Kienker v. Truck & Tractor Co.

• Decision Date: 30 July 1929
• Docket Number: No. 28046.,28046.
• Citation: 19 S.W.2d 1060
• Court: Missouri Supreme Court
• Parties: LOUIS KIENKER ET AL. v. POWER TRUCK & TRACTOR COMPANY ET AL., Appellants.

19 S.W.2d 1060

LOUIS KIENKER ET AL. v. POWER TRUCK & TRACTOR COMPANY ET AL., Appellants.

No. 28046.

Supreme Court of Missouri, Division One.

July 30, 1929.

Appeal from Circuit Court of City of St. Louis — Hon. Victor H. Falkenhainer, Judge.

AFFIRMED.

George C. Mackay and William G. Carpenter for appellants.

(1) The court erred in appointing a receiver under the petition herein filed. Second, the court erred in summarily overruling defendant's motion to vacate such appointment. Third, the petition confers no jurisdiction on the court to appoint a receiver. Fourth, the petition states no facts sufficient to constitute a cause of action. (2) Whether plaintiffs did or did not have a cause of action must be determined as of the date of the filing of the original petition on July 23, 1923. It is incumbent upon them to show: (a) That they had made an effort to redress the grievances, about which they were complaining, within the corporation itself; (b) That they were stockholders at the time of the wrongs complained of. The original petition failed to plead any such facts. The second amended petition attempts to meet that issue by setting forth the proceedings of a meeting in August, 1923, in which plaintiffs demanded that the directors and stockholders take some action against the corporation, more than a month after this suit was filed. The demand came long after the commencement of this action, and is too late to supply the jurisdictional defect in the case. A cause of action must stand or fall on the facts as they exist at the time of the institution of the action. 31 Cyc. 391; Rice v. McClure, 74 Mo. App. 379; Davis v. Clark, 40 Mo. App. 515. To enable plaintiffs to maintain this action they must show that an effort was made to remedy the wrongs complained of within the corporation itself. Vogeler v. Punch, 205 Mo. 559; Mallinckrodt Chemical Co. v. Nemnich, 169 Mo. 388. Plaintiffs have no right to complain of acts committed before they become stockholders, and an affirmative showing should be made that they were stockholders at the time of any wrong of which they complain and from which they seek relief. (3) A receiver will not be appointed for a corporation in doubtful cases, and fraud or conduct amounting to fraud must clearly appear, and the minority of the stockholders must show it is otherwise remediless. Ward v. Nat. Ice Cream Co., 246 S.W. 554; Thompson v. Price, 178 S.W. 749. (4) "The appointment of a receiver and sequestration of the corporate property suspends the functions of the corporation and virtually operates as an annihilation of corporate rights. These are persuasive reasons why courts should act with great caution and not take the management of the concerns of corporations out of the hands of directors and managers, to whom the law has intrusted it, except in cases of urgent necessity ... a necessity characterized elsewhere as extreme." State ex rel. v. Peoples U.S. Bank, 197 Mo. 598; Blades v. Mercantile Co., 154 Mo. App. 358. (5) Jurisdiction to appoint a receiver, the effect of which is to wind up the corporation, cannot be conferred by consent of the corporation or all of the interested parties. State ex rel. v. Foster, 225 Mo. 71; Brown v. Savings Bank, 5 Mo. App. 1; State ex rel. Navig. Co. v. Dew, 312 Mo. 300; State ex rel. McMann v. Muench, 217 Mo. 124. (6) A corporation cannot be dissolved nor its affairs would up under the guise of receivership proceedings. State ex rel. v. Donnell, 225 Mo. 171; Ashton v. Penfield, 233 Mo. 391; State ex rel. v. Dew, 312 Mo. 300.

Harry E. Sprague for respondents.

