Koch v. Missouri-Lincoln Trust Co.

• Decision Date: 02 December 1915
• Docket Number: No. 16688.,16688.
• Citation: 181 S.W. 44
• Parties: KOCH et al. v. MISSOURI-LINCOLN TRUST CO. et al.
• Court: Missouri Supreme Court

181 S.W. 44

KOCH et al. v. MISSOURI-LINCOLN TRUST CO. et al.

No. 16688.

Supreme Court of Missouri, Division No. 1.

December 2, 1915.

Appeal from St. Louis Circuit Court; Hugo Muench, Judge.

Proceeding by Anna T. Koch and another against the Missouri-Lincoln Trust Company, a corporation, and another. Judgment on demurrer for defendants, and plaintiffs appeal. Affirmed.

John A. Blevins, of St. Louis, for appellants. Arnstein & Arnstein and Collins, Barker & Britton, all of St. Louis, for respondent Missouri-Lincoln Trust Co. Richard L. Goode, of St. Louis, for respondent Mercantile Trust Co.

BLAIR, J.

Final judgment having been rendered by the circuit court of St. Louis for defendants, on demurrers to the petition in this case, plaintiffs appealed.

The petition, formal parts omitted, states that both respondents, defendants, are Missouri corporations, engaged in the banking business in St. Louis, and that appellants are stockholders in the Missouri-Lincoln Trust Company, and were such at all times mentioned in the petition.

Plaintiffs further state that on or about the 23d day of September, 1907, the Missouri-Lincoln Trust Company became embarrassed financially and unable to meet its obligations, and was about to fail, and its continuance in business at that time would have seriously jeopardized the safety of its depositors and creditors and stockholders, whereupon said Missouri-Lincoln Trust Company entered into a contract with the defendant Mercantile Trust Company by the terms of which it assigned and delivered to the Mercantile Trust Company all its property, personal and real, chattels, notes, bonds, accounts, and other assets, including its ledgers, daybooks, books of account, all of its contracts, deeds, and other writings, upon condition that the said Mercantile Trust Company, within 15 months from such date collect all of said assets, convert the same into money, pay off the creditors of the said Missouri-Lincoln Trust Company, and turn over the balance that might be remaining to the Missouri-Lincoln Trust Company; that by the terms of said agreement between said defendant companies the Missouri-Lincoln Trust Company agreed to quit business as a bank or trust company, and the Mercantile Trust Company bought and agreed to pay for the safety deposit boxes and business of the said defendant Missouri-Lincoln Trust Company $25,000, and also agreed to advance certain money on the note of the Missouri-Lincoln Trust Company toward the payment of the depositors of the said company and to reimburse itself for such advance of money out of the assets of the said Missouri-Lincoln Trust Company.

Plaintiffs further state that it was also provided by the terms of said contract that the Mercantile Trust Company should receive the reasonable expenses which it might incur in carrying out said contract, and also commissions as follows: 1½ per cent. on all notes collected; ½ per cent. on all bonds and stocks sold; 2½ per cent. on all real estate and leaseholds sold; 2 per cent. on all rentals collected; and also that defendant Missouri-Lincoln Trust Company should pay to said Mercantile Trust Company 6 per cent. interest on all the money advanced by it toward paying the depositors and creditors of said Missouri-Lincoln Trust Company.

Plaintiffs further state that thereafter, on the 24th day of June, 1908, at the insistence of the defendant Mercantile Trust Company, the said defendant companies entered into another, further, and supplemental agreement, by the terms of which the Missouri-Lincoln Trust Company was required by the defendant Mercantile Trust Company to renew and extend said contract of September 23, 1907, for a period of one year from its termination on December 23, 1908, and to pay the said Mercantile Trust Company a bonus or commission of 2 per cent. for such extension, and to thereafter renew or extend said contract from year to year from December 23d of each year, until all of said matters should be closed up, and to pay 2 per cent. bonus or commission each of said years for such extension of said contract.

Plaintiffs further state that by the terms of said supplemental contract of June 24, 1908, the said Missouri-Lincoln Trust Company was required by the Mercantile Trust Company to increase the commissions to be paid to said Mercantile Trust Company, as follows: 1 per cent. on all collections of notes; 1 per cent. on all collections on stocks; 2½ per cent. on all real and leasehold estate; 5 per cent. on all sales of real estate outside the city and county of St. Louis; 3 per cent. on collections on leaseholds.

