Lindsay v. Sonora Gold Min. & Mill. Co.

• Decision Date: 29 June 1912
• Citation: 148 S.W. 849
• Court: Missouri Supreme Court
• Parties: LINDSAY v. SONORA GOLD MIN. & MILL. CO. et al.

148 S.W. 849

LINDSAY v. SONORA GOLD MIN. & MILL. CO. et al.

Supreme Court of Missouri, Division No. 1.

June 29, 1912.

1. BILLS AND NOTES (§§ 475, 484)—ACTIONS —PLEADINGS—FACTS ADMITTED.

In an action on notes, where the makers pleaded payment, and the reply charged fraud regarding such payment, and a want of or a failure of consideration, the execution of the notes and payment are both admitted; the plaintiff merely having the burden of proving fraud.

2. BILLS AND NOTES (§ 505)—ACTIONS—EVIDENCE— ADMISSIBILITY.

In an action on notes, where defendants set up payment in mining stock, and plaintiff pleaded that his intestate was, by fraud and misrepresentations, induced to accept mining stock in payment, and that there was a failure of consideration, evidence that defendants organized a party of possible investors, among whom was the intestate, and took them to visit a mine which they falsely represented belonged to them, while in reality they had only a contract for its purchase, and that on faith of such representations, and that money was needed to develop the mine, sold stock to many of the investors, including the intestate, which proved worthless, tended to show the misrepresentations and plaintiff's reliance thereon and the want of consideration, and so was improperly excluded.

Appeal from Circuit Court, Buchanan County; L. J. Eastin, Judge.

Action by Ernest M. Lindsay, as administrator, against the Sonora Gold Mining & Milling Company and others. From a judgment for defendants, plaintiff appeals. Reversed and remanded.

This action was instituted in the circuit court of Buchanan county by the plaintiff against the defendants on two promissory notes, executed by the latter to the former, for the sum of $6,250 each. The petition was in conventional form, and contained two counts, one on each note.

The separate answers of the defendants were substantially the same, and I will copy that of the Sonora Gold Mining & Milling Company and others, which will sufficiently outline the defense interposed to the suit by all the defendants. Said answer is in words and figures as follows:

"Now comes Sonora Gold Mining & Milling Company, James M. Johnson, and Rice McDonald, defendants in the above-entitled cause, and for their separate answer to the petition in said cause admit that plaintiff is the administrator of the estate of Ernest Lindsay, deceased, and was at the time of the filing of said petition, that the defendant Sonora Gold Mining & Milling Company is and was at all times herein mentioned a corporation as alleged in the petition; and also admits the execution by these answering defendants of the notes sued on and described in said petition, and both counts thereof, and for answer to said petition in behalf of these defendants, and for answer to both counts thereof, these defendants state that both of said notes have been fully paid and satisfied; that they and each of them were settled, discharged, and satisfied on or about February 22, 1900, in and by the sale, issue, and conveyance of certain shares of the capital stock of this defendant corporation, and the subscription for and purchase by said Ernest Lindsay, deceased, thereof certificate for which was at said time delivered to him, and by the giving by said Ernest Lindsay as evidencing said transaction of his written obligation hereinafter pleaded as a counterclaim. Wherefore these answering defendants ask to be discharged with their costs.

"For further answer and for a counterclaim these defendants state that on or about February, 22, 1899, said Ernest Lindsay, deceased, made, executed, and delivered to defendant Sonora Gold Mining & Milling Company his written obligation dated at St. Joseph, Mo., February 22, 1900, whereby he promised in consideration of 50,000 shares of the capital stock of the Sonora Gold Mining & Milling Company, the defendant corporation, to pay to said defendant company on demand $20,000 without interest; and whereby he further agreed that the notes of Rice McDonald and C. N. Robinson and others for $12,500, with interest to said February 22d should be accepted as part payment, and that the interest on said notes should cease from said date. That the notes of Rice McDonald and C. N. Robinson and others, referred to in said writing and agreed therein to be accepted as part payment, are the same notes sued on in the two counts of plaintiff's petition herein. That said 50,000 shares of stock and the certificate evidencing the same were delivered to said Ernest Lindsay, deceased, at said time, and were received and accepted by him, and were thereafter retained by him to the time of his death; whereby he became, and at all times was, a stockholder of defendant corporation and acted as such. That a copy of said written obligation duly verified by affidavit is herewith filed. That no part of the balance of said $20,000 after crediting the $12,500 with interest has been paid, but the whole thereof is due, and, although demanded, remains unpaid. Wherefore these answering defendants ask that defendant Sonora Gold Mining & Milling Company have judgment against plaintiff for the balance of said $20,000 after crediting thereon the notes set up in the petition, with interest thereon from January 29 to February 22, 1900, and for costs."

