Hutchinson v. Green

• Decision Date: 15 November 1886
• Citation: 1 S.W. 853,91 Mo. 367
• Parties: HUTCHINSON and others v. GREEN and others.
• Court: Missouri Supreme Court

1 S.W. 853

91 Mo. 367

HUTCHINSON and others v. GREEN and others.

Supreme Court of Missouri.

November 15, 1886.

1. CORPORATIONS — ASSIGNMENT FOR BENEFIT OF CREDITORS — OPPOSITION OF STOCKHOLDERS.

Where the majority of the board of directors of a corporation determine to make an assignment for the benefit of creditors, any inference of fraud that may be drawn from its being made in opposition to the known and expressed will of a majority of the stockholders, and in the knowledge that such majority of the board would cease to hold office at an election only four days distant, and from the fact that the majority of the directors had agreed among themselves to make the assignment before presenting the matter openly at a meeting of the board, and had a deed prepared, with a notary at hand to take the acknowledgment as soon as the resolution should be passed, is overcome if it is shown that the corporation is insolvent; that its affairs are going from bad to worse; and that efforts are being made by certain creditors to appropriate the property of the company to the payment of their debts, in disregard of the other creditors.

2. SAME — POWER OF DIRECTORS.

The directors of a corporation alone can make an assignment for the benefit of creditors, and in circumstances such as the foregoing it is within their power to make an assignment, even against the expressed will of the stockholders.

Appeal from St. Louis court of appeals.

Suit to set aside an assignment for the benefit of creditors. Judgment for defendants. Plaintiffs appeal.

E. I. Allen and J. O. Broadhead, for appellants, Hutchinson and others. Mr. Clubb, Jas. Taussig, and G. A. Madill, for respondents, Green and others. Pattison & Crane and Given Campbell, for Packet Company.

BLACK, J.

This case is an outgrowth of Ward v. Davidson, ante, 846, decided in this court at the last April term. By the decree rendered in that case certain directors of the Keokuk Northern Line Packet Company were removed from office. Thereafter, and at a special election held on the seventeenth November, 1880, pursuant to the order of the circuit court, four directors were elected to fill the unexpired term of the removed directors.

There had been a disagreement of long standing between the officers and stockholders as to the management of the affairs of the company, which resulted in two parties, — one known as the Davidson, or majority, party; and the other, as the Gray, or minority, party. The removed directors were of the former. By cumulative voting at the special election, the minority party elected a sufficient number of directors to give them a majority in the board for the time being. On the fifteenth January, 1881, and four days before the annual election of directors, notice of which had been given, the board resolved to and did make a voluntary assignment of all of the property of the company for the benefit of all of the creditors. At the annual election the majority party again acquired the ascendency in the board, and the plaintiffs then, for themselves and other stockholders, brought this suit against the directors who voted for the assignment. They allege that the defendants combined to destroy the property and business of the corporation, and in furtherance thereof made the assignment; and pray that the deed of assignment be set aside for the alleged fraud, for other equitable relief, and for damages.

The defendants in making the assignment acted, in part, at least, upon a report made by a committee appointed to examine into the affairs of the company. That report clearly enough shows that the company was unable to pay its debts in the usual course of business. But the correctness of that report was then, and is now, denied. The new board caused another report to be made, by a new committee, in which the debts are placed at $161,944.07, and in this respect the two reports are not materially different. In the last, the effects are valued at $234,229.35; thus leaving a surplus over liabilities of $72,285.62. No account is taken of capital stock, amounting to $751,000, paid in full. The evidence as to the value of the assets is conflicting and unsatisfactory, many of the witnesses having but little knowledge of the property about which they testified. In the last report warehouses are placed at $47,197.87, and cash and bills receivable appear to be estimated at nine or ten thousand dollars. The evidence shows that the warehouses were poor affairs, scattered along the river from St. Louis to St. Paul, on property not owned by the company, and were of no greater value than $18,000. The bills receivable were of little value, and the company had no money on hand worthy of mention. The best steam-boats, barges, and wharf-boats were...