First Nat. Bank v. Rockefeller

• Decision Date: 29 March 1906
• Citation: 93 S.W. 761,195 Mo. 15
• Parties: FIRST NAT. BANK OF DEADWOOD, S. D., v. ROCKEFELLER et al.
• Court: Missouri Supreme Court

93 S.W. 761

195 Mo. 15

FIRST NAT. BANK OF DEADWOOD, S. D., v. ROCKEFELLER et al.

Supreme Court of Missouri, Division No. 2.

March 29, 1906.

1. CORPORATIONS—STOCKHOLDERS — LIABILITY FOR CORPORATE DEBTS—VALIDITY OF INCORPORATION.

Rev. St. 1899, c. 12, § 955, provides that on the organization of a corporation it shall be the duty of its officers to file with the Secretary of State a copy of the articles of association, that the corporate existence shall date from the filing thereof, and that a certificate of the Secretary of State shall be taken by all courts as evidence of the corporate existence. Section 1313 provides that the articles shall be signed and acknowledged by all the parties thereto. Section 1314 requires the Secretary of State to give a certificate of incorporation, which shall be taken by all the courts as evidence of corporate existence, and provides that the persons acknowledging the articles of association and their associates and successors shall be a body corporate. Held that, where persons have complied with the provisions of these sections, their failure to pay for the amount of stock named in the articles, and the failure of some of them to acknowledge the articles, does not render them liable as copartners to creditors of the corporation.

2. SAME—FRAUD.

That a certificate of incorporation was obtained from the Secretary of State by a fraud, in that the failure of stockholders to acknowledge the articles of association or to pay for the amount of stock subscribed for was not made known to him, does not affect the validity of the incorporation, so as to render the incorporators liable to creditors as copartners; the state alone being entitled to attack the validity of the incorporation.

3. SAME — CONSTITUTIONAL AND STATUTORY PROVISIONS.

Const. 1875, art. 12, § 8, and Rev. St. 1899, § 962, providing that no corporation shall issue stock or bonds except for money paid, labor done, or property received, and all fictitious increase of stock or indebtedness shall be void, do not render incorporators who fail to acknowledge articles of association and to pay for stock subscribed for liable to creditors as copartners; these sections referring to their liability as members of the corporation.

Appeal from Circuit Court, Jackson County; W. B. Teasdale, Judge.

Action by the First National Bank of Deadwood, S. D., against Frank Rockefeller and others. From a judgment sustaining a demurrer to the petition, plaintiff appeals. Affirmed.

Botsford, Deatherage & Young and Johnson & Lucas, for appellant. Gage, Ladd & Small, Frank Hagerman, and C. O. Tichenor, for respondents.

GANTT, J.

This action was brought June 18, 1901, in the circuit court at Kansas City, Mo., and all of the defendants were duly served with process. Afterwards on January 12, 1903, by leave of the circuit court, plaintiff filed in said cause an amended petition in words and figures as follows, omitting caption:

"And now on this day again comes the said plaintiff and by leave of court first had and obtained files this amended petition herein:

"Plaintiff for its cause of action says that during all the times hereinafter mentioned plaintiff was and still is a corporation duly created and existing under the laws of Congress of the United States as a national bank for the purpose of doing business as such national bank at the city of Deadwood, in the state of South Dakota. Plaintiff further states that on the 27th day of November, 1899, said defendants and one William Askew, for the purpose of forming a concern and company under the name of Siegel-Sanders Live Stock Commission Company, which thereafter should engage and did engage in the live stock commission business at the Stockyards Exchange Building in Kansas City, Missouri, executed and signed certain articles of association, but that said articles of association were not acknowledged by the defendants Frank Rockefeller and E. E. Matchette, and that said articles of association of said defendants and said Askew, without being acknowledged by defendants Rockefeller and Matchette, were filed and recorded in the office of the register of deeds at Kansas City, Jackson county, Missouri, on the 28th day of November, 1899, and that a certified copy of said articles of association was, on December 1, 1899, filed and recorded in the office of the Secretary of State of Missouri, and a certificate of incorporation was on said last day executed by said Secretary of State, by which said certificate said Siegel-Sanders Live Stock Commission Company purported to be a corporation. Plaintiff further states that defendants in said articles of association stated and represented as follows, to wit:

"`The capital stock of this corporation is two hundred and fifty thousand dollars, divided into 2,500 shares of the par value of one hundred dollars each. The same has been bona fide subscribed, and all thereof actually paid up in lawful money of the United States, and is in the custody of the persons hereinafter named as the first board of directors.

