Guerney v. Moore

• Decision Date: 17 December 1895
• Citation: 32 S.W. 1132,131 Mo. 650
• Parties: Guerney, Appellant, v. Moore, Appellant
• Court: Missouri Supreme Court

32 S.W. 1132

131 Mo. 650

Guerney, Appellant, v. Moore, Appellant

Supreme Court of Missouri, Second Division

December 17, 1895

Appeal from Jackson Circuit Court. -- Hon. E. L. Scarritt, Judge.

Reversed and remanded.

Peak & Ball for Moore, appellant and respondent.

(1) The sheriff's return was premature and plaintiff acquired no right of action. Marks v. Hardy, 86 Mo. 232; Schermerhorn v. Conner, 41 Mich. 376; Adams v Cumminskey, 4 Cush. 420; Roberts v. Knight, 48 Me. 171; Dillon v. Rash, 27 Mo. 243; Johnson v Latta, 84 Mo. 139. (2) The language of the Kansas statute makes the stockholder primarily liable; it does not contemplate a suit against a stockholder founded on a judgment against the corporation. (3) Plaintiff can not maintain this suit. Sheidley paid the bank and took no assignment and it was as if he had paid Guerney and this payment revoked and annulled whatever authority Guerney had over the judgment as the representative of the bank. (4) The evidence shows, too, that the judgment had been paid off and discharged by Sheidley. See McDaniels v. Lee, 37 Mo 204; Burton v. Rutherford, 49 Mo. 255; Hull v. Sherwood, 59 Mo. 172. (5) The Kansas statute under which plaintiff is proceeding is a penal one and the courts of this state will not enforce it. Critzer v. Woodson, 19 Mo. 327; Ochiltree v. Railroad, 54 Mo. 113; Bank v. Rudge, 154 Mass. 203.

W. L. Stocking for Guerney, respondent and appellant.

(1) The execution was not prematurely returned. Renaud v. O'Brien, 35 N.Y. 99; Tomlinson v. Mfg. Co., 34 F. 380; Leverett v. Read, 54 Ala. 531; Hower v. Krider, 15 Serg. & Rawle, 43. (2) Under the facts in the case no execution was necessary; the law does not require useless things. Savings Ass'n v. Kellogg, 52 Mo. 585; Flash v. Conn, 107 U.S. 371; Morawetz on Private Corp., sec. 883. (3) The action was based on the Kansas statute and plaintiff showed compliance with it. Knight v. Frost, 14 Mo.App. 331; Marks v. Hardy, 12 Mo.App. 595; s. c., 86 Mo. 232. (4) This action was rightly instituted on the judgment. Grund v. Tucker, 5 Kan. 70; Hawes v. Co., 101 Mass. 385; Thayer v. Co., 108 Mass. 523; Cook on Stockholders, sec. 209. (5) This suit was brought by the real party in interest. (6) The facts in evidence do not show payment or satisfaction of the judgment before this suit was brought. See Wheeler's Estate, 1 Md. Ch. 80; Coykendall v. Constable, 99 N.Y. 309; Swope v. Leffingwell, 72 Mo. 348. (7) "The law is settled that a surety against whom judgment is rendered with his principal, may advance the money to the creditor and have the judgment assigned to a third person and kept alive for his security." Chandler v. Higgans, 109 Ill. 602; Crawford v. Logan, 97 Ill. 396; Glagg v. Geltmacher, 98 Ill. 293; Barriger v. Royden, 7 Jones (N. C.), 187; Townsend v. Whitney, 75 N.Y. 42; Allen v. Tuft, 11 How. (N. Y.) Pr. 187; Corey v. White, 3 Barb. (N. Y.) 12; Harheck v. Vanderbilt, 20 N.Y. 393; Ramsey v. Daniels, 1 Mackey (D. C.), 16; Corcoran Granite Co. v. French, 65 How. Pr. 309. (8) "If a creditor suing a corporation also holds stock in less amount than that held by the person so sued, the defendant is not on any principle entitled to any greater relief than an abatement of his liability declared by statute of a sum equal to the amount of stock held by plaintiff." Schaefer v. Brewing Co., 4 Mo.App. 115; Hall & Co. v. Klink, 25 N.C. 348; Farrows v. Brivings, 13 Rich. 45; Simpson v. Spencer, 15 Wend. 548; Slee v. Bloom, 5 Johns. (Ch.) 382. (9) The Kansas double liability statute is not a penal one. It creates a contractual relation between the stockholders and creditors of the corporation and this court can no more refuse to recognize it than it can any other contract validly entered into in another jurisdiction. Morawetz on Private Corporations, secs. 875 and 876, and cases cited; St. Louis Supply Co. v. Harbine, 2 Mo.App. 134; Hodgson v. Cheever, 8 Mo.App. 318; Bagley v. Tyler, 43 Mo.App. 195; Flash v. Conn, 107 U.S. 371. (10) The trial court committed error in refusing to enter judgment for plaintiff in the sum of $ 7,500.