To this answer the plaintiff filed the following amended reply, viz. (formal parts omitted):

"Comes now the plaintiff, and for reply to the answer of the defendants, Sonora Gold Mining & Milling Company, James M. Johnson, Rice McDonald, and C. N. Robinson, denies each and every allegation therein contained except such as are hereinafter specifically admitted.

"Plaintiff admits that Ernest Lindsay, deceased, in his lifetime signed a certain instrument in words and figures as follows: `February 22, 1900. In consideration of 50,000 shares of stock in the Sonora Gold Mining & Milling Company, the receipt of which is acknowledged, I promise to pay said company, on demand, twenty thousand dollars, without interest. The notes of Rice McDonald and C. N. Robinson and others for $12,500 with interest to this date shall be accepted as part payment. Interest on said notes to cease from this date. Ernest Lindsay.' Which said instrument is mentioned and pleaded in the answer of the said defendants. Plaintiff says that said instrument was entered into, made, and executed at St. Joseph in the state of Missouri.

"Plaintiff further says: That in the year 1899, Cary H. Brown, then a resident of Kansas City, Mo., Charles A. Meeker, a resident of Indiana, and Charles N. Robinson, Rice McDonald, and James M. Johnson, together with Lewis W. Hax and Benjamin F. Johnson, all residents of St. Joseph, Mo., associated themselves together as promoters for the purpose of engaging in the promotion of mining schemes in the state of Sonora, Republic of Mexico, and, for the purpose of selling stock to promote their schemes as promoters, incorporated the defendant company, and entered into and executed articles of incorporation in the state of Colorado under the name of Sonora Gold Mining & Milling Company with an authorized capital of $2,000,000, which capital stock was never paid in, and the said corporation at no time had any assets except such as were derived from the sale of stock in the imaginary enterprises of the said promoters. That although the said promoters, with the exception of Charles A. Meeker, were residents of the state of Missouri, they incorporated under the laws of the state of Colorado for the purpose of evading the laws of the state of Missouri, governing the organizing of corporations. That said corporation was organized for pecuniary profit. That the headquarters of said corporation were maintained at St. Joseph, Mo. That the public office and place of business of the defendant corporation was maintained in the state of Missouri for the transaction of business at St. Joseph, Mo., during all said time, and the said Lewis W. Hax was the president, and said C. N. Robinson the secretary, of said corporation, and said corporation transacted its business at St. Joseph, Buchanan county, Mo. That said corporation has never filed a certified copy of its charter or articles of incorporation with the Secretary of State of the state of Missouri, duly certified and authenticated, and never received a certificate from the Secretary of State of the state of Missouri authorizing it to do business in this state, and has never filed with the Secretary of State of the state of Missouri a statement duly sworn to of the proportion of the capital stock of the said corporation which is represented by its property located and business transacted in the state of Missouri, and has never paid into the Missouri state treasury any incorporating taxes or fees, and said corporation has never complied with the laws of the state of Missouri with reference to foreign corporations doing business in the state of Missouri. And plaintiff says that, by reason thereof, said instrument is void and of no effect and should be canceled and for naught held.

"Second Count. Plaintiff, for another and further defense to the new matter set up in the answer of defendants, Sonora Gold Mining & Milling Company, Rice McDonald, James M. Johnson, and C. N. Robinson, says that the instrument set up and pleaded in the answer of said defendants is wholly without consideration and void and of no effect and should be canceled and for naught held; that at the time of the execution of said instrument the said Sonora Gold Mining & Milling Company had no assets or property of any kind or description whatever, and the said 50,000 shares of its capital stock mentioned in said instrument were entirely valueless, and the said Ernest Lindsay, deceased, received no consideration whatever for said instrument. And the plaintiff further says: That, at the time the said instrument of writing was signed and delivered by the said Ernest Lindsay, it was for the purchase of...