Dolan v. Truck Equipment Co.

• Decision Date: 12 April 1948
• Docket Number: 40364
• Citation: 212 S.W.2d 438,357 Mo. 1034
• Parties: John C. Dolan, Appellant, v. Truck Equipment Company, a Corporation, and Beulah M. Sleeper
• Court: Missouri Supreme Court

212 S.W.2d 438

357 Mo. 1034

John C. Dolan, Appellant, v. Truck Equipment Company, a Corporation, and Beulah M. Sleeper

No. 40364

Supreme Court of Missouri

April 12, 1948

Rehearing Denied June 14, 1948.

Appeal from Circuit Court of City of St. Louis; Hon. Eugene J Sartorius, Judge.

Affirmed.

James T. Blair, Jr., Geo. O. Durham and T. D. Drury for appellant.

(1) The respondent Beulah M. Sleeper failed to sustain the burden of proof with respect to the contract of purchase and sale alleged by her, and on that issue the court erred in finding the issues against the appellant. (2) Unless specially authorized by the pledge contract the pledgee may not become the purchaser of the subject matter of the pledge. The pledge contract will be strictly construed against the pledgee and unless authorized by the contract his purchase at his own sale is defective and void. State ex rel. Shull v Liberty Natl. Bank, 331 Mo. 386, 53 S.W.2d 899; Exchange v. Stockyards Bank, 16 S.W.2d 722; Allen v. Bagley, 234 Mo.App. 891, 133 S.W.2d 1027. (3) Nonpayment of the original debt does not work a forfeiture, and title cannot inure to the pledgee by lapse of time. Fitzsimmons v. Life Ins. Co., 234 Mo.App. 878, 133 S.W.2d 680. (4) A pledgor may follow the property subject matter of an unauthorized sale. Allen v. Bagley, 133 S.W.2d 1027, 234 Mo.App. 891. (5) In any event, in the instant case, there was no such delivery of the shares as to constitute a pledge. Bank v. Aylor, 254 S.W. 99. (6) There was no evidence to authorize the finding of laches or estoppel.

Moser, Marsalek, Carpenter, Cleary & Carter, G. W. Marsalek and Max C. Sigoloff for respondents.

(1) The weight and proponderance of the evidence as to the conduct of both plaintiff and defendant Sleeper is corroborative of defendant's position. It shows that plaintiff's interest in the corporate defendant, Truck Equipment Company, was transferred to defendant Sleeper in consideration of the cancellation of plaintiff's debts to her. The conduct of the parties prior to the actual book transfer of September, 1940, is consistent with defendant Sleeper's version of the transaction, and wholly inconsistent with plaintiff's contention. Potashnick Truck Service v. Sikeston, 351 Mo. 505, 510, 173 S.W.2d 96; Langwell v. Willbank, 106 S.W.2d 417; Gorman v. Mercantile-Commerce Bank & Trust Co., 345 Mo. 1059, 137 S.W.2d 571. (2) The conduct of the parties subsequent to the actual stock transfer supports the nature of the transaction between plaintiff and defendant Sleeper, as related by defendant, and conflicts with the plaintiff's testimony in this regard. Cases cited under Point (1), supra. (3) The plaintiff is guilty of laches in urging his asserted claim, having put off asserting his claim until the principal disinterested witness had died, the Truck Equipment Company had become a prosperous organization, and defendant Sleeper had obligated herself extensively in its behalf. Troll v. St. Louis, 257 Mo. 626, 168 S.W. 167; Shelton v. Horrell, 232 Mo. 358, 137 S.W. 264; Snow v. Funck, 41 S.W.2d 2; Ruckels v. Pryor, 351 Mo. 819, 174 S.W.2d 185. (4) The plaintiff should be equitably estopped from prosecuting his alleged cause of action, even under his own theory of the case, or from obtaining the relief prayed in his petition, having misrepresented his position to the plaintiff, she having relied thereon and changed her position to her great disadvantage were plaintiff not estopped. State ex rel. v. Missouri Utilities Co., 96 S.W.2d 607; Cases cited under Point (3), supra. (5) The transaction between the parties did not constitute a pledge of plaintiff's stock to defendant. Miners' Bank of Carterville v. Aylor, 264 S.W. 99.

Bradley, C. Dalton and Van Osdol, CC., concur.

OPINION

BRADLEY

By this action plaintiff (appellant) seeks to establish that he is the owner of 75 percent of the capital stock of the Truck Equipment Company, the corporate defendant. The trial court found that plaintiff sold his stock to defendant Sleeper. Plaintiff appealed. The amount in dispute is in excess of $ 7500, hence the appeal is properly to the supreme court. Sec 3, Art. V, Constitution.

