Home Powder Co. v. Lively

• Decision Date: 16 June 1914
• Docket Number: No. 1063.,1063.
• Citation: 168 S.W. 351,182 Mo. App. 130
• Parties: HOME POWDER CO. et al. v. LIVELY et al.
• Court: Missouri Court of Appeals

168 S.W. 351

182 Mo. A. 130

HOME POWDER CO. et al. v. LIVELY et al.

No. 1063.

Springfield Court of Appeals. Missouri.

June 16, 1914.

Rehearing Denied July 7, 1914.

1. CORPORATIONS (§ 542) — FRAUDULENT CONVEYANCE — SALE OF CORPORATE PROPERTY.

Where a corporation pretended to sell all its assets, pursuant to a scheme by which the stockholders sold substantially all the stock, payments for which from time to time by the buyers out of the assets of the corporation in the operation of its business were to go direct to the old stockholders, and no part of the price would become assets of the corporation, the transaction was fraudulent as against its creditors.

2. CORPORATIONS (§ 569) — FRAUDULENT CONVEYANCE — EVIDENCE — ADMISSIBILITY.

Where an assignment, bill of sale, and deed of trust and notes executed to evidence a sale of the assets of a corporation were on their face bona fide, an agreement and a letter showing that the stockholders undertook to sell their shares of stock to the buyers and to turn over to any corporation that the buyers might form the assets of the corporation, and that the proceeds of the sale as the money was turned in from the operation of the business of the corporation should go to the stockholders in proportion to the amount of their stock, were admissible to show a fraudulent transaction as against the creditors of the corporation.

3. FRAUDULENT CONVEYANCES (§ 255) — ACTION TO SET ASIDE — PARTIES.

In a suit to set aside a conveyance evidenced by a deed of trust as fraudulent as against creditors, the trustee, not connected with the transaction except named in the deed of trust, is properly made a party defendant.

Appeal from Circuit Court, Jasper County; David E. Blair, Judge.

Action by the Home Powder Company and others against M. R. Lively and the Old Judge Mining Company. From a judgment for plaintiffs, defendants appeal. Affirmed.

M. R. Lively, of Webb City, for appellants.

FARRINGTON, J.

A creditors' bill was filed by the plaintiffs to subject to the payment of their two judgments certain property alleged to have been fraudulently transferred by a bill of sale, assignment, deed of trust, and notes secured by same, agreement between the stockholders and officers of the Old Judge Mining Company, and a letter written by the stockholders of the Old Judge Mining Company to the alleged purchasers; all bearing date of June 15, 1909. The deed of trust purported to secure notes aggregating $60,000, but the evidence shows that the real consideration was probably $50,000. The chancellor granted the relief sought, and the defendants have appealed.

The facts of the case may be stated as follows: The Old Judge Mining Company, a Missouri corporation, owned and operated a certain mining mill and machinery on a leased tract of land. Two officers of that company were V. T. Price (president), and C. M. Olmsted (secretary). Realto Price, James E. Corlett, and H. J. Grotwohl were also stockholders, and some were directors. There was a directors' meeting authorizing a sale of the property to F. C. Stover and F. W. Wonn; one of these parties residing in Chicago and the other in Wisconsin. At this directors' meeting, V. T. Price, the president of the company, was authorized to draw up the proper papers to carry out the deal; the secretary, Olmsted, testifying, "on certain conditions," he did not remember the conditions, but later in his examination stated two of them. He denied that the president, Price, was ever authorized to execute on behalf of the corporation an instrument hereinafter set forth and referred to as the triplicate agreement, or to write a letter on behalf of the corporation, also referred to. Although he says minutes of the meeting were kept by him as secretary, he does not know what the directors did authorize, and the minute book had been at the time of the trial and for a long time prior thereto in the hands of the officers of the defendant company in Iowa and was not produced at the trial. The appellants naturally would not deny the validity of the deed of trust, assignment of the lease, or bill of sale of all the property of the Old Judge Mining Company, as these are the foundation for their claim on the property under the deed of trust. At all events, the deed of trust, bill of sale, and the assignment of the lease were executed, which, together with the triplicate agreement and the letter, were sent by the president V. T. Price, after drawing up the same, to the secretary of the Old Judge Mining Company, Olmsted, and were by him or by his direction recorded in the office of the recorder of deeds of Jasper county, Mo.

It may be said that the assignment, the deed of trust, the notes, and the bill of sale on their face have the stamp of good faith. The property referred to, being all the property of the Old Judge Mining Company, was sold to Messrs. Stover and Wonn. These two men took possession of the property and operated in their names for quite a while, and afterwards by their direction it was operated in the name of the Red Wing Mining Company, a corporation. It was while the property was being operated in the name of the Red Wing Mining Company that the debts were contracted which were afterward placed in judgment and which are the basis of plaintiffs' claim in this suit. Messrs. Stover and Wonn hired a superintendent who operated the mine for them. It clearly appears in evidence that they directed at a certain time that their superintendent (Graham) run the mine in the name of the Red Wing Mining Company, and that they also informed these creditors that they desired the account changed from their names to that of the Red Wing Mining Company. Checks were issued for the expenses of operation in the name of the Red Wing Mining Company. There is evidence tending to show that a contract was made with the Old Judge Mining Company allowing (as the triplicate agreement provided) the Red Wing Mining Company to be substituted for Stover and Wonn, and this agreement was afterwards returned to Graham, the superintendent of the mine. The triplicate agreement which was made on June 15, 1909, the day on which the other instruments referred to were executed, purports to be between the stockholders of the Old Judge Mining Company, as parties of the first part, and Stover and Wonn—the assignees of the property mentioned in the bill of sale as that of the Old Judge Mining Company—as parties of the second part. It appears that the stockholders sold $50,000 of the stock less eight shares (which was all of it except the eight shares) to Stover and Wonn. We here set forth enough of this instrument to disclose its nature:

"Witnesseth: That parties of the first part being holders and owners of all stock in the Old Judge Mining Company, save and except eight shares, do in part consideration of the covenants and agreements on the part of second parties contained in a certain trust deed of even date herewith by and between the Old Judge Mining Company and the parties of the second part, hereby covenant and agree to deposit our said stock in the Old Judge Mining Company in the First National Bank of Elkader, Iowa, for the faithful fulfillment and performance of this supplementary...