Kirby v. Davis

• Decision Date: 03 March 1936
• Docket Number: No. 5474.,5474.
• Parties: KIRBY v. DAVIS et al.
• Court: Missouri Court of Appeals

91 S.W.2d 215

KIRBY v. DAVIS et al.

No. 5474.

Springfield Court of Appeals. Missouri.

March 3, 1936.

Appeal from Circuit Court, McDonald County; E. E. Smith, Judge.

"Not to be reported in State Reports."

Action by Noel D. Kirby against Will M. Davis and another. From a judgment for plaintiff, defendants appeal.

Affirmed.

D. S. Mayhew and J. E. Sater, both of Monett, for appellants.

H. A. Gardner, of Monett, for respondent.

ALLEN, Presiding Judge.

This case originated in the circuit court of Barry county. The petition was filed on the 23d day of December, 1932, and was in substance, as follows:

That defendants, Efton M. Henson and Will M. Davis, in the month of February, 1931, were the principal officers, stockholders, and owners of the Henson Investment Company, a corporation, with offices at Monett. That the Henson Investment Company was indebted to plaintiff in the sum of about $2,000 for borrowed money, which was evidenced by a certificate of indebtedness, issued by said corporation to and held by plaintiff. That defendants about the 4th day of February, 1931, devising, contriving, and wickedly combining to cheat and deceive plaintiff and defeat the payment of said $2,000 or a part thereof and to cheat and defraud plaintiff of same, did enter into a conspiracy to that end, and in furtherance of such unlawful conspiracy the defendants organized a certain corporation known as the Motor Mortgage Company, with an ostensible capital of $2,000, divided into twenty shares of $100 each, and signed and executed articles of incorporation therefor, stating that said stock had been in good faith subscribed and actually paid up in cash, and was then in the custody of the persons therein named as the first board of directors, which included the defendants, when in fact said corporation had no capital stock and no amount had been actually paid in. That defendants, Henson and Davis, then assumed to act as the president and secretary of the Motor Mortgage Company, when in fact no meeting of the board of directors was ever had and no president or secretary was ever elected, and no books or records were had or kept.

That on or about the 25th day of February, 1931, the said defendants in furtherance of their fraudulent scheme and conspiracy to defraud the plaintiff and to deprive him of a part of all of said indebtedness due him from the Henson Investment Company set about to sell plaintiff certain shares of stock in said pretended corporation, which shares of stock were then held and owned by the defendants, and to sell plaintiff and to induce him to buy a certain certificate of indebtedness on the Motor Mortgage Company and to transfer a part of the indebtedness of the Henson Investment Company to plaintiff, to the Motor Mortgage Company. That said defendants, with the acquiescence and connivance of the said Will M. Davis, and in furtherance of their common design, conspiracy, and scheme to defraud plaintiff, falsely represented and stated to plaintiff that the Motor Mortgage Company was duly incorporated in Missouri with a capital and assets of $2,000 in cash; that the stock in said corporation consisted of twenty shares of the par value of $100 each, actually paid up in cash. That Henson was the owner of seventeen shares of the value of $1,700; that Davis was the owner of one share of the value of $100; and that Henson's wife was the owner of one share of the value of $100, actually paid up in cash. That the capital stock of the Motor Mortgage Company was to be used for buying and handling automobile paper for profit. That a certificate of indebtedness which defendants proposed to then issue to plaintiff in the sum of $500 was worth $500 in cash.

Plaintiff stated that the representations made to him as aforesaid were false and untrue, and were known by the defendants and each of them at the time they were made to be false and untrue, and were made with the intent to cheat, wrong, deceive, and defraud plaintiff, and to induce him to purchase shares of stock in said pretended corporation and to induce him to buy a certificate of indebtedness from said corporation and to have transferred all or part of the indebtedness of the Henson Investment Company to him, to the Motor Mortgage Company; that said representations were fraudulently and wrongfully made, in furtherance of said defendants' scheme to wrong and defraud plaintiff. That plaintiff relied upon and believed said representations and statements to be true and so relying was deceived thereby, and was induced to purchase from defendants three shares of stock in the Motor Mortgage Company, for the sum of $300 for which he paid cash to defendants, and was also induced to and did purchase from defendants a certificate of indebtedness of said Motor Mortgage Company in the sum of $500; that no part of said $300 or $500 or the total of $800 went into the assets of the Motor Mortgage Company, but that defendants used the same for their own personal benefit and for the benefit of the Henson Investment Company.

