Heisler v. Clymer

• Decision Date: 02 December 1913
• Citation: 161 S.W. 337,179 Mo.App. 110
• Parties: ANTONE HEISLER, Appellant, v. MILTON G. CLYMER, Respondent
• Court: Missouri Court of Appeals

161 S.W. 337

179 Mo.App. 110

ANTONE HEISLER, Appellant, v. MILTON G. CLYMER, Respondent

Court of Appeals of Missouri, St. Louis

December 2, 1913

Submitted November 4, 1913.

Appeal from St. Louis City Circuit Court.--Hon. J. Hugo Grimm Judge.

AFFIRMED.

Judgment affirmed.

N. P Zimmer and Marion C. Early for appellant.

(1) The court erred in ruling that the five-year Statute of Limitations barred plaintiff's right of recovery. He relied upon the representations of defendant, which under the circumstances he was entitled to do. He was not obliged to make an independent investigation to discover fraud. He is entitled to the ten-year period of limitation of the statute even though it be held plaintiff's cause of action accrued when the stock was delivered in July, 1902. R. S 1909, sec. 1889; Fitzpatrick v. Stevens, 114 Mo.App. 497; Ruff v. Milner, 92 Mo.App. 620. (2) One should not be allowed to avoid liability upon the ground that another trusted him. Upon the facts disclosed in the record silence upon the part of defendant amounted to fraudulent concealment. This should be held a continuing trust. Newberry v. Wilkinson, 199 F. Rep. 673; State v. Milwaukee, 138 N.W. 1006; Perry on Trusts, sec. 178; Callan v. Callan, 175 Mo. 346; Hudson v. Cahoon, 193 Mo. 547; Bank v. Thayer, 184 Mo. 61; Scott v. Boswell, 136 Mo.App. 601. (3) Upon the record here the allegations of the petition and statement of facts are admitted. The cause should not, therefore, be remanded. The lower court should be reversed and judgment entered for appellant with decree for an accounting. Evidence improperly excluded should be considered as in the record on appeal. State v. Jablousky, 169 Mo.App. 238.

Schnurmacher & Rassieur for respondent.

(1) An action based on fraud, to recover a money judgment, is governed by the 5th subdivision of the five-year Statute of Limitations, whether the action be brought at law or in equity. Sec. 1889, R. S. 1909, subdivision 5. Johnson v. Railroad, 243 Mo. 278. This rule applies also to all trusts, except such as are cognizable only in equity. Landis v. Saxton, 105 Mo. 406; Johnson v. Railroad, supra. (2) To bring himself within the 5th subdivision of Sec. 1889, R. S. 1909, plaintiff must allege and prove facts showing diligence on his part to discover the alleged fraud or that defendant was guilty of acts which prevented plaintiff from making the discovery. No attempt was made to bring the case within this rule. Johnson v. Railroad, supra; State ex rel. v. Yates, 231 Mo. 276; Callan v. Callan, 175 Mo. 346; Shelby County v. Bragg, 135 Mo. 291; State ex rel. v. Musick, 145 Mo.App. 33; Scott v. Boswell, 136 Mo.App. 601. (3) Under the facts averred, the defendant cannot be regarded as a trustee for plaintiff. The shares were purchased by defendant with his own money and became his property, in his own right--subject only to his oral agreement to permit the plaintiff and others to participate in the purchase. The right of action, then, is an action based upon this oral agreement, and the same is likewise barred by the five-year statute. (4) The petition shows that whatever may have been the arrangement of the parties in 1900, nevertheless in 1902 a different arrangement was, in lieu thereof, agreed upon, and no action based upon the original agreement could be enforced, even if the Statute of Limitations did not bar such action.

REYNOLDS, P. J. Nortoni and Allen, JJ., concur.

OPINION

REYNOLDS, P. J.

This is an action to recover the value of certain shares of stock, charged to have been converted by defendant to his own use, July 15, 1902, and for an accounting of the profits received by defendant from time to time as the holder of these shares. The statement of the case by counsel for respondent is brief and fair, so that we adopt it, not literally, but substantially, as a summary of the amended petition on which the case went to trial.

