Hill v. Rich Hill Coal Min. Co.

• Decision Date: 16 December 1893
• Parties: HILL v. RICH HILL COAL MIN. CO.
• Court: Missouri Supreme Court

24 S.W. 223

119 Mo. 9

HILL v. RICH HILL COAL MIN. CO.

Supreme Court of Missouri, Division No. 2.

December 16, 1893.

CORPORATIONS — CONTRACTS — VALIDITY — SPECIFIC PERFORMANCE — PLEADING — REPLY — DEPARTURE.

1. Defendant, a corporation whose bylaws required the attendance of a majority of its directors to constitute a quorum, contracted with plaintiff, a director, to purchase land of him, at a special meeting at which only three of the five directors were present, one of them being plaintiff, and another his father, who also had an interest in the contract. Held, that such contract did not bind defendant, there being no valid quorum present when made.

2. Where defendant's by-laws require 10 days' notice to be given to each director in order to call a special meeting, such a meeting, at which a contract with plaintiff was made, was void if no notice was given absent directors.

3. Even though the contract were valid, plaintiff cannot enforce specific performance as to a part of the land and retain a part, since the contract must be enforced as a whole, if at all.

4. The land having been purchased for coal thereon, the refusal of plaintiff to allow defendant to examine it, taken in connection with his conduct in contributing by his vote as director of defendant to procure defendant to purchase the land, is sufficient ground to bar his right to specific performance.

5. The mere presence of a director owning a majority of stock at a meeting held without notice does not make such meeting, nor contracts entered into thereat, valid.

6. Plaintiff having sued on a written contract to enforce specific performance thereof, he cannot recover upon allegations in his reply on an alleged estoppel, which constitute a departure from his reply.

7. The fact that a railroad company, contrary to a constitutional provision, owned a majority of the stock in defendant company, organized for the purpose of mining coal, and thereby influenced the affairs of defendant, cannot be attacked collaterally by plaintiff, but must be investigated by the state in a sovereign capacity.

Appeal from circuit court, Bates county; James H. Lay, Judge.

Action by William S. Hill against the Rich Hill Coal Mining Company. There was judgment for plaintiff, and defendant appeals. Reversed.

The other facts fully appear in the following statement by SHERWOOD, J.:

The plaintiff instituted this proceeding to obtain specific performance of an alleged contract, made with the defendant corporation, for the purchase of a certain tract of land in Bates county, known as the "Robert M. Handley Land," and particularly described in the petition. The pleadings are very voluminous. The answer, besides a general denial except as to the incorporation of defendant, contains a number of defenses, which, so far as necessary, will be adverted to hereafter, as well as the reply, which was lengthy. There was much evidence introduced, and the logical result of the rulings made was a decree in behalf of plaintiff, which, in full, is as follows:

"William S. Hill, Plaintiff, vs. The Rich Hill Coal Mining Co., Defendant.

"(1) Now, at this day, this cause coming on for trial, and the plaintiff appearing in person and by Silas W. Dooley, Esq., his attorney, and the defendant by its attorneys, R. T. Railey, Esq., and Messrs. De Armond & Smith, the parties respectively announce ready for trial, and, this being an action in equity for the specific performance of contract for the sale and purchase of real estate, the matters in issue are duly submitted to the court for hearing and adjudication on the pleadings and proofs; and, after hearing the testimony and evidence adduced by the respective parties, and the argument of counsel in this behalf, respectively, the court doth find that on the 22d day of May the said plaintiff and defendant duly contracted for the sale by plaintiff, and purchase by defendant, of the following described real estate, situate in the county of Bates and state of Missouri, to wit: The tract of land known as the `Robert M. Handley Tract,' containing six hundred and eleven and one-half acres, particularly described as follows, to wit: The southeast quarter of section No. seventeen, (17,) and the east half of the southwest quarter of said section No. seventeen, (17;) also, the northeast quarter, and the east half of the northwest quarter, and the northeast quarter of the southwest quarter, all in section No. twenty, (20;) and the northwest quarter of the southwest quarter, and the west half of the northeast quarter of the southwest quarter; also, one acre off of the north end of the southwest quarter of the southwest quarter, and one-half acre off of the north end of the west half of the southeast quarter of the southwest quarter, all in section No. twenty-one, (21;) also, one acre off of southwest end of the southwest quarter of the northwest quarter of said section No. twenty-one, (21,) — all the above and foregoing lands being in township No. thirty-eight, (38,) of range No. thirty-one, (31;) also, an undivided one-half of lot No. seven, (7,) of section No. thirty-six, (36,) in township No. thirty-nine, (39,) of range No. thirty-one, (31,) except right of way existing on said lands at said date, — at the price and sum of thirty thousand five hundred and seventy-five dollars, ($30,575.00,) less the sum of two thousand dollars, school-fund mortgage then existing on a part of said lands, which sum of two thousand dollars defendant covenanted and assumed to pay as part of said purchase price of thirty thousand five hundred and seventy-five dollars.