Plaintiffs further state that by the terms of said supplemental agreement of June 24, 1908, it was also provided that each of the directors of the Missouri-Lincoln Trust Company might personally take up and carry a portion of the loan that might be due said Mercantile Trust Company for money advanced by it as aforesaid and, in case such director took up any portion of such loan, he should receive 2 per cent. bonus or commission on same, and, in addition thereto, 6 per cent. interest.

Plaintiffs further state that it is provided by both of said contracts that the Mercantile Trust Company shall have the right to substitute and exchange collaterals and exchange assets assigned and delivered to it by the defendant Missouri-Lincoln Trust Company as aforesaid.

Plaintiffs further state that upon execution of the contract of September 23, 1907, the Missouri-Lincoln Trust Company delivered all its assets of every kind to the defendant Mercantile Trust Company, and that the defendant Mercantile Trust Company has now in its possession all of said assets of said Missouri-Lincoln Trust Company, except such as have been converted into cash and applied by said Mercantile Trust Company toward the payment to it of money advanced or loaned to said Missouri-Lincoln Trust Company, and certain commissions, bonuses, interest, attorney's fees, donations, and expenditures made by said defendant companies outside of and not contemplated by or covered in the terms of either of said aforementioned contracts.

Plaintiffs further state that among the assets so turned over to said Mercantile Trust Company were several million dollars in cash bonds, stocks, collaterals, real estate, leaseholds, and choses in action.

Plaintiffs further state that the contract between defendant companies of September 23, 1907, was, in effect, a voluntary general assignment, and that defendant Missouri-Lincoln Trust Company by said contract and said supplemental contract of June 24, 1908, made a voluntary general assignment of its business, assets, affairs, and effects to the defendant Mercantile Trust Company for the benefit of its creditors, and that such assignment and said contracts are and were in violation of law and against public policy, and are and were void and of no effect.

Plaintiffs further state that the directors of the Missouri-Lincoln Trust Company are dominated by and under the influence and control of the defendant Mercantile Trust Company and its officers and agents, and that a number of said directors are under obligations to or in the employ of said Mercantile Trust Company, and are not free and independent of said Mercantile Trust Company so as to enable them to look after, protect, and impartially and freely represent the creditors and stockholders of the Missouri-Lincoln Trust Company.

Plaintiffs further state that since the execution of the contract aforesaid of September 23, 1907, W. F. Carter was elected a director and president of the said Missouri-Lincoln Trust Company, and has since his election been actively engaged in whatever business was to be transacted by the said Missouri-Lincoln Trust Company as its president and chief officer, and that he and his partners in law, of whom C. C. Collins is also a director of the Missouri-Lincoln Trust Company, receives a salary of about $15,000 a year out of the assets of defendant Missouri-Lincoln Trust Company, and has been receiving such salary for a long time, that said Carter, while so being a director and president of said Missouri-Lincoln Trust Company, was by the defendant Mercantile Trust Company elected a director and active vice president of the said Mercantile Trust Company, and receives from said company a salary of about $10,000, and has been receiving such salary for a long time; that said Carter is now, and for a long time has been, actively engaged in the management and control of the said Mercantile Trust Company and its business, and of the business and affairs of said Missouri-Lincoln Trust Company, and of the dealings and transactions of the said two companies with each other; that said Carter has during all of said times since his election as president of the Missouri-Lincoln Trust Company been actively engaged in whatever business was required to be transacted on the part of the said Missouri-Lincoln Trust Company, and has undertaken to represent the interests of said company, its creditors and stockholders; that a large portion of said assets so pledged to the Mercantile Trust Company has been diverted and paid out for purposes other than the extinguishment of the indebtedness of said Missouri-Lincoln Trust Company to its creditors, and in addition to the payment of the indebtedness to the Mercantile Trust Company on account of money advanced by it toward the payment of the indebtedness of said Missouri-Lincoln Trust Company; that the business of said Mercantile Trust Company and the said Missouri-Lincoln Trust Company is now, and since the making of the contracts aforesaid has been, dominated and manipulated by the officers and agents in charge of said companies to the advantage of and in the interest of the Mercantile Trust Company, and the rights of these plaintiffs and the other stockholders are and have been neglected and sacrificed; that large and exorbitant sums have been and are being unlawfully paid out of the assets of the...