Doe Run Lead Company v. Maynard

• Decision Date: 12 July 1920
• Parties: DOE RUN LEAD COMPANY and ST. JOSEPH LEAD COMPANY v. SAMUEL R. MAYNARD et al., Appellants. DOE RUN LEAD COMPANY and ST. JOSEPH LEAD COMPANY v. ROBERT HOLMES et al., Appellants
• Court: Missouri Supreme Court

223 S.W. 600

283 Mo. 646

DOE RUN LEAD COMPANY and ST. JOSEPH LEAD COMPANY v. SAMUEL R. MAYNARD et al., Appellants.

DOE RUN LEAD COMPANY and ST. JOSEPH LEAD COMPANY v. ROBERT HOLMES et al., Appellants

Supreme Court of Missouri

July 12, 1920

Appeal from St. Francois Circuit Court. -- Hon. Peter Huck, Judge.

Reversed.

A. L McCawley and Warner, Dean, McLeod & Langworthy for appellant.

(1) The resolution favoring dissolution, upon which this proceeding is based, and claimed to have been adopted at a special stockholders' meeting of Doe Run Lead Company was not adopted by stockholders holding two-thirds in value of all the shares of stock in the company. The charter and license of the St. Joseph Lead Company did not authorize the ownership and voting of stock of another corporation. (a) For the purposes of determining its right to own and vote stock in a Missouri corporation, the St. Joseph Lead Company could have no greater powers than a Missouri corporation. Sec 3037, R. S. 1909; Head v. Ins. Co., 241 Mo. 413; State ex rel. v. Cook, 171 Mo. 362; National Lead Co. v. Paint Store Co., 80 Mo.App. 271. (b) The Constitution and statutes of Missouri, do not authorize a domestic business and manufacturing corporation to own and vote stock in another business and manufacturing corporation but deny such right. Sec. 7, Art. 12, Mo. Constitution; Secs. 2990, 3346, R. S. 1909. The charter and laws under which a corporation is organized or licensed must be strictly construed. Blair v. Perpetual Ins. Co., 10 Mo. 565; Matthews v. Skinker, 62 Mo. 331; Carroll v. Campbell, 108 Mo. 559; State ex rel. Light Co. v. Murphy, 130 Mo. 24; State ex rel. Crow v. Lincoln Trust Co., 144 Mo. 587; Watson Seminary v. County Court, 149 Mo. 70; Prairie Slough Club v. Kessler, 252 Mo. 434; 1 Morawetz on Private Corporations, sec. 431; Parsons v. Tacoma Co., 25 Wash. 492; Thomas v. Railroad Co., 101 U.S. 82; Schwab v. Potter Co., 194 N.Y. 415, 418; Franklin Co. v. Savings Bank, 68 Me. 45. (c) Reference to other sections of the Missouri Statutes, shows conclusively that the Legislature did not intend to grant to manufacturing and business corporations the right to subscribe for, own and vote stock in other manufacturing and business corporations. R. S. 1909, secs. 3346, 1124, 3080, 3081, 3316. (d) It is contrary to the public policy of the State for one manufacturing and business corporation to subscribe for, own and vote stock in another business and manufacturing corporation. Hanlon Millinery Co. v. Trust Co., 251 Mo. 574; State ex rel. v. Bank, 157 Mo.App. 563; Newland Hotel Co. v. Furniture Co., 73 Mo.App. 135; State ex inf. v. Lincoln Trust Co., 144 Mo. 562; Anglo-American Land Co. v. Lombard, (C. C. A.) 132 F. 736; Central Life Sec. Co. v. Smith, 236 F. 175; Franklin Co. v. Savings Bank, 68 Me. 43; People ex rel. Peabody v. Trust Co., 130 Ill. 269; Converse v. Emerson-Talcott & Co., 242 Ill. 619; Dunbar v. American Tel. & Tel. Co., 224 Ill. 22; Irvine v. Chicago Co., 200 F. 953; Central Railroad Co. v. Collins, 40 Ga. 628; Kean v. Johnson, 9 N.J.Eq. 407; Black v. Del. & Raritan