Flint v. Sebastian

• Decision Date: 10 October 1927
• Docket Number: 26262
• Citation: 300 S.W. 798,317 Mo. 1344
• Parties: A. M. Flint and W. S. Harley, Doing Business under Firm Name of Flint & Harley, v. Frank Sebastian, Earnest A. Koerner, Arthur W. Maher, John H. Keating, Albert Hoos, Guy C. Houck, Henry L. Griesedieck, Henry W. Geller, Arthur E. Koerner, Edmund Beims, John C. Steinlage and John H. Feckter, Appellants
• Court: Missouri Supreme Court

300 S.W. 798

317 Mo. 1344

A. M. Flint and W. S. Harley, Doing Business under Firm Name of Flint & Harley, v. Frank Sebastian, Earnest A. Koerner, Arthur W. Maher, John H. Keating, Albert Hoos, Guy C. Houck, Henry L. Griesedieck, Henry W. Geller, Arthur E. Koerner, Edmund Beims, John C. Steinlage and John H. Feckter, Appellants

No. 26262

Supreme Court of Missouri

October 10, 1927

Motion for Rehearing Overruled December 12, 1927.

Appeal from Circuit Court of City of St. Louis; Hon. A. B Frey, Judge.

Affirmed.

Edgar R. Rombauer and Greensfelder, Rosenberger & Grand for appellants.

(1) The personal liability imposed by the provisions of the Oklahoma statute upon stockholders of a corporation is secondary, and can be resorted to only after the usual remedies against the corporation itself have been exhausted, and can then be enforced only by a suit in equity where all the creditors and the corporation itself are parties, are represented, where an accounting can be had and all the facts ascertained and the equities adjusted. Smith v. Kastor, 195 Ill.App 458; National Bank of Auburn v. Dillingham, 147 N.Y 603. (2) A statute in derogation of the common law, or a penal statute, must be strictly construed. Taff v. Tallman, 277 Mo. 157. (3) Plaintiff's petition fails to state facts sufficient to constitute a cause of action against defendants. It charges defendants subscribed for a certain number of shares of stock in the corporation in question, but the petition nowhere alleges that the stock was held by them. The failure to allege that defendants held stock in the corporation in question is fatal to plaintiffs' petition. (4) Plaintiffs failed to prove their case in the following particulars: First, that defendants held any stock in the corporation in question; second, the amount, if any, that was unpaid on such stock by the various defendants; and, third, that plaintiffs are judgment creditors of the company. (a) Plaintiffs' Exhibit A is not a copy of the record of any judgment. It is merely a copy of a journal entry presented to the judge for his signature in aid of the clerk, and for the clerk's assistance in making up his journal and recording the proceedings of the court. It corresponds to a memorandum or decree prepared under the customs and usages of our Missouri practice, for the accommodation and convenience of the clerk when he gets ready to spread the judgment on the court record. There is no evidence in the record that the judgment was ever rendered in plaintiffs' favor against the Oil Company, which judgment forms the basis for this lawsuit. Secs. 685, 865, 867 and 876, Compiled Statutes, Oklahoma, 1921; Bouyant v. Crockett, 12 Okla. 57; Ex parte Stevenson, 20 Okla. 549; Hilliguss v. Webb, 60 Okla. 89; Colter v. Martin, 60 Okla. 181; Midland Savings Co. v. Miller, 155 P. 864; Boorigie Bros. v. Tea & Coffee Co., 157 P. 330; Molaski v. Farris, 219 P. 323; Sherwood v. Miller, 37 Mo.App. 48. (b) Plaintiffs' Exhibit A, which plaintiffs term an authenticated copy of the judgment mentioned in the petition, recovered by plaintiffs against the company, is wholly insufficient to prove the rendition of any such judgment. Plaintiffs claim, as the very foundation of this lawsuit, that they obtained a judgment against the company, in the District Court of Kiowa County, Oklahoma, on February 1, 1921, for the sum of $ 8,441. To prove that, they introduced in evidence a copy of a journal entry, certified to by some court clerk. What court the attestator is clerk of, the certificate does not show. The clerk's signature is not certified to, or attested by, the judge of the District Court of Kiowa County, but by the judge of an entirely different and inferior county court. The purported authentication is insufficient. Secs. 1, 9, 10, 11 and 12, Art. 7, Okla. Constitution; Secs. 3057, 876 and 3198, Compiled Statutes, Oklahoma, 1921; Sec. 1519, Federal Statutes of 1918; Sec. 5387, R. S. Mo. 1919; Phelps v. Tilton, 17 Ind. 423; Paca v. Dutton, 4 Mo. 371; Barlow v. Steele, 65 Mo. 611; Mayer v. Lyon, 38 Mo.App. 635. (5) The Oklahoma statute expressly provides that several judgments must be rendered against each defendant in a proceeding of this kind. The trial court, therefore, erred in rendering a joint judgment against the several defendants. Farmers Bank v. Bayliss, 41 Mo. 274; Ransdell v. Threlkelds, 4 Bush (Ky.) 347; Loew's Adm. v. Telton, 84 Tex. 386; Wilkinson v. Grant (Cal.), 189 P. 319. (6) The court erred in allowing interest on the judgment in question. (a) At common law judgments do not carry interest. Thompson v. Monrow, 2 Cal. 101. (b) The common law of England is in force in Oklahoma. McKennon v. Winn, 1 Okla. 327; Hoppe Hdw. v. Bain, 95 P. 767; Major v. Etna Life Ins. Co., 260 S.W. 758.

