Joy v. Manion

• Decision Date: 22 November 1887
• Citation: 28 Mo.App. 55
• Parties: CHARLES F. JOY, Respondent, v. PETER P. MANION, Appellant.
• Court: Missouri Court of Appeals

28 Mo.App. 55

CHARLES F. JOY, Respondent, v. PETER P. MANION, Appellant.

Court of Appeals of Missouri, St. Louis.

November 22, 1887

APPEAL from the St. Louis Circuit Court, DANIEL DILLON, Judge.

Affirmed.

CAMPBELL & RYAN, for the appellant: A conditional subscription is valid, and unless the condition is performed there is no contract, and the subscriber can not be held to the liabilities of a stockholder. Thompson on Stockholders, sect 116; Chase v. Railroad, 38 Ill. 215; Railroad v Boestler, 15 Iowa 555; Jewett v. Railroad, 10 Ind. 539; Railroad v. Dunn, 39 Me. 587, 595; Railroad v. Hickman, 28 Pa.St. 318, 327; Edwards v. Railroad, 1 Mylne & Craig, 650; Pellat's Case, 2 Ch. Div. 527, 536; Ex parte Simpson, 38 L. J. Ch. 88, and affirmed in 39 L. J. Ch. 121; Ex parte Wood, 28 L. J. Ch. 899. It is after the condition is performed that the liability of the stockholder matures and the subscription becomes a legal debt and may be assigned by it. Thompson on Stockholders, sect. 819. The assignee succeeds only to the rights of the assignor and is affected by all the equities against him. Burrill on Assignments sect. 391; Thompson on Stockholders, sect. 142; Lionberger v. Bank, 10 Mo.App. 509; Ins. Co. v. Adae, 8 F. 106; Roberts v. Corbin, 26 Iowa 315; Walker v. Miller, 11 Ala. 1067; Hodgson v. Barrett, 33 Ohio St. 63; Morris' Appeal, 88 Pa.St. 368, 379. And the prevailing rule is, that neither the assignee nor the creditors he represents are purchasers for a valuable consideration without notice, as against prior equitable liens. Burrill on Assignments, 620. To permit an assignee of a corporation to recover funds which the corporation could not recover, he must show that he represents creditors who have an equitable right to be paid out of these funds. McLean v. Eastman, 21 Hun; Billings v. Robinson, 94 N.Y. 415, 422. The acts and agreements of Selden as promoter of the company were binding on it. Edwards v. Railroad, 1 Mylne & Craig, 650.

FRANK M. ESTES and JOHN D. DAVIS, for the respondent: In a suit brought by an assignee against stockholders, to recover the amount of their unpaid subscription, it is no defence that the stockholder was induced to become such by false and fraudulent representations made by the agent of a corporation. Ogilvie v. Ins. Co., 22 How. 380; Upton v. Tribilcock, 91 U.S. 45; Ins. Co. v. Floyd, 74 Mo. 286; Thompson on Stockholders, sect. 150. When a subscription has been obtained by fraud, the injured party can have his subscription abrogated, except (1) where the subscriber has been guilty of negligence in informing himself of the actual facts; (2) where, in consequence of the delay in repudiating the contract, innocent third parties, creditors, have acquired rights which would be prejudiced by its rescission. Thomp. on Stock., sect. 120, et seq. The secret agreement set up by the appellant to defeat the respondent's action is against the policy of the law. Haskell v. Sells, 14 Mo.App. 91. Parol agreements, inconsistent with the terms of a written contract of subscription, are void, and evidence of them will not be received. Thomp. on Stock., sect. 121, and cases cited.

OPINION

ROMBAUER J.

The defendant is sued on account of his subscription to the capital stock of the St. Louis Brick Company, an insolvent business corporation, organized under the laws of this state in October, 1883. The plaintiff is the assignee of the corporation and claims under a deed of general assignment for the benefit of creditors, made in February, 1884. The cause was tried by the court without the intervention of a jury, and the trial resulted in a judgment for the plaintiff for twelve hundred and fifty dollars, and interest, being the amount of fifty per cent. on the capital stock subscribed by the plaintiff.

The errors assigned are, that the petition fails to state a cause of action; that the court admitted illegal testimony; that it made erroneous declarations of law, and that the judgment on the evidence should have been for the defendant.

The petition states in substance the incorporation of the plaintiff's assignor; that the defendant subscribed to twenty-five shares of its capital stock of the par value of one hundred dollars each, and agreed to pay fifty per cent. thereof forthwith; that he has refused to pay the same and it is still due; that, in February, 1884, the corporation made a general assignment for the benefit of its creditors; that the plaintiff is the present assignee, and that more than the amount sued for is required to liquidate the indebtedness of the corporation.

It will be thus seen that the petition does state a good cause of action. The objection made to it is, that it is founded on an instrument of writing which recites that the fifty per cent. sued for herein has been paid. As these facts do not appear on the face of the petition the objection, even if available, could not be taken by demurrer in any shape. Instruments of writing upon which a suit is founded, even if filed with the petition, do not constitute a part thereof, and can not be made the subject of demurrer. Curry v. Lackey, 35 Mo. 392; Bowling v. McFarland, 38 Mo. 467.

The assignment of error that the court admitted illegal evidence is not supported by any reference to the evidence thus admitted and will not be considered. McKensie v. Railroad, 24 Mo.App. 396.

Nor is it necessary to consider any alleged errors of the court in its declarations of law, as there is no conflict in the evidence, and the judgment of the court is a mere conclusion of law. The judgment in such a case must stand or fall by the determination of the law applicable to the conceded facts.

The answer of the defendant is a general denial. The affirmative defences attempted to be set up by the evidence were, that the subscription was conditional and never became absolute by a performance of the condition. Also, that the defendant had parted with his stock, if any he had, while the corporation was solvent, and prior to the institution of this suit. The first of these defences goes to show that the corporation and the plaintiff, as its assignee, never had any cause of...