Canal Co., 24 N.J.Eq. 474; De La Vergne Co. v. Savings Inst., 175 U.S. 54. The cases of State ex inf. v. Mo. Pac. Ry. Co., 237 Mo. 338; State ex inf. v. Mo. Pac. Ry. Co., 241 Mo. 1, and Tanner v. Lindell Ry. Co., 180 Mo. 1, relied upon by respondents, are distinguishable from the case at bar. The exceptions mentioned in those cases are such as to make them really authorities in favor of appellant under the facts of this case. (e) At the time the resolution for dissolution was voted upon, the total paid up capital stock of The Doe Run Lead Company was $ 10,000,000, and the resolution therefore failed to carry by the requisite two-thirds vote. Sec. 2996, R. S. 1909, requires that the resolution favoring a dissolution must be voted by "stockholders holding at least two-thirds in value of all the shares of stock in said corporation." It is alleged that only 65,783 shares of stock were issued and outstanding, but the facts show that there were 100,000 shares of paid up and issued stock in said corporation, and that the resolution failed to carry. The certificate of the Secretary of State is conclusive. R. S. 1909, sec. 3356. This is admitted by respondents. The action of the company with reference to an alleged treasury stock account was illegal. Chrisman-Sawyer Banking Co. v. Mfg. Co., 168 Mo. 646; Hazard v. Wight, 201 N.Y. 403. The fact that certificates were not issued for a portion of these shares is immaterial. Knapp v. George Knapp & Co., 127 Mo. 71; Williams v. Everett, 200 S.W. 1050; Armour Bros. Banking Co. v. St. Louis Natl. Bank, 113 Mo. 20; Schaeffer v. Mo. Home Ins. Co., 46 Mo. 250; Kimball v. Davis, 52 Mo.App. 207; Pacific Nat. Bank v. Eaton, 141 U.S. 234; Burr v. Wilcox, 22 N.Y. 555; Flour City Natl. Bank v. Shire 84 N.Y.S. 813; Field v. Pierce, 102 Mass. 261; U.S. Radiator Co. v. New York, 208 N.Y. 149; Carthage Natl. Bank v. Poole, 160 Mo.App. 143. (2) This proceeding is not a bona-fide dissolution proceeding such as is authorized by the dissolution statute. The evidence shows that the purpose of this proceeding is to enable St. Joseph Lead Company to consolidate with Doe Run Lead Company, and compel the minority stockholders to sell out their interests to the majority stockholders at a price fixed by the majority. A dissolution statute cannot be made use of to accomplish such purposes. In re Paine, 166 N.W. 1037; Theis v. Gas Light Co., 34 Wash. 23. The facts of the two foregoing cases are almost identical with those in the case at bar, and in each of them a decree of dissolution was denied. Riker & Son Co. v. United Drug Co., 79 N.J.Eq. 582; Ervin v. Oregon Ry. & Nav. Co., 27 F. 625, cited with approval in Tanner v. Lindell, 190 Mo. 20; Chicago Hansom Cab Co. v. Yerkes, 141 Ill. 335; Byrne v. Elec. Mfg. Co., 65 Conn. 336; Taylor v. Porter, 4 Hill (N.Y.) 143. (3) The proposed dissolution is prejudicial to the minority stockholders. The dissolution statute requires the court to find that the proposed dissolution of the corporation is not prejudicial to the stockholders. R. S. 1909, sec. 2999. The men elected as directors of Doe Run Lead Company through the Chubb transaction were all interested directors dominated by St. Joseph Lead Company, and attempted to make a sale to the St. Joseph Lead Company upon its own terms. The transactions thus attempted to be consummated are illegal. Kitchen v. Ry. Co., 69 Mo. 261; Ashton