Kissane v. Brewer

• Decision Date: 23 May 1921
• Citation: 232 S.W. 1106,208 Mo.App. 244
• Parties: BYRON A. KISSANE, Assignee of the DURANGO MERCANTILE COMPANY, Appellant, v. JACOB T. BREWER, Respondent
• Court: Kansas Court of Appeals

232 S.W. 1106

208 Mo.App. 244

BYRON A. KISSANE, Assignee of the DURANGO MERCANTILE COMPANY, Appellant, v. JACOB T. BREWER, Respondent

Court of Appeals of Missouri, Kansas City

May 23, 1921

Appeal from the Circuit Court of Jackson County.--Hon. Allen C Southern, Judge.

AFFIRMED.

Judgment affirmed.

Lewis P. Main, Perkins & Perkins and Ellis & Yale for appellant.

Scarritt Jones, Seddon & North for respondent.

OPINION

TRIMBLE, P. J.

This is an action in equity, brought by the Assignee of the Durango Mercantile Company, a corporation, of Durango Colorado, against defendant, a former stockholder in and general manager of said corporation, to have him declared a trustee ex maleficio and to recover, for the benefit of said corporation and its creditors, the value of certain assets of the corporation alleged to have been sold or turned over to defendant in exchange for the stock owned by him in said Mercantile Company. Upon a hearing before the Chancellor, the decree was in favor of defendant and plaintiff has appealed.

Some time in the forepart of the year 1911, the corporation known as the Durango Mercantile Company was organized, in Durango, Colorado, with an authorized capital of $ 20,000 and a paid up capital of $ 8000. This last was made up by the transfer to the corporation of two stocks of merchandise, one owned by a partnership composed of R. L. Alexander and James B. Van Daniker, and the other being the Coder-Vandeviele dry goods stock. The corporation thus formed and organized, conducted a general merchandise or department store in Durango, having a department of groceries and meats, one of hardware, and another of dry goods, the latter being the Coder stock as above stated.

In the fall of 1911, defendant traded the remnants of a livery stable (falling into disuse because of the encroachments of the automobile), for stock in the said corporation of the par value of $ 3250, and shortly thereafter he purchased an additional two shares of the par value of $ 100 each.

About January 1, 1912, defendant was elected to membership in the Board of Directors and was made General Manager of the Company, succeeding James B. Van Daniker; and R. L. Alexander was President. Byron A. Kissane, now the corporation's assignee for the benefit of creditors, became a stockholder therein about March 8, 1912.

Things did not seem to prosper with the corporation. Brewer, the defendant herein, was not satisfied with the situation the Company was in. It had sold so many goods on credit (over $ 8000 worth), and had so many accounts out that it had no money with which to meet its bills and keep its stock up-to-date and attractive, particularly the dry goods stock as it was peculiarly affected thereby. The stockholders also were not satisfied with Brewer as a Manager. As the corporation was needing money to meet its bills, Brewer advanced $ 1333.33 to the Corporation and took its note for that amount, while additional money was obtained at the First National Bank of Durango.

About March 25, 1912, all of the stockholders with the possible exception of one--Conroy who had one and a half shares--agreed that something had to be done, some change had to be made, or an assignment would be imperative.

According to plaintiff's evidence, defendant made a proposition that he would take over the dry goods stock and the safe, cash register and fixtures going with that stock, and in return therefor he would pay certain bills the company owed on account of it, cancel and turn over to the company the $ 1333.33 note he held against it, and cancel the debts owed by the company to him and his daughter for their unpaid salary, and also turn back to the company his stock therein which he considered of no value. According to other of plaintiff's evidence he was also to refund the premium on certain insurance and take certain notes belonging to the company. According to this evidence the stockholders were glad to do this and get defendant out of the corporation.

According to defendant's evidence, the dry goods stock was a burden to the company as it consisted of two or three old stocks and had been sold off down to the "tailings" thereof, leaving little that was salable, and it could not be sold unless money was put into it and fresh up-to-date goods were bought and added to it so as to have what people wanted and would buy. He testified that the president of the company said to defendant that if the company could get rid of the dry goods stock and the debts owed thereon, and cancel the lease on that part of the building, it would be relieved of a great deal of expense as well as the necessity of making an assignment. Whereupon the defendant, in order to avert an assignment, offered to take the dry goods stock off their hands, and the president said he would call a meeting of the stockholders and let him know. Afterwards she returned and said they had agreed to the proposition.

