Gilson v. Carroll et al.

• Decision Date: 25 May 1936
• Docket Number: No. 18520.,18520.
• Court: Missouri Court of Appeals
• Parties: A.S. GILSON, APPELLANT, v. WM. J. CARROLL ET AL., RESPONDENTS.

97 S.W.2d 146

A.S. GILSON, APPELLANT, v. WM. J. CARROLL ET AL., RESPONDENTS.

No. 18520.

Kansas City Court of Appeals. Missouri.

May 25, 1936.

Appeal from Circuit Court of Jackson County. — Hon. Emory H. Wright, Judge.

AFFIRMED.

C.W. Prince, James N. Beery and Hume & Raymond for appellant.

Henry S. Conrad, L.E. Durham, Hale Houts and Wm. J. Carroll for respondents.

BLAND, J.

This is a creditor's bill seeking to recover the sum of $1600 with interest at the rate of seven per cent per annum from August 28, 1908, and to have a lien fixed upon certain real estate for the amount so recovered. From an adverse decree plaintiff prosecutes this appeal.

The facts show that on May 12, 1908, the Mexican Gulf Land & Development Company, Ltd., was incorporated under the laws of Arizona. The corporation was formed entirely by citizens of the State of Missouri but it was chartered as a corporation under the laws of Arizona in order to avoid the corporate laws of Missouri. The organization established its main office in Kansas City, and proceeded to transact practically all of its business in this State.

On August 18, 1908, the corporation entered into a contract with Samuel W. Scott, purchasing 7500 acres of land from him situated in the Republic of Mexico, for which it agreed to pay him $150,000 in United States gold and in addition thereto, to issue to him 1000 shares of its common stock. The capital stock of the corporation consisted of a million dollars divided into 7500 shares of common and 2500 shares of preferred stock. The plaintiff, on August 28, 1908, purchased for cash a $1600 certificate of the preferred stock from the company through its president, James T. Burney.

This suit is brought upon that certificate. The proceeding is against William J. Carroll, administrator of the estate of Samuel W. Scott, deceased, and Sarah D. Scott, deceased's widow, and Helen Scott Jaccard, his daughter. The suit was brought against the administrator on the theory that Scott and his associates, who incorporated the Mexican Gulf Land & Development Company, Ltd., became partners by reason of the violation of the laws of this State in the matter of the incorporation. It was brought against the other defendants in order to have a lien declared upon certain land, known as the Kinloch Addition, located in Jackson County, Missouri, which was conveyed by said Scott to them on June 17, 1919. It is alleged in the petition that this land was conveyed to them without consideration when Scott was insolvent and in fraud of plaintiff and other creditors of Scott. Defendants filed a joint answer pleading the five and ten year Statutes of Limitations, and also alleging that the plaintiff was guilty of laches.

Other litigation concerning Scott and the Mexican Gulf Land & Development Company, Ltd., has reached the appellate courts of this State. [See Booth v. Scott, 276 Mo. 1; Branner v. Klaber, 330 Mo. 306; Branner v. Klaber, 49 S.W. (2d) 169; Klaber v. Booth, 49 S.W. (2d) 181.] In these cases it was established that the incorporation of the Mexican Gulf Land & Development Company, Ltd., under the laws of Arizona, was for the purpose of avoiding the laws of this State and that the corporation had no rights to a license in Missouri by reason of the provisions of Section 4598, Revised Statutes 1929, rendering its acts in this State invalid and the incorporators liable as partners.

The theory upon which plaintiff brought this suit against the administrators is that the certificate issued to him was a contract or bond which contained a promise to repay, five years from the date thereof at seven per cent interest, the amount of money paid or loaned to the Mexican Gulf Land & Development Company, Ltd., by plaintiff for which the said Scott and his fellow incorporators of that company became personally liable to repay as partners.

It is the contention of defendants that the only possible cause of action that plaintiff has against Scott, or his administrator, is that for money had and received, and as this suit is not brought on that theory, it cannot be maintained and the judgment must be affirmed. A considerable part of the briefs on behalf of the parties is devoted to this subject. This point includes the question as to whether the certificate issued to plaintiff was in fact a certificate of preferred stock or was it a contract or bond containing a promise to repay money loaned by plaintiff. In view of the conclusion that we have reached in reference to other points raised in the briefs, we find it unnecessary to pass on this question, but may assume that the viewpoint of the plaintiff in this regard is the correct one. We say this because, in any event, the judgment must be affirmed as plaintiff did not show a right to maintain this creditor's bill. We may assume, for the purposes of the case, the correctness of plaintiff's contentions that the evidence shows that the conveyance by Scott to his wife and daughter of the Kinloch Addition on June 17, 1919, was voluntary, and that, therefore, a presumption of fraud arose casting the burden upon defendants to establish that the grantor had ample means to meet his liabilities, and in view of the fact they failed to do so, the transfer must be deemed void as against creditors. [See Miller v. Allen et al., 192 S.W. 967; May v. Gibler, 319 Mo. 672; First National Bank v. Hopper et al., 270 S.W. 405.] We find no evidence in the record that Scott was either solvent or insolvent at the time of the conveyance in question.

However, even assuming that the conveyance was fraudulent, it does not necessarily follow that plaintiff may maintain this creditor's bill. The general rule is that a mere creditor cannot maintain an action to set aside a fraudulent conveyance. [Davidson v. Dockery, 179 Mo. 687.] It will be remembered that plaintiff had not procured a judgment against Scott, or his administrator, prior to the institution of this suit. However, it is claimed by plaintiff that he is entitled to maintain this bill because it was shown that Scott was insolvent and a nonresident of this State at the time of its filing. This suit was filed on June 15, 1929. The evidence shows that Scott was a resident of this State until February 5, 1923, when he and his family moved to the State of Kansas. There is no pleading or evidence that Scott's estate was insolvent on June 15, 1929. In an effort to establish the insolvency of Scott's estate on that date, plaintiff introduced evidence showing that there were nine suits pending on that date, in the Circuit Court of Jackson County, Missouri, against Scott arising out of his connection with the Mexican...