"`Fourth. The names and places of residence of the several stockholders and the number of shares subscribed by each are as follows:

                     Names.          Places of Residence.   No. of
                                                            Shares
                Frank Rockefeller.   Cleveland, Ohio.        1,000
                Wm. Askew.           Kansas City, Missouri.    250
                E. E. Matchette.     Kansas City, Mo.          250
                Frank Siegel.        Kansas City, Mo.          500
                R. D. Swain.         Kansas City, Mo.          500
                

"`Fifth. The business of this corporation shall be managed by a board of directors composed of five directors, and the following shareholders shall constitute the board of directors of this corporation for the first year and until their successors can be elected as provided by the by-laws of this corporation: Frank Rockefeller, Cleveland, Ohio; Wm. Askew, Kansas City, Mo.; Frank Siegel, Kansas City, Mo.; E. E. Matchette, Kansas City, Mo.; R. D. Swain, Kansas City, Mo.'

"Plaintiff further states that, notwithstanding said statements so made by defendants and said Askew in said articles of association, the capital stock of said company was never in fact paid up; that said Frank Rockefeller did not in fact pay, and had not at the time of the filing of said articles of association in the offices of the recorder of deeds and of said Secretary of State paid, into the treasury or to the directors of said company the sum of $100,000, or any part thereof; that the said William Askew did not pay, and had not at the time of the filing of said articles of association as aforesaid paid, into the treasury or to the directors of said company the sum of $25,000, or any other sum; that the said E. E. Matchette did not pay, and had not at the time of the filing of said articles of association paid, into the treasury or to the directors of said company the sum of $25,000, or any other sum; that the said Frank Siegel had not at the time of the filing of said articles of association paid into the treasury or to the directors of said company the sum of $50,000, or any other sum; that the said R. D. Swain did not pay, and had not at the time of the filing of said articles of association paid, into the treasury or to the directors of said company the sum of $50,000, or any other sum. Plaintiff further states that it was not true, as alleged in said articles of association, that all the stock mentioned therein as aforesaid had been bona fide subscribed and actually paid up in lawful money of the United States, or any other property or valued thing, and that it was and is not true, as alleged in said articles of association, that the said capital stock thereof, to wit, $250,000, or any other sum, was in the custody of the persons therein named as the first board of directors. Plaintiff further states that at the time of the signing and executing and filing as aforesaid of their said articles of association it was agreed by and between defendants and said Askew that the capital stock of said company should not in fact be paid up, and that pursuant to said agreement the capital stock of said company was not in fact paid up, and no portion of said capital stock was paid at the time of the filing of said articles of association as aforesaid, or at the time of the issuance by the Secretary of State of the state of Missouri of said certificate thereon, and the statements and allegations in said articles of association that the said capital stock of said $250,000 had in fact been bona fide subscribed, and had in fact been paid up in lawful money of the United States, were wholly false and untrue, and were known to be false and untrue by all of the said defendants and said Askew at the time of the executing and subscribing and filing as aforesaid of said articles of association. Plaintiff further states that it was agreed among all said defendants and said Askew that the capital stock of said company was not in fact to be paid up, either in money, property, or labor, but that the said capital stock should be issued as fully paid up without in fact being paid up.

"Plaintiff further states that by reason of the premises the certificate of incorporation obtained by defendants and said Askew from said Secretary of State was obtained by fraud and deceit; that said Secretary of State was not informed by defendants and said Askew, or by any of them, at the time of their obtaining said certificate of incorporation from said Secretary of State, of the said nonpayment of said capital stock, and of the said agreement between defendants and said Askew that the same should not be paid as aforesaid, and that Secretary of State was not informed that said articles of association were not acknowledged before the filing thereof by defendants Frank Rockefeller and E. E. Matchette, and that said certificate of incorporation was so issued by the said Secretary of State in ignorance of the facts, stated as...