rule of law is, that, "to make the act of the agent the act of the principal, it must be executed in the name of the principal." McTyler v. Steele, 26 Ala. 487. (c) It must appear both in the body and signature to be the deed of the principal. Carter v. Chandron, 21 Ala. 72. (5) The tendency of the courts has ever been to construe deeds strictly as to signatures, and the principal's name must appear in the signature as the contracting party. 33 Ala. 599; 26 Ala. 591; 23 Ala. 507; Skinner v. Gunn, 9 Port. 305.
A. Comingo for defendants in error.
(1) The plaintiff's petition does not state any facts that tend to invalidate the assignment. It fails to state any cause of action that warrants the relief sought; or, indeed, any relief whatever. (2) The directors had power and authority to make the assignment. R. S., 1879, sec. 906. (3) The assent of a majority of the stockholders was given. Each of the seven directors who joined in the resolution of the board, pursuant to which the assignment was made, was a stockholder; and his concurrence in the resolution is actual assent. R. S., 1879, sec. 906. (4) But the assent of the stockholders is not essential to the validity of an assignment for the benefit of creditors. DeRuyter v. St. Peter's Church, 3 N.Y. 238; S. C., 3 Barb. Ch. 119; State v. Bank of Maryland, 6 Gill & J. 205; Union Bank v. Elliott et al., 6 Gill & J. 363; Sergeant v. Webster, 13 Met. [Mass.] 497; Town v. Bank River Raisen, 2 Doug. [Mich.] 530; Flint v. Clinton Co., 12 N.H. 431; Dana v. Bank, 5 Watts & Serg. 223; Burrell v. Prest., 2 Met. 163; Covert v. Rogers, 38 Mich. 363; Shultz v. Suter, 3 Mo.App. 137; Lionberger v. Broadway, 10 Mo.App. 503. (5) The plaintiff is estopped by his long silence to assail the assignment. Eppright v. Nickerson, 78 Mo. 484.
Plaintiff brought this action against Joseph Brown, assignee of the Warrensburg Savings Bank, and against said bank to set aside a deed of assignment from the bank to said Brown, and to divest the assignee of all right, title, and interest, in and to the property conveyed, and to restore and invest title to, and control over, the same to the bank, and to enjoin the assignee from asserting title thereto. Since the institution of the suit, and while the same was pending in this court on writ of error, as appears by stipulation in the cause, said Brown has departed this life, and said Woods has been duly appointed his successor as such assignee, and duly qualified as such. Plaintiff was a stockholder in the bank, and also one of its creditors at the time of the assignment, on account of money theretofore loaned to it, and evidenced by certain certificates of deposit, and in February, 1881, he recovered judgment against the bank upon said indebtedness, in the circuit court of Johnson county, Missouri, which said judgment remains in force unpaid and unsatisfied.
On January 17, 1880, a majority of the board of directors of said bank met in regular session, and upon motion duly seconded, resolved that they believed it to be to the interest of all concerned that Joseph Brown be appointed assignee to settle up the business of the bank, and that William Calhoun, president, and Amos Markee, cashier, be authorized and directed to execute and deliver to said Brown, as assignee, a deed of assignment, in form of law, conveying to him all the property owned by the bank, to be held for the benefit of all its creditors according to the laws of this state.
Afterwards, on the twenty-sixth day of January, 1880, a deed of assignment was, under authority of said resolution, executed, acknowledged, and delivered to said Brown, who caused the same to be recorded, in the office of the recorder of deeds for Johnson county, Missouri, on the twenty-sixth day of January, A. D., 1880, and immediately thereafter, and in pursuance and by virtue of said instrument, took possession of all the property and effects of the bank, and is asserting title thereto and exercising control thereof, to the exclusion of all other persons. Said deed of assignment, and the acknowledgment thereof are set out in the petition, but are omitted from this opinion, for the reason that they already appear in full in the case of Eppright v. Nickerson, 78 Mo. 482, to which reference is here had.
The above facts, except as to the successorship of said Wood (which appears by said stipulation, filed in this court) appear from the petition in this case, which further avers, in substance, that the said majority of said board of directors adopted, and caused to be entered upon the records of the proceedings of said board, the said resolution of January 17, 1880, without authority from, or notice to, the owners and holders of the shares of the capital stock of said corporation, and without notice, assent, or knowledge, and against the desire, of plaintiff, and that the said deed of assignment, having been executed without the assent or knowledge of the said several shareholders, is void, and of no binding force, as against them; that the specified directors, constituting a majority of the board, have conspired to and with defendant, Brown, and are aiding and abetting him to claim possession of the property and effects of said corporation, under the said instrument, and refuse to bring this suit in the name of the corporation against said Brown, for the relief of the shareholders, and that plaintiff, therefore, brings the same, on his own behalf, and in behalf of all other shareholders in said corporation, similarly situated.
Defendants interposed a demurrer to the petition, assigning as the grounds therefor that the same does not state facts sufficient to constitute a cause of action; that there is a defect of parties plaintiff, and that if plaintiff ever had a right of action, as claimed, he is, by his own showing, estopped from now asserting it. This demurrer was sustained by the court, and the propriety of its action, in this behalf, is the only question before us for review and determination. The plaintiff, it will be perceived, sues in his own behalf, and in behalf of those similarly situated, without stating who they are or how numerous, or whether they constitute a majority, or otherwise, of the creditors and stockholders, both of which he shows himself to be. If the assignment, however, is ultra vires, and void, as claimed, any portion of the shareholders may, it seems, be complainants, or even a single one of them, and, in that event, the action properly purports to be brought by the given plaintiff, and others similarly situated. 1 Morawetz on Private Corp., sec. 408, and cases cited. The petition, in this case, it will be seen, does not, directly and in terms, charge, either one way or the other, as to the solvency or insolvency of the corporation, at the date of the resolution, or at the date of the said deed of assignment, nor does it charge the directors with any fraudulent intent, or fraud in fact, in the premises, nor does it negative the grounds given in the resolution to assign, that such course was required, in the best interests of all concerned. Moreover, we may add that it is not alleged that the assignee had mismanaged or wasted, or is about to mismanage or waste, the assets, or that the interests of the stockholders would be promoted by the grant of the relief prayed for.
The resolution, in itself, does not purport the insolvency of the bank, but only, perhaps, failing circumstances, and present inability to convert its assets into cash, and to pay its debts on demand. But, as against the pleader, so failing to...
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