That plaintiff would not have purchased said shares of stock or certificate of indebtedness, but for the wrongful representations and statements of defendants.

That the representations and statements aforementioned were false and untrue and were made in furtherance of the wrongful and fraudulent scheme and conspiracy to wrong and defraud plaintiff and others; that said Motor Mortgage Company then had no assets whatever; nor did it have any capital stock; nor was the pretended stock then claimed to be held by defendants of any value whatsoever; nor was said certificate of indebtedness of any value whatsoever; nor were defendants the duly authorized and elected president and secretary of said corporation, all of which facts were well known to the defendants and each of them, at the time, but were unknown to plaintiff.

That said pretended corporation was then insolvent and had ceased to function; that defendants have paid the plaintiff the sum of $165 for which they have been given credit; that by reason of the premises defendants were jointly and severally indebted to plaintiff in the sum of $635, and that plaintiff had been damaged in the sum of $635.

Plaintiff prayed judgment against defendants and each of them, in the sum of $635, together with interest thereon at the rate of 8 per cent. per annum, from February 25, 1931, together with costs.

Defendant Henson, by separate answer, denied each and every allegation in the petition.

Defendant Davis, in his separate answer, also denied each and every allegation in plaintiff's petition, except the incorporation of the Henson Investment Company and the incorporation of the Motor Mortgage Company.

The cause was continued to the June term, 1933, at which time defendant Henson took a change of venue from the county, and the cause was sent to McDonald county, where Davis filed his application for change of venue from the trial judge, which was overruled, on the ground that only one change of venue can be taken in a case regardless of the number of defendants, to which ruling defendant Davis filed a term bill of exceptions, and on the same day filed his separate amended answer to plaintiff's amended petition.

The cause was tried on the 30th day of August, 1933. The jury found the issues in favor of the plaintiff and against both defendants, and assessed plaintiff's recovery in the sum of $635.

Motion for new trial was filed by defendants, which motion was overruled, and the case comes to this court on appeal by defendants.

The evidence we think, shows that the first money the Motor Mortgage Company ever had, either as capital or otherwise, was the $500 paid it by plaintiff. Henson and Davis were to be the president and secretary, respectively, of the Motor Mortgage Company and Davis was given one share of stock of the par value of $100, Henson's wife another share, and Henson the other eighteen shares. No capital stock was paid in. Davis' share cost him nothing. Both Davis and Henson signed the articles of incorporation, representing that the capital stock, twenty shares, at $100 each, amounting in all to $2,000 was paid up. On these articles the secretary of state issued a charter. The articles were signed February 4, 1931, and the certificate of incorporation was issued by the secretary of state February 6, 1931, and recorded in Barry county, February 10, 1931.

The board of directors of the Motor Mortgage Company held no meetings, elected no officers, and no minutes or books of any kind were kept, but Henson and Davis thereafter assumed to act as president and secretary, respectively, of the newly formed corporation.

The records of the Monett State Bank, the only bank with which the Motor Mortgage Company did its business, show that the first money the Motor Mortgage Company ever deposited in that institution was $612.62, on February 26, 1931. On the day before, February 25th, plaintiff had paid to the Motor Mortgage Company a check of $62.82, on another matter, and a check for $500. This latter check was the one which Henson Investment Company delivered to plaintiff, who immediately indorsed same to defendants, and they deposited it to the credit of the Motor Mortgage Company and gave plaintiff therefor a $500 certificate of indebtedness of the Motor Mortgage Company. In other words, $500 of the indebtedness of the Henson Investment Company was shifted to the Motor Mortgage Company. This seemed to represent the first assets the Motor Mortgage Company ever had.

There is some testimony that along about that time Henson sold the Motor Mortgage Company automobiles valued at $2,200, but no money was paid thereon and a note and mortgage was given by the Motor Mortgage Company to secure this, and this note and mortgage was reduced by the payment of $500, which was received by Henson and credited on this note, reducing the indebtedness to approximately $1,700, which was the amount of the mortgage.

The...