Thereafter, on March 25, 1912, a written agreement was entered into as follows:

"This agreement made and entered into on this the 25th day of March, A. D. 1912, by the Durango Mercantile Company of Durango, Colorado, acting by its several stockholders, and Jacob T. Brewer, also a stockholder in said company, witnesseth: That the said The Durango Mercantile Company, acting by its stockholders as aforesaid, hereinafter called the party of the first part, have sold and by these presents does sell and deliver to the said Jacob T. Brewer, hereinafter called the party of the second part, all the stock of dry goods, now in the dry goods department of the said party of the first part at the storehouse in the City of Durango, consisting of boots, shoes, clothing, caps and hats, jewelry, notions and furnishing goods carried in stock by it, including all furniture and fixtures used in connection with such dry goods business; also including one small safe and one new National Cash Register, used in connection with such business; also one certain promissory note, with all accrued interest thereon, made and executed by F. H. & D. C. Roberts to said party of the first, in the sum of six hundred and forty-one dollars and ten cents ($ 641.10); also one certain promissory note with accrued interest payable to the party of the first party by Garvino Trujillo in the sum of one hundred dollars ($ 100). Also one certain promissory note with accrued interest payable to the party of the first part by E. M. and M. A. Cooper in the sum of $ 505.65.

"In consideration of the foregoing, sale and transfer of the said personal property to him the said party of the second part, he, the said party of the second part, agrees to deliver and does hereby assign and deliver to said party of the first part, all the certificates of stock held by him, in the capital stock of the said party of the first part, amounting to the sum of three thousand, three hundred and fifty dollars ($ 3350); also to cancel and deliver to the said party of the first part, a certain promissory note which he the said party of the second part holds against the said party of the first part, in the sum of one thousand three hundred and thirty-three dollars and thirty-three cents ($ 1333.33); also to cancel and receipt all salary due from the party of the first part to the said party of the second part and his daughter Florence; also to assume and pay one-third of all taxes due by the party of the first part for the year 1911; also to assume and pay all bills due and to become due on the stock of goods assigned and sold to him by the party of the first part as above set out.

"And it is further mutually understood and agreed by and between the parties hereto, that the said party of the first part will assume and pay the premium on one thousand dollars ($ 1000) insurance on the stock of dry goods hereinbefore assigned and sold to the party of the second part.

"And it is further mutually understood and agreed by and between the parties hereto, that the party of the first part is to have and collect all bills and account due it and own the same free from any claim of the party of the second part, and that it will pay all bills and accounts due by it without any liability attaching to the said party of the second part.

"It is further mutually understood and agreed, that should it become necessary, the said party of the first part will cause and procure its action to be ratified by its board of directors.

"Signed in duplicate March 25, 1912.

"By F. E. DODGER

W. J. EVANS, Stockholder,

JAMES B. VAN DANIKER,

A. A. BURNHAM,

R. L. ALEXANDER,

BYRON A. KISSANE,

M. E. SCAGGS,

"J. T. BREWER, Party of the second part."

All of the stockholders, except Conroy, signed the above contract, and under it defendant took possession of the dry goods, fixtures and notes described. He moved the stock of dry goods to a location a block distant, and there opened up a dry goods store adding thereto new goods which he got by borrowing $ 2450 and putting in an additional $ 300 of his own. Here he ran a dry goods business for nineteen months. The stockholders of the corporation were fully cognizant of what was done, made no objection thereto, and cancelled the stock in the corporation turned over by defendant, and continued to run the business of the grocery, meats and hardware, left after divorcing therefrom the dry goods stock.

After taking over said stock, defendant complied with the contract of March 25, 1912, by paying $ 64.60 taxes assessed against the corporation, and also paying to Burnham, Hanna & Munger Dry Goods Co. $ 778.35 in full of its bill against the corporation on account of the dry goods stock, also $ 275.50 to the Hamilton Brown Shoe Co. for a similar account, also cancelling the two salary debts owed by the...