"(2) The court doth further find that, at the time of the making of said contract, the board of directors of defendant consisted of five persons; that the by-laws of defendant required that notice should be given of the meeting of said board of directors.

"(3) That said contract was made at a meeting of the board of directors of defendant, held in the city of New York on or about the 22d day of May, 1890, of which meeting no previous notice had been given; that at said meeting the only directors present were Edwin Gould, William S. Hill, the plaintiff, and his father, James A. Hill; that all the stock of the defendant not owned by the said William S. Hill and James A. Hill was owned by the Missouri Pacific Railway Company, through others, who held the nominal title to the same as trustee for said railway; that only nominal amounts were held by the other directors, to qualify them as directors, and that they held the same for, and acted in the interest of, the Missouri Pacific Railway Company, and under the direction of the said Edwin Gould, as the trustee.

"(4) That the said William S. Hill and James A. Hill were, at the time of the making of said contract, both interested in making said sale to defendant, but that they were not acting as trustee, or in any representative capacity; the other interest in the stock of defendant not held by them being held for the Missouri Pacific Railway Company, represented at the time by said Edwin Gould, who at the time held a controlling vote in the meeting, being at the time the owner of a large majority of the stock as trustee for said railway.

"(5) That on or about the 10th day of June, 1890, a meeeting of the board of directors was held in the city of St. Louis, the said William S. Hill, James A. Hill, and R. M. McDowell, directors, only, being present. The court does not find that any previous notice of said meeting had been given, but does find that at said meeting said contract was ratified and approved, and that about the same time the said contract was ratified and approved by Dr. S. H. Smith, secretary and treasurer of said company, in whose name a considerable amount of stock of defendant stood, as trustee for the other stockholders of defendant.

"(6) That, shortly after said contract was made, defendant went upon the premises sold, and drilled a number of holes, prospecting for coal; that it does not appear what the result of said prospecting was.

"(7) That, after said prospecting, defendant, on or about the 25th day of September, 1890, refused to carry out said contract and take said land, and that by said prospecting and refusal the market value of said premises was greatly depreciated.

"(8) That defendant never, until its answer was filed in this suit, asked to avoid the contract on the grounds set forth in the answer, and that the delay therein was unreasonable, under all the facts in the case.

"(9) That the failure to give the notices of the said meetings was the neglect of the Missouri Pacific Railway Company, the real owner and controller of the defendant company, and that defendant cannot take advantage of its own failure in that regard. The court doth further find that plaintiff has duly complied with the terms of the contract on his part to be performed, and duly tendered his deed of conveyance for all of said lands, in due and sufficient form, and duly acknowledged by himself and wife. The court doth further find that plaintiff and defendant mutually agreed on the 10th day of June, 1890, that defendant should pay to plaintiff six per cent. per annum interest on the purchase price of said land to be paid by defendant to plaintiff, (being the sum of twenty-eight thousand five hundred and seventy-five dollars,) from May 31, 1890, until such time as said purchase money was fully paid by defendant to plaintiff.

"(10) The court doth further find that plaintiff has paid one hundred and thirty dollars interest on said school-fund mortgage, which should have been paid by defendant under the terms of said contract, and that plaintiff is not entitled to recover of defendant the two and one-half per cent. on said purchase price, as incidental expenses incurred by him in the purchase thereof.

"(11) It is therefore considered, adjudged, and decreed by the court, that plaintiff have a judgment and decree in this behalf, specifically performing said...