Manufacturers' Sav. Bank v. O'Reilly

CourtUnited States State Supreme Court of Missouri
Writing for the CourtBlack
Citation97 Mo. 38,10 S.W. 865
Decision Date18 February 1889
PartiesMANUFACTURERS' SAV. BANK v. O'REILLY et al.
10 S.W. 865
97 Mo. 38
MANUFACTURERS' SAV. BANK
v.
O'REILLY et al.
Supreme Court of Missouri.
February 18, 1889.

1. CORPORATIONS — CONTRACTS BY DIRECTORS — RIGHTS OF STOCKHOLDERS.

Where a sale of corporate property to pay debts, though made by persons who are directors both of the selling and purchasing corporations, realizes more than the value of the property, stockholders in the former have no ground of complaint.

2. APPEAL — REVIEW — WEIGHT OF EVIDENCE — REFEREE'S REPORT.

A referee's report will not be disturbed as to findings of fact, except upon a clear showing of mistake.

Appeal from St. Louis circuit court; WILLIAM H. HORNER, Judge.

G. Pollard and Krum & Jonas, for appellant. Geo. A. Castleman and H. I. D'Arcy, for respondents.

BLACK, J.


This is a suit begun by the plaintiff, and now prosecuted in its name, for the purpose of compelling the directors of Big Muddy Iron Company to account for property which it is alleged they fraudulently and secretly sold, and by reason of which alleged fraudulent and secret sale it is claimed the stock held by the plaintiff was rendered worthless. It is also alleged that the defendants converted to their own use pig-iron of the value of $126,000.

It appears that Benjamin White owned 75 shares of preferred and 150 shares of common stock in the Big Muddy Iron Company. He transferred this stock to Mr. Harding, president of the plaintiff, a banking corporation. The transfer is absolute on its face, but it was made to secure a debt owing by White to the bank. The transfer was made in November, 1872, and in the fall of 1873 the bank caused the stock to be sold, and became a purchaser of it. This suit was commenced in 1874, and slumbered along until 1879, when the bank transferred the stock to Cook, who transferred the one-half to P. C. Bulkley, and this suit seems to be prosecuted by them in the name of the bank. It may be here stated that Bulkley was a director and the secretary

10 S.W. 866

of the Big Muddy Iron Co. during the entire time of its existence, though it seems he opposed the sale of which complaint is made.

The general facts are not disputed, and they are these: The defendants, O'Reilly, Whitman, Mills, Lancaster, and White, and other persons, purchased an iron furnace and certain personal property at an assignee's sale in bankruptcy on the 23d March, 1872, for $139,000. They were stockholders in and creditors of the bankrupt corporation. On the 5th April, 1872, they organized the Big Muddy Iron Company, transferred the property so purchased to it, and the corporation became liable for the payment of the $139,000. The company was organized with 1,570 shares of stock, of the par value of $2 per share. But 930 shares of stock were ever taken, so that the company had a capital of only $1,860. The company conducted the business until the last of December, 1872, when it became involved, unable to pay its debts, and the directors sold the furnace to a new company by the same name. This new company was organized with a capital of $200,000 for the express purpose of buying the property of the old company, and the defendants were stockholders and officers in the new company, so that in effect the sale was one by themselves, to themselves.

So far as the manufactured pig-iron on hand is concerned, it is sufficient to say that it was sold by the directors in the usual course of business for about $105,000, and the proceeds were applied to the payment of the debts of the company. This they had a right and were in duty bound to do. The sale to the new company included the furnace, machinery, implements, and raw material on hand. The new company paid for the furnace and existing...