Gantt, P. J. Sherwood and Burgess, JJ., concur.

OPINION

Gantt, P. J.

This cause is here on cross appeals from the circuit court of Jackson county.

There is practically no conflict in the evidence. In the year 1887 the defendant, L. R. Moore, George Sheidley, and others entered into the agreement hereinafter set out. In October, 1887, a corporation was formed in pursuance of this agreement under the laws of Kansas known as the Kansas City Radiator and Iron Foundry Company. The chief promoter and organizer of this corporation was Joseph Askins. This corporation was organized for manufacturing and business purposes; and was not a railway, a religious, or charitable corporation.

At the time of the organization of this corporation the following sections of the Kansas statutes (General Statutes, Kansas, 1889) were, and still are, in full force and effect:

"(1192) Execution against stockholder: action. If any execution shall have been issued against the property or effects of a corporation, except a railway, or a religious, or charitable corporation, and there can not be found any property whereon to levy such execution, then execution may be issued against any of the stockholders, to an extent equal in amount to the amount of stock by him or her owned, together with any amount unpaid thereon; but no execution shall issue against any stockholder, except upon an order of the court in which the action, suit, or other proceeding shall have been brought or instituted, made upon motion in open court, after reasonable notice in writing to the person or persons sought to be charged; and, upon such motion, such court may order execution to issue accordingly; or the plaintiff in the execution may proceed by action to charge the stockholders with the amount of his judgment."

"(1206) Liability. No stockholder shall be liable to pay debts of the corporation, beyond the amount due on his stock, and an additional amount equal to the stock owned by him."

"(1200) How dissolved. A corporation is dissolved -- first, by the expiration of the time limited in its charter, second, by a judgment of dissolution rendered by a court of competent jurisdiction; but any such corporation shall be deemed to be dissolved for the purpose of enabling any creditors of such corporation to prosecute suits against the stockholders thereof to enforce their individual liability, if it be shown that such corporation has suspended business for more than one year, or that any corporation now so suspended from business shall for three months after the passage of this act fail to resume its usual and ordinary business."

"(1204) Action against stockholder. If any corporation, created under this or any general statute of this state, except railway, or charitable, or religious corporations, be dissolved, leaving debts unpaid, suits may be brought against any person or persons who were stockholders at the time of such dissolution, without joining the corporation in such suit; and if judgment be rendered, and execution satisfied, the defendant or defendants may sue all who were stockholders at the time of dissolution, for the recovery of the portion of such debt for which they were liable, and the execution upon the judgment shall direct the collection to be made from property of each stockholder, respectively; and if any number of stockholders (defendants in the case) shall not have property enough to satisfy his or their portion of the execution, then the amount of deficiency shall be divided equally among all the remaining stockholders, and collections made accordingly, deducting from the amount a sum in proportion to the amount of stock owned by the plaintiff at the time the company dissolved.

"(1205) Contribution. If any stockholder pay more than his due proportion of any debt of the corporation, he may compel contribution from the other stockholders by action."

"(4567) Execution returnable. The sheriff, or other officer, to whom any writ of execution shall be directed, shall return such writ to the court to which the same is returnable, within sixty days from the date thereof."

On March 21, 1890, the directors resolved to close out the business of the corporation, collect all moneys due it, sell out its works, and pay the proceeds to its creditors. After that date no goods were manufactured or sold, and no business transacted except such as was necessary in closing up its business. In July, 1890, it effected a sale of its entire plant and placed the purchaser in possession thereof, though the deed was not delivered and the purchase money paid until January, 1891. By January, 1891, all of its assets had been converted into cash and paid out to its creditors. After that time it had no assets of any kind except some uncollectible and worthless accounts. The last stockholders' meeting was held in November, 1890, and the last directors' meeting in February, 1891. Since February, 1891, there has been no meeting of either stockholders or directors and no business of any kind transacted.

At the time of the directors' meeting of March 21, 1890, the corporation owed about $ 51,500, of which $ 6,500 was secured by mortgage on its real estate and was assumed by the purchaser; $ 25,000 was a note to the Union National Bank; $ 15,000 was a note to Henry Harper, and the balance consisted of numerous small debts.

At the meeting on March 21, 1890, it was agreed by the directors, of whom defendant was one, that in closing up the business of the company the small debts should be first paid, to the end that the debts might be reduced in number, in order that if it became necessary to sue the stockholders the debts might be united in one account, thereby...