Glidden & Joy Varnish Co. of Ohio v. Interstate Nat. Bank

• Decision Date: 02 September 1895
• Docket Number: 529.
• Citation: 69 F. 912
• Parties: GLIDDEN & JOY VARNISH CO. OF OHIO v. INTERSTATE NAT. BANK OF KANSAS CITY.
• Court: U.S. Court of Appeals — Eighth Circuit

69 F. 912

GLIDDEN & JOY VARNISH CO. OF OHIO v. INTERSTATE NAT. BANK OF KANSAS CITY.

No. 529.

United States Court of Appeals, Eighth Circuit.

September 2, 1895

This suit was brought by the Interstate National Bank of Kansas City, Kan., the defendant in error, against the Glidden & Joy Varnish Company, the plaintiff in error, an Ohio corporation on four promissory notes (one dated May 6, 1893, for $3,000 one dated May 29, 1893, for $2000; one dated June 16, 1893 for $2,000; and one dated July 1, 1893, for $3,000), each due 90 days after date, and signed, 'The Glidden & Joy Varnish Company, Geo. E. Dudley, Treas.' These notes are renewals of notes originally given in January, February March, and December, 1891. The defendant pleaded non est factum. This was the single issue to be tried, and it turned on the question whether George D. Dudley had authority to execute the notes in the defendant's name. There were two corporations,-- one, the Glidden & Joy Varnish Company, a corporation of the state of Ohio, and the defendant in this action; and the other, the Glidden & Joy Varnish Company of Kansas City, Mo. The case hinges on the relation these companies bore to the business out of which the indebtedness arose, and on the relation George E. Dudley sustained to each of these companies, and particularly to the defendant company, at the time the notes in suit were executed.

The plaintiff in error, the Glidden & Joy Varnish Company, was organized in Ohio, March 27, 1883, with a capital stock of $100,000, which was afterwards increased to $200,000, and was held chiefly by the following persons, in about the amounts named, namely: Francis H. Glidden, $70,000; F. K. Glidden, $50,000; C. A. Grasselli, $30,000; F. A. Glidden, $16,000; O. M. Stafford, $12,500; W. J. Glidden, $2,000; Emily Meaher, $7,000; Mary A. McKay, $5,000; and the rest was held by various persons, in small amounts. The officers of the Ohio company were F. H. Glidden, president; F. A. Glidden, vice president; F. K. Glidden, secretary and treasurer; W. J. Glidden, assistant superintendent; and George E. Dudley was a stockholder, and a member of the board of directors and of the executive committee. The Glidden & Joy Varnish Company of Kansas City, Mo., was organized in Missouri, August 10, 1887, with a capital stock of $20,000, and its officers were F. K. Glidden, president; William F. Joy (a brother-in-law of F. H. Glidden), vice president; George E. Dudley, secretary and treasurer. Both corporations were organized to conduct the same kind of business. The Ohio company established in Kansas City a branch of its business in 1885, and put George E. Dudley in charge of it, as general agent and manager. He conducted the business at that point and in that capacity until the formation of the Missouri company, in August, 1887, at which time he became a stockholder and director of that company, and its secretary and treasurer, and was made sole agent and manager, for the purpose of conducting its business. The object of incorporation the Missouri company is not very clear. Its stockholders and officers were substantially the same as those of the Ohio company, and it carried on the same business that Dudley had previously carried on as agent and manager of the Ohio company in Kansas City, and conducted it in the same manner. Whatever may have been the object of the Ohio company, or-- what is the same-- of its stockholders, in organizing the Missouri company, it was afterwards practically, though not technically, dissolved; and the Ohio company acquired all its property, and succeeded to its business, which was thereafter conducted by Dudley, as agent and manager of the Kansas City branch of the Ohio company's business, precisely as it had been before the organization of the Missouri company. These facts appear from the records of the two companies, the correspondence of the Ohio company, and the other testimony in the case.

On January 27, 1891, at a meeting of the stockholders of the Ohio company, this resolution was unanimously adopted:

'The question of purchasing the property of, and absorbing, the Glidden & Joy Varnish Company of Kansas City, was taken up; and after due consideration the following resolution (as stockholders' action) was offered by C. A. Grasselli, and seconded by O. M. Stafford: 'Resolved, that the Glidden & Joy Varnish Company of Cleveland, Ohio, will purchase the property of the Glidden & Joy Varnish Company of Kansas City, Missouri (as shown by balance sheet and record book of Jan. 27, 1891), upon the following terms, viz: All the capital stock of the Glidden & Joy Varnish Company of Kansas City, Missouri, shall be surrendered and canceled, except one share to each director of that company, the which three shares shall be by each of them transferred to the Glidden & Joy Varnish Company of Cleveland, Ohio, to be held in trust to keep alive the charter of said Glidden & Joy Varnish Company of Kansas City, Missouri. The Glidden & Joy Varnish Company of Cleveland, Ohio, shall then issue to each stockholder of said Glidden & Joy Varnish Company of Kansas City, Missouri, certificates of stock of said Glidden & Joy Company of Cleveland, Ohio, to the same amount as he shall have so surrendered stock in said Glidden & Joy Varnish Company of Kansas City, Missouri."