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20 practice notes
  • May Department Stores Co. v. Union E.L. & P. Co., No. 34288.
    • United States
    • United States State Supreme Court of Missouri
    • June 30, 1937
    ...will not be disturbed on appeal — especially if confirmed by the lower court. Manufacturers Savs. Bank v. Big Muddy Iron Co., 97 Mo. 43, 10 S.W. 865; Roth v. Continental Wire Co., 94 Mo. App. 267, 68 S.W. 594; State ex rel. v. Elliott, 82 Mo. App. 476; Laucieri v. Kansas City Sprinkling Co.......
  • Rossing v. State Bank of Bode, No. 30706.
    • United States
    • United States State Supreme Court of Iowa
    • November 28, 1917
    ...the property of one to the other as that a fraud is worked upon minority shareholders. Such relief has often been given. Bank v. Iron Co., 97 Mo. 38, 10 S. W. 865;Abbot v. Rubber Co., 33 Barb. (N. Y.) 588;Conro v. Iron Co., 12 Barb. (N. Y.) 64; 3 Cook, Corp. (7th Ed.) p. 2113. In Mason v. M......
  • Rossing v. State Bank of Bode, 30706
    • United States
    • United States State Supreme Court of Iowa
    • November 28, 1917
    ...other as that a fraud is worked upon minority shareholders. Such relief has often been given. Manufacturers' Sav. Bank v. O'Reilly, (Mo.) 10 S.W. 865; Abbott v. American Hard Rubber Co., 33 Barb. (N.Y.) 578, 588; Conro v. Port Henry Iron Co., 12 Barb. (N.Y.) 27, 64; 3 Cook on Corporations (......
  • Smith v. Stone, 694
    • United States
    • United States State Supreme Court of Wyoming
    • December 9, 1912
    ...a fiduciary capacity must be closely scrutinized. This principle applies to transactions of directors of corporations. (Bank v. Iron Co., 97 Mo. 38; Pearson v. Ry. Co., 62 N.H. 537; Fitzgerald v. Constr. Co., 44 Neb. 463; Wardens &c. v. Rector, 45 Barb. 356; Ins. Co. v. Ins. Co., 14 N.Y. 85......
  • Request a trial to view additional results
20 cases
  • May Department Stores Co. v. Union E.L. & P. Co., No. 34288.
    • United States
    • United States State Supreme Court of Missouri
    • June 30, 1937
    ...will not be disturbed on appeal — especially if confirmed by the lower court. Manufacturers Savs. Bank v. Big Muddy Iron Co., 97 Mo. 43, 10 S.W. 865; Roth v. Continental Wire Co., 94 Mo. App. 267, 68 S.W. 594; State ex rel. v. Elliott, 82 Mo. App. 476; Laucieri v. Kansas City Sprinkling Co.......
  • Rossing v. State Bank of Bode, No. 30706.
    • United States
    • United States State Supreme Court of Iowa
    • November 28, 1917
    ...the property of one to the other as that a fraud is worked upon minority shareholders. Such relief has often been given. Bank v. Iron Co., 97 Mo. 38, 10 S. W. 865;Abbot v. Rubber Co., 33 Barb. (N. Y.) 588;Conro v. Iron Co., 12 Barb. (N. Y.) 64; 3 Cook, Corp. (7th Ed.) p. 2113. In Mason v. M......
  • Rossing v. State Bank of Bode, 30706
    • United States
    • United States State Supreme Court of Iowa
    • November 28, 1917
    ...other as that a fraud is worked upon minority shareholders. Such relief has often been given. Manufacturers' Sav. Bank v. O'Reilly, (Mo.) 10 S.W. 865; Abbott v. American Hard Rubber Co., 33 Barb. (N.Y.) 578, 588; Conro v. Port Henry Iron Co., 12 Barb. (N.Y.) 27, 64; 3 Cook on Corporations (......
  • Smith v. Stone, 694
    • United States
    • United States State Supreme Court of Wyoming
    • December 9, 1912
    ...a fiduciary capacity must be closely scrutinized. This principle applies to transactions of directors of corporations. (Bank v. Iron Co., 97 Mo. 38; Pearson v. Ry. Co., 62 N.H. 537; Fitzgerald v. Constr. Co., 44 Neb. 463; Wardens &c. v. Rector, 45 Barb. 356; Ins. Co. v. Ins. Co., 14 N.Y. 85......
  • Request a trial to view additional results

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