Patrick A. Lavin and William Kohn for respondents.

(1) Not having raised the question of alleged defect of parties by demurrer or answer, defendants are precluded from doing so now. Secs. 1226, 1230, R. S. 1919; Rideout v Burkhardt, 255 Mo. 116; Sanders v. Kaster, 222 S.W. 133; Gibson v. Shull, 251 Mo. 480; State ex rel. v. Sullivan, 283 Mo. 572; Barnard v. Keathley, 230 Mo. 209; Hudson v. Wright, 204 Mo. 412. (a) Under the constitutional provision and the statute of Oklahoma pleaded and proved, and under our law, which really governs the matter, the corporation or other creditors of the corporation, if any, were neither necessary nor proper parties. Scott v. Luehrmann, 278 Mo. 638; Scott v. Barton, 285 Mo. 427. (b) Plaintiffs exhausted their remedies against the corporation when the execution was returned nulla bona. In fact, under defendants' admission that the corporation was insolvent, plaintiffs could have sued without first recovering judgment. Schneider v. Johnson, 164 Mo.App. 639; Calder v. Calder Pack. Co., 160 Ill.App. 620; 6 Fletcher Ency. Corp. 7122, sec. 4129. (2) The contention that the petition does not charge that defendants held stock in the company is not well taken, for it is alleged in the petition in at least two places that the stock was "issued to" defendants, and in one place that it was "held by" them; and in the prayer the court is asked to ascertain the amount that is unpaid upon the stock "held by each of the defendants" and that judgment be entered "for the amount remaining unpaid upon the stock or shares owned" by them. (a) The case was tried and disposed of upon the theory that an allegation that defendants held stock in the corporation was in the petition. Substantial evidence in support of such allegation was introduced without objection. Defendants are bound by the theory upon which the case was tried below. Machine Co. v. Bottling Co., 273 Mo. 142; Bragg v. Ry. Co., 192 Mo. 331. (b) Under the Oklahoma law, shown by the evidence, after the granting of a charter, subscribers to the capital stock of a corporation become stockholders, so that in view of the allegation in the petition that all preliminary steps were taken and pursuant thereto a charter was granted, the allegation that defendants were subscribers is tantamount to an allegation that they were stockholders. Cummings v. State, 149 P. 864. (3) It is not essential that a stock certificate be issued to constitute one a stockholder. Griswold v. Seligman, 72 Mo. 110; Natl. Bank v. Shire, 88 A.D. 401, 84 N.Y.S. 810; Petty v. Knight-Petty Merc. Co., 220 P. 835; Natl. Bank v. Shire, 179 N.Y. 587; Chester Glass Co. v. Dewey, 16 Mass. 94; Holland v. Iron Min. Co., 65 Minn. 324; U.S. Radiator Corp. v. State, 208 N.Y. 114; Lipscomb v. Condon, 56 W.Va. 416; In re Phoenix Hdw. Co., 249 F. 410; Rasor v. W. Coast D. Co., 192 P. 631. Having established that defendants were stockholders, the presumption is that they continued as such until the contrary appears. In fact, under the Oklahoma decisions introduced in evidence, subsequent transfers do not relieve stockholders of liability for unpaid stock. Chilson v. Cavanaugh, 160 P. 601; Barron v. Paine, 83 Me. 312; Huey v. Patterson, 174 P. 939. (4) No objection was made to the introduction of the copy of the execution nor to the testimony of Flint, both of which establish that the judgment was recovered. As to the copy of the judgment, the only objection to it was that "it did not show the sheriff's return." This objection is abandoned in this court. The objections to the document made here were not made in the court below. Not having made the objections at the time the copy of the judgment was offered in evidence, defendants cannot make them now. Natl. Bank of Commerce v. Pierce, 280 Mo. 633; Williams v. Lobban, 206 Mo. 399; McCune v. Goodwillie, 204 Mo. 306; Baade v. Cramer, 278 Mo. 516; Keyes v. Munroe, 266 Mo. 114; Meddis v. Kenney, 176 Mo. 200; Kansas City v. Railroad Co., 77 Mo. 180; Chouquette v. Barada, 28 Mo. 491; State ex rel. Hirsch v. Silverstein, 77 Mo.App. 304. "Inadmissible evidence admitted without objection is not a nullity or void of probative force, but is to be given its natural effect as if it was in law admissible." Sawyer v. French, 235 S.W. 126. (5) The contention that the judgment is a joint judgment and should have been a "several judgment" was not made in the trial court. The three motions for new trial of the several defendants are silent as to this; so are the two motions in arrest of judgment. If the form of the judgment was erroneous, attention was not called to the matter in the trial court. It was given no opportunity to correct it. Defendants, therefore, are precluded from raising the question in this court. Sec. 1512, R. S. 1919; Hubbard v. Slavens, 218 Mo. 598; Baade v. Cramer, 278 Mo. 516; Freeland v. Williamson, 220 Mo. 217; Howell v. Aiken, 262 Mo. 403; Farmers Bank v. Ogden, 192 Mo.App. 243. (a) That part of the Oklahoma statute which relates to the remedy is not binding here, for the law of...