Keokuk Northern Line Packet Co. v. Davidson
| Decision Date | 04 June 1888 |
| Parties | Keokuk Northern Line Packet Company, by Receiver, Appellant, v. Davidson |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. Shepard Barclay Judge.
Affirmed.
Patterson & Crane for appellant.
(1) The suit was properly brought by the receiver. He was still in office and authorized to maintain the suit. 13 Mo.App. 561; Railroad v. Railroad, 46 Vt. 795; Jay v DeGroat, 17 Abb. Pr. 36, note; Johnson v Beazley, 65 Mo. 250; Newman v. Mills, 1 Hogan, 291; Beverly v. Brookes, 4 Gratt. 220; Whiteside v. Pendergrast, 2 Barb. Ch 472; Davis v. Gray, 16 Wall. 203. (2) Under the circumstances shown in this case equity will hold respondent a trustee for the corporation. Ward v. Davidson, 89 Mo. 445; Barnes v. Brown, 80 N.Y. 527, 535, and cases cited; Wardell v. Railroad, 103 U.S. 657; Koehlor v. Iron Co., 2 Black, 715; Lindley on Part., 590, 591; Perry on Trusts, sec. 427; Story on Agency, sec. 210; Bent v. Priest, 86 Mo. 475; Tyrrell v. Bank, 10 H. of L. 26; Sloo v. Law, 3 Blatch. 459. (3) It is not necessary to show actual or intentional fraud. Bain v. Brown, 56 N.Y. 285; Coal Co. v. Parish, 42 Md. 606; Pearson v. Railroad, 16 Rep. 463; Brewster v. Stratman, 4 Mo.App. 41; Grumley v. Webb, 44 Mo. 444; Rea v. Copelin, 47 Mo. 76. (4) It is no defence that respondent sought to obtain the contract for the company. Grumley v. Webb, 44 Mo. 444; Keech v. Sanford, Selw. Cas. in Ch. 61; Gulick v. Ward, 18 Am. Dec. 389. (5) Equity will hold a trustee in such case to account for all profits which he made or might have made out of the contracts. Sloo v. Law, 3 Blatch. 459; Barnes v. Brown, 80 N.Y. 535. And respondent cannot deduct any sum he may have paid Kerens. Tool Co. v. Norris, 2 Wall. 45. (6) The record shows that respondent has not fully accounted to the company, and that there is still a large sum due from him to it under the contract. And the presumptions are against the respondent. 2 Perry on Trusts, sec. 821; 1 Story's Eq. Jur. 468; Hays v. Bayliss, 82 Mo. 209; Landis v. Scott, 32 Pa. St. 498; Anonymous case, 1 Ld. Raymond, 731; Campbell v. Campbell, 8 F. 461; Benjamin v. Ellinger, 80 Ky. 479. (7) P. S. Davidson, as a director of the company, is affected with knowledge of the company's rights. Railroad v. Bowler, 9 Bush, 507; Coal Co. v. Coal & Iron Co., 16 Md. 456; Wardell v. Railroad, 4 Dill. 330; affirmed, 103 U.S. 651.
Given Campbell for respondent.
(1) The receiver, Samuel C. Clubb, who brings this suit, upon the face of the pleadings, has no standing in court nor lawful authority to bring this suit. R. S., secs. 948, 949, 950; Gill v. Balis, 72 Mo. 429, 430; High on Receivers, secs. 40, 41, 42, 288, and notes; Edwards on Receivers, 1; McCabe v. Lewis, 76 Mo. 296; 67 Mo. 685; 68 Mo. 179. (2) Should the court determine to hear the cause on its merits, the only question to be determined is one of fact. There is nothing under the facts in this case to distinguish it from an ordinary equity cause. It is a rule of general application, in equity and admiralty appeals, that, where there is evidence on both sides, the appellate court will defer to the findings of the chancellor, unless he has manifestly disregarded the evidence. Sharpe v. McPike, 62 Mo. 300; Chouteau v. Allen, 70 Mo. 366; Hodges v. Black, 76 Mo. 537; Chapman v. Mcllwrath, 77 Mo. 43; Gill v. Ferris, 82 Mo. 168, 166; Snell v. Harrison, 83 Mo. 658; The Richmond, 103 U.S. 540; The Juniata, 93 U.S. 339; The Lady Pike, 21 Wall. 1; The Wheeler, 20 Wall. 385; The Quickstep, 9 Wall. 665; The Marcellus, 1 Black, 416. (3) Under the evidence in this case, respondent claims that no question of law can arise as to the relations and obligations of directors and officers of corporations, and that all the law cited in the brief of appellant is irrelevant, but the true rule is laid down in the following cases: Oil Co. v. Marberry, 91 U.S. 587; Bent v. Priest, 10 Mo.App. 543; S. C., 86 Mo. 475; Perry on Trusts, sec. 428; 25 Beavan, 586, 595, 596.