The directors of the Ohio company on the same day ratified this resolution, in these words:

'The resolution was adopted by the stockholders at their meeting this day recorded, pertaining to purchase of property of Glidden & Joy Varnish Company of Kansas City, having been unanimously indorsed at said stockholders' meeting. It was moved by F. K. Glidden, and seconded by O. M. Stafford, that the directors hereby recognize, ratify, and approve such stockholders' action, and that same be spread upon the records of this company. Unanimously carried.

'F. H. Glidden, Pres't. ' 'F. K. Glidden, Sec'y.' On the same day the stockholders of the Missouri company unanimously passed the following resolution to sell all the property of the Missouri company to the Ohio company:

'Resolution offered by F. H. Glidden, and seconded by F. K. Glidden: ' Resolved, that this company (the Glidden & Joy Varnish Company of Kansas City, Missouri) will sell, and does hereby sell, all its property to the Glidden & Joy Varnish Company of Cleveland, Ohio, upon the following terms: All the capital stock in this company to be surrendered and canceled, except one share to each director, which three shares shall be transferred to the Glidden & Joy Varnish Company of Cleveland, Ohio, to be held in trust to keep alive the charter of the Glidden & Joy Varnish Company of Kansas City, Missouri. The Glidden & Joy Varnish Company of Cleveland, Ohio, shall thereupon issue to each stockholder of the Glidden & Joy Varnish Company of Kansas City stock in the Glidden & Joy Varnish Company of Cleveland, Ohio, to the same amount as he shall have so surrendered in the Glidden & Joy Varnish Company of Kansas City, Missouri. The Glidden & Joy Varnish Company of Kansas City, Missouri, hereby accepts the propositions of the Glidden & Joy Varnish Company of Cleveland, Ohio."

In pursuance of this action of the companies, respectively, all the stock of the Missouri company, except 3 shares, aggregating $300, was canceled and destroyed, and stock in the Ohio company issued therefor to the holders thereof. In this way, Dudley became the owner of 50 shares of stock in the Ohio company. This purchase and transfer of the property of the Missouri corporation to the Ohio corporation was to be treated as made on January 1, 1891, and was actually so treated by both companies, though the date of the consummation of the transaction, as disclosed by the records, was in fact January 27, 1891. All the property of the Missouri company passed to and vested in the Ohio company; being entered on the books of the latter company as its own property, and thereafter carried thereon as its assets. Prior to this sale the books of the Missouri company were kept at Kansas City, where its office and place of business was fixed by its articles of incorporation; but, after the sale of its property and business to the Ohio company, its books were taken to Cleveland, Ohio, and after that time there were no more meetings of the stockholders or directors of the Missouri company.

At a meeting of the directors of the Ohio company on the 27th day of January, 1891, the following proceedings took place:

'Minutes of directors' meeting of the Glidden & Joy Varnish Company of Cleveland, Ohio, held at the office of the company on the twenty-seventh day of January, 1891, immediately after the adjournment of the stockholders' meeting (this was the stockholders' meeting at which the property of the Missouri company was purchased): There were present F. H. Glidden, C. A. Grasselli, O. M. Stafford, F. K. Glidden, F. A. Glidden, G. E. Dudley, all of whom have duly qualified as such directors since the foregoing stockholders' meeting. Moved and seconded that F. H. Glidden be chairman of the directors' meeting, and F. K. Glidden secretary of same. Carried. There being present a quorum for the transaction of business, it was unanimously decided to proceed with the election of officers for 1891. It was moved by C. A. Grasselli, and seconded by O. M. Stafford, that the officers of this company as of 1890 be re-elected for the year 1891. Unanimously carried. * * * It was also moved and seconded that the executive committee of 1890 be re-elected for the year 1891, and that Geo. E. Dudley be added to the same. Same was carried. * * * Moved by F. A. Glidden, and seconded by C. A. Grasselli, that the salary of George E. Dudley, as manager of the Kansas City, Missouri, branch, be fixed at $2,000 for

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