It is alleged in that petition, that in 1896, plaintiff Heisler, defendant Clymer and several others organized the Columbia Preserving Company and agreed with each other that the interest of each should be and always remain the same; that in January or February, 1900, two of the stockholders, owning 185 shares, wanted to sell their shares and that plaintiff, defendant and three other stockholders then owning all of the stock except the shares so offered for sale, agreed to purchase these 185 shares; that defendant was selected as the agent of the five and, acting as such agent and trustee, but in his own name, purchased the 185 shares at and for the price of $ 15,000, borrowed the money for this purchase, giving his own note for it, and pledged the shares as security for the debt incurred by him in the purchase; that defendant took the title to the stock in his own name, although he was in fact holding it in trust for the five parties; that in March, 1900, the stockholders of the Columbia Preserving Company voted to unite that company with the St. Louis Syrup & Preserving Company, and the latter company agreed to the consolidation, provided defendant and his associates would purchase the 185 shares above referred to from the then holders of those shares; that on the consolidation of the two companies, defendant, acting as such agent and trustee, exchanged the 185 shares of Columbia Preserving Company stock for stock in the St. Louis Syrup & Preserving Company, which stock was issued to defendant but held by him as such agent and trustee for the five original parties. It is then alleged that on or about July 15, 1902, plaintiff was notified by defendant that plaintiff's pro rata of the stock of the St. Louis Syrup & Preserving Company was thirty-seven shares, and that the shares were ready for distribution. (We add here that it appeared by the agreed statement that the note for $ 15,000, which defendant had given had matured and that it and its accrued interest had to be paid, and that plaintiff was then, that is in July, 1902, called upon to pay his proportion of the note and accrued interest, upon doing which he would receive his proportionate number of the 185 shares.) It is further averred that relying upon this representation of the defendant, it was agreed between plaintiff and defendant, "that plaintiff would take and plaintiff did take and pay for twenty-five shares of said stock at and for the sum of $ 2500, for the reason that at that time plaintiff was not able to take all of said thirty-seven shares." It is then charged that defendant had received in exchange for these 185 shares of Columbia Preserving Company stock 277 1/2 shares of the St. Louis Syrup & Preserving Company stock, therefore plaintiff avers that he (plaintiff) is entitled to have one-half share additional with each of the twenty-five shares of stock so transferred to him, or twelve and a half shares additional. That part of the petition charging fraud is as follows:

"Plaintiff further states that at the time, to-wit, on or about July 15, 1902, said defendant notified this plaintiff that said stock was ready for distribution among the persons aforesaid, he falsely and fraudulently stated to this plaintiff that he was giving and transferring to him his full pro rata share of said stock, and plaintiff having been long associated with defendant in business, reposed implicit faith and confidence in said defendant and fully relied upon said representations of defendant, believing the same to be true, accepted and paid for twenty-five shares of said stock. Plaintiff further says when defendant represented to plaintiff that he was transferring to him all the stock to which he was entitled said representation was false and fraudulent for the reason that in truth and in fact defendant at the time held said extra twelve and a half shares as aforesaid which was in truth the property of this plaintiff, and he was entitled to have the same. But plaintiff says that defendant so fraudulently concealed the truth from this plaintiff, held said stock, transferred and converted the same to his own use and ever thereafter concealed the truth from this plaintiff and continued to secretly hold, use said stock or its proceeds.

"And plaintiff says that said defendant Clymer held and now holds said twelve and one-half shares of said stock so fraudulently concealed and held back from this plaintiff and converted the same to his own use. Plaintiff further says that he had no knowledge whatever that said defendant had so concealed the fact of his having received said twelve and one-half shares of said stock and so wrongfully converted the same to his own use until within the last eight weeks before the filing of this suit, whereupon he demanded of defendant said stock or its value and accumulated dividends, which was by defendant refused, said defendant at said time again falsely representing to plaintiff that he had already been given his full share of said stock. That said fraud remained and was kept secret and concealed from this plaintiff until it was so discovered by him at the time stated, and this suit is filed within less than ten years after the commission of said secret fraud upon this plaintiff."

Plaintiff further charges that the St. Louis Syrup & Preserving Company stock was transferred by defendant to the Corn Products Company; that defendant had received large dividends on the stock which he had also converted to his own use and that the twelve and one-half shares are now worth $ 6000. Judgment is prayed against defendant for the value of this stock, namely $ 6000, together with all dividends collected by him from and after the date of the conversion, and that defendant be compelled to account for all profits realized through sales and transfers of the stock and for such other and further relief as to the court...