The Keokuk Northern Line Packet Company was in 1880, and for many years prior thereto, a corporation formed for the purpose of building, purchasing, employing, and using steamboats and barges for the transportation of freight and passengers upon the Mississippi river. In October, 1880, S. C. Clubb was appointed its receiver, and brought this suit to recover from defendant the money received by him from the United States for carrying the mails on the upper Mississippi river, under two contracts made by defendant, Wm. F. Davidson, while he was president, with the Postmaster General. One of these contracts provided for the payment of $ 22,464 per annum for carrying the mail in steamboats six times a week during the season of open navigation, between St. Louis and Keokuk, and return, the service to begin July 1, 1879. The other provided for the payment of $ 71,190 per annum for carrying the mails in the same manner six times a week from St. Louis to St. Paul and return, the service to begin on July 1, 1880. William F. Davidson was the contractor in both these contracts. The plaintiff claims in his petition that said contracts were in equity the contracts of the company, and that said Davidson should be required to account for all moneys paid under them.
The answer of defendant, after denying the right of the receiver to maintain this suit, and denying that the corporation had any interest in said mail contracts or either of them, then sets up and avers that all the moneys received by him under said contracts over and above the expense incurred in receiving and collecting said moneys from the government in 1879 and 1880 were paid to plaintiff, and that said plaintiff received the full benefit of all sums paid defendant and during the time plaintiff carried said mails. On the trial plaintiff's bill was dismissed and judgment rendered for defendant, from which the plaintiff has appealed.
Waiving the question raised by the answer in reference to the right of Clubb, the receiver, to maintain this suit, two questions are left in the case, the first of which is, can the defendant as contractor for carrying said mails be required to account to plaintiff for what he received under said contract, and if so, to what extent? The second is, does the evidence show that defendant has paid to plaintiff all the moneys received by him under said contracts above the expenses in collecting said moneys from the government, in 1879 and 1880?
An answer to these questions depends upon the circumstances under which these contracts were made, and the ability of plaintiff to perform the service required in carrying said mails. It appears from the evidence of Davidson that, prior to the first of July, 1879, Mr. Rhodes, at that time a director of the company, being authorized by Davidson, president of the company, went to Washington to secure a contract with the government for the company to carry the mails between St. Louis and Keokuk which resulted in a failure to get the contract. Subsequently, at the request of the defendant, Mr. Kerens went to Washington for the same purpose and also failed to accomplish it. It also appears that, about July, 1879, defendant authorized said Kerens to make another application for the company for a contract, which being refused, defendant then made an arrangement to make an application on behalf of defendant, whereby it was agreed that if defendant could get twenty thousand dollars a year Kerens was to have the excess over twenty thousand dollars, as compensation for his services in obtaining the contract, collecting the money, and making settlements with the government as Davidson's agent, said Kerens acting in that behalf under a power of attorney. This resulted in a contract between the government and Davidson for carrying the mails by boat between St. Louis and Keokuk from the first of July, 1879, for which Davidson was to receive twenty-two thousand four hundred and sixty-four dollars per annum. The evidence shows that defendant having thus become contractor employed the boats of the Keokuk Northern Line Packet Company to the extent of its capacity to perform the required service, and that he also employed on his own account certain boats of P. S. Davidson, and of the Eagle Packet Company, to fully comply with his contract. This contract terminated the thirtieth of June, 1880, and during its continuance the plaintiff by its boats carried the mails seventy-six thousand miles, P. S. Davidson's boats about nineteen thousand five hundred, and the Eagle Packet Company about fifteen hundred miles.
It appears that, upon the termination of said contract, the plaintiff company through Mr. Kerens made application for a...
To continue reading
Request your trial