Little v. St. Louis Union Trust Co.

• Decision Date: 30 May 1906
• Parties: LITTLE et al. v. ST. LOUIS UNION TRUST CO. et al.
• Court: Missouri Supreme Court

94 S.W. 890

197 Mo. 281

LITTLE et al. v. ST. LOUIS UNION TRUST CO. et al.

Supreme Court of Missouri, Division No. 1.

May 30, 1906.

1. INTERPLEADER — NATURE AND SCOPE OF REMEDY.

To entitle one to maintain a bill of interpleader, he must be a mere disinterested stakeholder or trustee, impartial in so far as his conduct may influence the judgment to be ultimately rendered, and he must act in good faith and have reasonable cause for a real doubt as to which of the claimants is entitled to the fund.

2. SAME—GOOD FAITH OF TRUSTEE.

A corporation increased its capital stock, and, some of the shares not being taken by the stockholders, a certificate for such additional shares was issued to the treasurer, and they were carried on the books as assets of the corporation. Subsequently the corporation sold all its property to another corporation for a specified sum, which it was agreed should be distributed among the stockholders of the selling corporation. The purchasing corporation deposited such sum with a trust company, the depositors deposited their stock, and the trust company issued to each stockholder a receipt reciting the contract between the stockholders and the trust company, and that the holder of the receipt was entitled to receive a certain sum per share; such sum being the quotient obtained by dividing the purchase price by the shares of the selling corporation. The certificate issued to the treasurer was deposited by him, and after receiving the trust company's receipt the treasurer and the purchasing company assigned the receipt to a bank. Subsequently the stockholders sued the trust company to recover their pro rata share of the balance that would remain in the hands of the trust company if none of the purchase price should be paid on the certificate assigned to the bank. Held that, the trust company being in doubt as to whom payment should be made as between the bank and the stockholders, it was not guilty of bad faith in informing the stockholders of the situation.

3. SAME—QUESTION OF LAW.

There was such a question of law as entitled the trust company to maintain a bill of interpleader.

Appeal from St. Louis Circuit Court; John A. Blevins, Judge.

Action by William C. Little and others against the St. Louis Union Trust Company and another, in which the trust company filed a bill of interpleader. From a decree requiring the parties to interplead, defendant National Bank of Commerce of St. Louis appeals. Affirmed.

Albert N. Edwards and Geo. L. Edwards, for appellant. George H. Williams, for respondents.

VALLIANT, J.

This is an appeal from a decree sustaining a bill of interpleader. The plaintiffs, as stockholders of the Kansas & Texas Coal Company, brought suit in behalf of themselves and all other such stockholders against the St. Louis Union Trust Company to compel payment to them of what they claim is a balance of a trust fund applicable to their stock. The defendant the St. Louis Union Trust Company filed a cross-bill, in the nature of a bill of interpleader, admitting the possession of the fund, but averring that other parties claimed it, adverse to the plaintiff's claim, making those other parties defendants to the cross-bill, praying to be allowed to pay the fund into court and be then discharged, with their costs, and that the plaintiffs and the other parties named be required to interplead for the fund. Upon the filing of the cross-bill the parties therein named as claimants of the fund, among which was the National Bank of Commerce, were brought in and contested the right to an interpleader. The cause was heard on the pleadings and proof, and a decree in conformity with the prayer of the cross-bill, requiring the parties to interplead for the fund in dispute, was rendered, from which decree the National Bank of Commerce has appealed.