v. Penfield, 233 Mo. 427; Bent v. Priest, 86 Mo. 482; Bent v. Priest, 10 Mo.App. 556; Hill v. Coal Mining Co., 119 Mo. 23; Hannerty v. Theater Co., 109 Mo. 310; Michoud v. Girod, 45 U.S. (4 How.) 555; Jackson v. Ludeling, 88 U.S. (21 Wall.) 616; Symmes v. Union Trust Co., 60 F. 864; Mason v. Pewabic Mining Co., 133 U.S. 58. (4) The appellant is not estopped from opposing the dissolution of Doe Run Lead Company. The present plan of dissolution is a new one for the purpose of evading taxes. There is no ground for invoking the doctrine of estoppel. Harrison v. McReynolds, 183 Mo. 548; Keeney v. McVoy, 206 Mo. 57; Mills v. Railroad, 41 N.J.Eq. 9; Teele v. Granite Co., 224 Mass. 24; State ex rel. v. Bankers Trust Co., 157 Mo.App. 568. (5) the dissolution statute as construed by the trial court is unconstitutional. The Doe Run Lead Company was organized in 1886, thirteen years before the dissolution statute was enacted. Laws 1899, pp. 116, 117. The statute should not be construed to be retroactive. State ex rel. Parker v. Thompson, 41 Mo. 28; Bartlett v. Ball, 142 Mo. 35; State ex rel. v. Greer, 78 Mo. 188; Mutual Ins. Co. v. Flynn, 38 Mo. 483. The stockholders have a contractual right to have the company continued during the entire period of its incorporation. 2 Cook on Corporations (6 Ed.), secs. 492, 494; Tanner v. Lindell Ry. Co., 180 Mo. 16; Feld v. Roanoke Inv. Co., 123 Mo. 603; Luehrman v. Trust & Title Co., 192 S.W. 1032. The statute was construed by the trial court to be retroactive and as so construed is unconstitutional. Trustees of Dartmouth College v. Woodward, 4 Wheat, 520; State ex rel. Haeussler v. Greer, 78 Mo. 188; Farrington v. Tennessee, 95 U.S. 679; Clearwater v. Meredith, 68 U.S. 39; Covington Turnpike Co. v. Sandford, 164 U.S. 593; State Bank of Ohio v. Knoop, 57 U.S. (16 How.) 380; Wilmington Railroad v. Reid, 80 U.S. (13 Wall.) 264. (6) The motion to dismiss the appeals should be overruled. (a) While the remedy by appeal was unknown at common law and rests upon statute, contained in the general code of civil procedure, authorizes an appeal in this case. Sec. 2038, R. S. 1909. The dissolution statute calls for a hearing and a judgment and decree and contemplates a judicial proceeding. Secs. 2996-3000, R. S. 1909. An appeal may be taken from a judgment under the dissolution statute. In re Switzer, 201 Mo. 87; Nolan v. Johns, 108 Mo. 431; State ex rel. v. Lewis, 76 Mo. 370; State ex rel. v. Shelton, 238 Mo. 281; State v. Schneider, 47 Mo.App. 669; Stid v. Railroad, 211 Mo. 418; 3 C. J. p. 318, sec. 31. (b) Under the provisions of the Code of Civil Procedure, an appeal will lie from the judgment of a circuit court in a statutory proceeding, where the procedure is according to the course of common law trials, regardless of whether there is any specific right of appeal granted by such special statute. Sec. 2038, R. S. 1909. The mere fact that the proceeding is statutory does not prevent an appeal. Appeals are allowed in other statutory proceedings without a special provision for appeal. R. S. 1909, secs. 5425-5427, 5434, 2360, 2369, 2370-2381, 2535, 2559. The dissolution statute calls for a judicial determination of the question involved. Luehrman v. Lincoln Trust & Title Co., 192 S.W. 1033.

Boyle & Priest, Nagel & Kirby and Edward A. Rozier for respondent.

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