Hereinafter the term defendant has reference to defendant Sleeper unless otherwise indicated. Plaintiff and defendant had been acquainted many years. At the time they became acquainted defendant was working for the Gill Piston Ring Company (St. Louis) and plaintiff was traveling representative for the Auto Parts Company and called upon her employer. Defendant was then Miss Beulah Moon; she later married Mr. Sleeper (now deceased) who was manager of the company for whom she worked. Plaintiff's family and defendant's family became quite good friends; visited each other. Plaintiff, in 1925 or 1926, commenced a business which he operated under the name of Driveaway Company. Under contracts with dealers he furnished drivers and delivered cars under their own power. In January 1928, the Driveaway Company was incorporated. While plaintiff was operating the Driveaway Company, defendant's husband became sick and was out of employment; plaintiff, to accommodate the family, put him on the payroll of the Driveaway Company at $ 50 per week for twelve weeks, although he rendered no service. Mr. Sleeper died about 1930. In 1931 defendant was working for a laundry; was having rather hard sledding. Plaintiff's Driveaway business was prosperous; he had begun to use trailers for delivery as well as continuing the driveaways. In 1931 defendant went to the Driveaway Company as bookkeeper at $ 25 per week. At that time plaintiff was operating two companies, the Driveaway Company and the Convoy Company. Driveaway delivered Chevrolets and the Convoy delivered Fords.

In 1934 automobile companies commenced making their own deliveries to dealers and the Driveaway Company obtained the contract for exclusive delivery to dealers for Chevrolet vehicles shipped out of St. Louis. The Driveaway Company was then operating about 40 trailers of its own and about 75 on a rental basis. After the contract with the Chevrolet Company the driveaway feature of the delivery service was abandoned and deliveries were by trailer truck. November 21, 1934, the capital stock of the Driveaway Company was increased from $ 5,000 to $ 50,000; only $ 20,000 of the stock was issued. November 26, 1934, 20 percent of the Driveaway stock was issued to defendant. Plaintiff says that the stock to defendant was a gift because the Driveaway Company "was prosperous and had a bright future", and because defendant "was doing a good job of working hard, and I thought she was deserving it." Defendant denies that her Driveaway stock was a gift; she says that all of the additional stock issued was paid to the corporate treasury in cash and by taking out accounts payable, that is, personally assuming liabilities of the company, and later paying these from dividends. After the stock was issued to defendant, plaintiff held 320 shares and defendant 80. After the stock increase of November 21, 1934, the Driveaway Company did not pay any dividends until December 1936, but from December 1936 to August 1937, dividends amounting to about $ 300 per share were paid and plaintiff's salary was increased to $ 1250 per month and defendant's to $ 625 per month.

The above reflects the relation between plaintiff and defendant when plaintiff commenced, early in 1937, operating under the name of Truck Equipment Company, then not incorporated. Plaintiff testified that he realized that the continued success of the Driveaway Company was uncertain because that company had only one customer, the Chevrolet Company of St. Louis. He said that there was a company in St. Louis equipping Fords with special bodies and axles, and that in January 1937, at the suggestion of the western manager of the Chevrolet truck division, he began the business of equipping Chevrolet chassis with special bodies and axles. The company was incorporated April 15, 1937, with a capital stock of 1,000 shares of no par value. The articles of incorporation recited that the company "shall begin business" with $ 20,000, paid up in cash and property. According to the articles, $ 10,000 cash was paid in and the property put in was valued at $ 10,837.78. Plaintiff had a 75 percent interest (750 shares) and defendant a 25 percent interest (250 shares) in the incorporated Truck Equipment Company. Two of plaintiff's shares, as we understand, were issued to a nominal owner for qualifying purposes. All the stock, however, was issued to straw parties. Defendant was bookkeeper for the Truck Equipment Company and the Driveaway Company, and plaintiff was manager of these companies. Plaintiff had extensive business interests other than in St. Louis. He had interests in Ohio, Indiana and Texas, and after the incorporation of the Truck Equipment Company he commenced to spend more of his time away from St. Louis, and defendant commenced to manage both the Driveaway Company and the Truck Equipment Company. The assets of the Driveaway Company were sold in 1938 for about $ 85,000, in which plaintiff had an 80 percent interest and defendant a 20 percent interest. Plaintiff's interests outside of St. Louis were not successful. He frequently borrowed money from defendant and others. According to defendant, from June 1939 to March 1940, she made loans to plaintiff aggregating about $ 19,000, and in addition, she paid $ 2,080.72 federal income tax deficiency for plaintiff on the sale of the Driveaway assets.

Since defendant claims the purchase of plaintiff's stock in the Truck Equipment Company the burden was on her to establish such. So we first take up her side of the case. She alleged that in August, 1940, the Truck Equipment Company was losing money; that plaintiff was unable to pay...