There is little, if any, dispute as to the facts, which are as follows: The Kansas & Texas Coal Company, a Missouri corporation (hereinafter called the "Kansas Company"), owning mines and mining property, having a paid-up capital of $2,000,000, divided into 20,000 shares of stock of $100 each, par value, in 1891 increased its capital stock by adding $500,000, in 5,000 shares of $100 each. The purpose of issuing this increased stock was to obtain means to purchase other mining property, which was done. Of this 5,000 shares of increased stock 4,366 shares were purchased by the then shareholders, leaving unsold 634 shares, for which a certificate was issued to Mr. Heath as treasurer of the corporation and by him indorsed in blank and deposited in the safe deposit box of the corporation in the St. Louis Trust Company, where it remained until 1900, when it was canceled and two certificates issued in its stead, one for 600 shares in the name of Mr. Hobart, who was the president of the corporation and who used it as collateral for a loan which he obtained for the corporation of $20,000, which loan was afterwards paid, the collateral redeemed, and the certificate for the 600 shares was returned to the president, Mr. Hobart, who indorsed it to Mr. Heath as treasurer, and it was redeposited in the company's safe deposit box. In the meantime a certificate for the 34 shares had been issued in the name of Mr. Heath as treasurer, and also deposited in the company's safe deposit box. The 5,000 shares of increased stock were carried on the books of the corporation as an asset until the sales of the 4,366 shares of the same to the then stockholders as above mentioned, after which only the 634 shares were carried on the books as the property of the corporation, and so stood in 1902, when this corporation sold out to the Central Coal & Coke Company as will be presently mentioned. In 1902 the Central Coal & Coke Company (hereinafter called the "Central Company"), proposed to the Kansas Company and its stockholders to purchase all of the capital stock of that company, 25,000 shares, at the price of $55 a share, amounting to $1,375,000, which proposition was accepted. But when the Central Company undertook to gather the money to make the purchase it experienced a difficulty which made it necessary to alter its proposal, and thereupon it proposed, instead of purchasing the stock, "to purchase all of the real and personal property of the Kansas & Texas Coal Company, including its assets of every kind, and to pay therefor $1,375,000"; the only difference in effect in the two proposals being the first was for the purchase of all the capital stock, the second for the purchase of all the assets of the corporation, and the price offered in both being the same. The proposition carried also the obligation of the Central Company to assume all the liabilities of the Kansas Company. This proposition was also accepted by the Kansas Company and all its shareholders. This proposal of the Central Company to purchase the assets of the Kansas Company was in writing and it specified that the Central Company would pay the Kansas Company $1,375,000 in cash, and assume all its liabilities "so that there shall remain for distribution among your stockholders said cash payment of $1,375,000." And it was also therein specified that the Central Company would "give such bonds of indemnity as may be deemed necessary to enable you to distribute to the stockholders of the Kansas & Texas Coal Company the entire cash payment above contemplated." The St. Louis Union Trust Company was selected as the medium for carrying the contract into effect. The Central Company deposited with the St. Louis Union Trust Company $1,375,000, of which $1,201,650 was in cash, and the balance in shares of stock of the Central Company, which some of the shareholders of the Kansas Company had agreed to take in lieu of cash. A written contract was entered into between the trust company and the stockholders of the Kansas Company, reciting in its preamble the contemplated purchase of the assets of the Kansas Company by the Central Company for the price named, $1,375,000, to carry which into effect it was agreed that the stockholders would deposit their stock with the trust company, which was made their agent and authorized to vote the same, and authorized to assent to any contract the officers and directors of the Kansas Company might make with the Central Company to carry the purchase into effect, provided it should yield the stockholders at least $55 a share for their stock and secure the payment of the liabilities of the Kansas Company. It was also agreed that the entire net proceeds of the sale received from the Central Company for the assets of the Kansas Company should be paid and distributed by the trust company to these stockholders according to their respective interests. Under that contract all the stockholders of the Kansas Company deposited their respective stock holdings with the trust company, and each received from the trust company a receipt or certificate of deposit for the stock he deposited. In this receipt or certificate the contract last above mentioned was referred to, and it was therein recited that the original contract between the stockholders and the trust company above mentioned was lodged with the trust company, that the holder of the receipt was a party to that contract and the receipt or certificate concluded as follows: "The legal holder of this certificate is entitled to receive in cash the sum of fifty-five dollars ($55.00) per share for each and every share of stock so deposited, out of the proceeds of the sale of the assets, real estate and property of said Kansas & Texas Coal Company, as and when the same is payable under and pursuant to the terms of said agreement. This certificate is transferrable only on the books of the undersigned, when properly indorsed and surrendered for that purpose." Stock certificates for the whole 25,000 shares of stock were thus deposited in the trust company, including the two certificates for the 634 shares in question which were deposited by Mr. Heath as...