(1) Only those errors which were raised in the motion to revoke the appointment of the temporary receiver and passed on by the trial court are now before this court in this appeal. Sec. 1512, R.S. 1919; Howell v. Jackson County, 262 Mo. 403; In re Guardianship McMenamy, 307 Mo. 98; Flint v. Sebastian, 300 S.W. 798; Ostrander v. Messmer, 289 S.W. 615; Allen v. Mo. Pac. Ry. Co., 294 S.W. 82; Taber v. Mo. Pac., 186 S.W. 688, affirmed 244 U.S. 200; Bank of Moberly v. Meals, 295 S.W. 75. (2) The sufficiency of the second amended petition is not before this court for review, because the motion to revoke the appointment of the temporary receiver raised no question concerning that petition in its original form, but confines its grounds for revoking the receivership to the effect of the filing of the January 25, 1926, stipulation. Cases supra. The sufficiency of the second amended petition, the appointment of the temporary receiver thereunder, the motion to revoke the order appointing the temporary receiver, and any other question embraced, or claimed by appellant to be embraced, within this appeal have become moot or academic questions with the filing of a third amended petition in the cause, with leave of the court, and without objection or exception by this appellant, and the trial of the cause on such third amended petition, resulting in a decree for plaintiffs (respondents herein) and the appointment of a permanent receiver for appellant on May 9, 1927, and the termination on that day of the temporary receivership. Appellate courts will not entertain appeals which through facts and circumstances occurring during the appeal, have become moot or academic questions and can have no effect or bearing on the rights of the parties or the final outcome of the case. 3 C.J. 357 et seq.; State ex rel. Ashton v. Imel, 243 Mo. 180; Henderson v. Elam, 232 S.W. 474; Trammel v. Kirk, 278 S.W. 739; State ex rel. v. Hall, 304 Mo. 83; St. L. Transfer Co. v. Alt. 256 Mo. 496.

GANTT, J.

Action by certain stockholders of the Power Truck & Tractor Company against the company, the directors thereof, and P.G. and B.B. Craven, individually and as copartners doing business under the name of P.G. Craven & Co.

The suit was instituted July 8, 1923. A second amended petition was filed September 24, 1923, praying for an accounting by the directors of the property of the corporation: that they be removed as directors for misconduct, mismanagement and fraud; that they be compelled to account for money and property of the corporation illegally transferred to and withheld by them; that certain contracts between the corporation and the Cravens and their company, alleged to be illegal, be canceled; that the Cravens and their company be enjoined from selling or disposing of stock of the corporation, and from altering or destroying the books and records thereof; that they be restrained from using or voting proxies held by them: that an order be made for a special meeting of the stockholders to elect others as directors to manage and control the corporation; and that a receiver be appointed, and defendants ordered to show cause, etc.

The return is a general denial, with pleas of solvency, conspiracy to wreck the business, failure to apply to the directors for redress, and that it was no longer necessary for the corporation to sell its treasury stock to conduct the business.

No action was taken to bring the cause to trial until January 25, 1926, when the parties appeared in person and by counsel. Plaintiffs then announced ready, and defendants stated they had no defense to offer and would consent to the appointment of a receiver if the "sting" was taken out of certain allegations in the petition. On request of the defendants, the matter was continued to two P.M., when the following stipulation, signed by the parties, was filed:

"There has heretofore been filed an original and a first and second amended petition, making divers and sundry charges against the Power Truck & Tractor Company and certain of its officers therein named, and it is stipulated that all charges in said amended petition may be considered withdrawn, except the charges `that the officers and directors of said corporation have unsuccessfully managed its affairs, and that the said corporation has been running at a loss for the past twelve months and is now being run and operated at a loss,' and in consideration of this stipulation, the said Power Truck & Tractor Company, by and through its directors, and also the other defendants named, hereby consent that a receiver may be appointed upon the allegations, as stipulated in the petition."

Accordingly, a receiver was appointed who took charge of the property. On June 18, 1926, certain stockholders filed a petition seeking "to lift the receivership" by paying the expenses thereof and the debts of the corporation. Hearings were had from time to time on this petition with all parties present and participating. The petition was denied on August 30, 1926.

On October 2, 1926, defendants' attorneys having withdrawn, another attorney representing them filed a motion to revoke the order appointing the receiver and all orders with reference to the receivership, for the reason that all the jurisdictional allegations of the petition were eliminated by the stipulation. A motion to remove the...