McCullam v. Buckingham Hotel Company
| Decision Date | 04 December 1917 |
| Citation | 199 S.W. 417,198 Mo.App. 107 |
| Parties | FONTAINE McCULLAM, TRUSTEE IN BANKRUPTCY OF MASTERS LUMBER COMPANY, Respondent, v. BUCKINGHAM HOTEL COMPANY, Appellant |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of the City of St. Louis.--Hon. Leo S Rassieur, Judge.
AFFIRMED.
Judgment affirmed.
Marshall & Henderson for appellant.
(1) Instruction No. 1 covers the facts in judgment, under the agreed statement of facts, and the trial court erred in refusing the same for the following reasons: (a) This is an action for money had and received, and is, therefore equitable in its nature, and it would be inequitable to hold the defendant liable in this case. Reynolds v Gerderman, 185 Mo.App. 183. (b) The defendant has successfully borne the burden of showing that S. M. Masters and Marcus Masters had authority from the corporation to pay their individual debts to the defendant for board and lodging at the defendant's hotel. St. Charles Savings Bank v. Edwards, 234 Mo. 555; Coleman v. Stocke, 159 Mo.App. 43; Clifford Banking Co. v. Donovan Com. Co., 195 Mo. 262; St. Charles Savings Bank v. Orthwein Inv. Co., 160 Mo.App. 369. (c) S. M. Masters and Marcus Masters were entitled to salaries from the corporation, notwithstanding no resolution was ever adopted by the stockholders or directors fixing their salaries, and there was no entry of such a resolution upon the minutes of the meetings of the stockholders or directors fixing such salaries, because S. M. Masters, Marcus Masters and Louis C. Johnson were the sole stockholders and directors of the corporation and they fixed the salary each should receive, and that agreement is just as effectual and binding as if it had been entered upon such minutes. Taussig v. Railroad Co., 166 Mo. 33; Rose v. Carbonating Co., 60 Mo.App. 28; Bennett v. St. Louis Car Roofing Co., 19 Mo.App. 349; Remmers v. Seky, 70 Mo.App. 364; Ward v. Davidson, 89 Mo. 454. The only case which holds that there must be a resolution of the stockholders or board of directors regularly adopted and entered upon the minutes fixing the salaries of the officers, is the case of Besch v. Western Carriage Co., 36 Mo.App. 333. (d) A corporation is a citizen within the meaning of the Fourteenth Amendment to the Constitution of the United States, and stands in the same relation to a subject-matter with a citizen, where the conditions are the same. Turnpike Co. v. Sanford, 164 U.S. 592; Julian v. Star, 209 Mo. 102; Houston v. Pulitzer Pub. Co., 249 Mo. 338. (e) A citizen employer would be estopped to recover from a third person money paid to a third person by an agent in discharge of the agent's debts to such third person under the conditions here presented. So, a corporation is estopped under the same conditions. Hence, it was error to refuse defendant's instruction No. 5. (f) Only creditors whose claims were existing at the date of a wrongful appropriation of the corporation's funds can be heard to recover the same. Subsequent creditors cannot do so, for they did not give credit to the corporation upon the faith of the corporation having such assets. Reynolds v. Faust, 179 Mo. 21. (2) Aside from all the foregoing considerations, the judgment of the trial court must be reversed, and judgment entered in this court for the defendant, because the General Assembly of Missouri has passed an act regulating the matters here involved, and changing the rule of law and the policy of the law in Missouri, which has the same effect as if this Court and the Supreme Court had overruled the prior decisions in this State establishing the policy of the law. Acts 1917, p. 143. Under this act and under the agreed statement of facts, that the defendant had no actual knowledge that the checks given to the defendant in the name of the corporation by its president were issued without authority of the corporation, there can be no recovery in this case. The General Assembly had power to pass this act and it applies to this case. 8 Cyc, p. 925; Keene v. Wyatt, 160 Mo. 13 and 16; Hendricks v. Musgrove, 183 Mo. 307; Trust Co. v. Donnell, 81 Mo.App. 151; Insurance Co. v. Hill, 86 Mo. 472; State v. Jackson, 105 Mo. 199; State ex rel. v. Railroad, 9 Mo.App. 532, affirmed 79 Mo. 420; Leete v. Bank, 115 Mo. 184; Railroad v. Cadmore, 103 Mo. 634; Van Rheeder v. Bush, 44 Mo.App. 283; O'Brien v. Allen, 108 Mo. 227; Daggs v. Insurance Co., 136 Mo. 382; State ex rel. v. Hager, 91 Mo. 452; Lovell v. Davis, 52 Mo.App. 342; Sheehan v. Insurance Co., 53 Mo.App. 354; Coe v. Ritter, 86 Mo. 277; Zellers v. Surety Co., 210 Mo. 86; Roenfeldt v. Railroad, 180 Mo. 554; 26 A. & E. Enc. Law (2 Ed.), 695.
Frumberg & Russell for respondent.
(1) Where a president or other officers of a corporation uses the checks of the corporation in payment of his private debts, the corporation, or its receiver or trustee in bankruptcy, is entitled to recover the amounts thereof. Kitchens v. Teasdale Com. Co., 105 Mo.App. 463; St. Louis Charcoal Co. v. Lewis, 154 Mo.App. 548; Coleman v. Stocke, 159 Mo.App. 43; Bank v. Orthwein Com. Co., 160 Mo.App. 369; Reynolds v. Gerdelman, 185 Mo.App. 176; Reynolds v. Title Guaranty Trust Co., 189 S.W. 176; Clifford Banking Co. v. Donovan Com. Co., 195 Mo. 262; Blake v. Bank, 219 Mo. 644; St. Charles Savings Bank v. Edwards Brokerage Co., 243 Mo. 553; Reynolds v. Whittemore, 190 S.W. 594. (2) The same rules of law apply to corporations as to individuals or partnership. Ackley v. Staehlin, 56 Mo. 558; Flannagan v. Alexander, 50 Mo. 50; Price v. Hunt, 59 Mo. 258; Hilliker v. Francisco, 65 Mo. 598; Reyburn v. Mitchell, 106 Mo. 365; Goddard-Peck Grocer Co. v. McCune, 122 Mo. 426; Mansur-Tebbetts Imp. Co. v. Bruton, 159 Mo. 213; Blake v. Bank, 219 Mo. 644. (3) Officers of a corporation are not entitled to salary for the performance of their ordinary duties as such officers unless they enter into a contract with the corporation for the payment of such salaries. Bennett v. St. Louis Car Roofing Co., 19 Mo.App. 349; Besch v. Western Carriage Mfg. Co. 36 Mo.App. 336; Rose v. Carbonating Co., 60 Mo.App. 28; Remmers v. Seky, 70 Mo.App. 364; Ward v. Davidson, 89 Mo. 454; Taussig v. Railroad Co., 166 Mo. 33. (4) The mere fact that the officers were entitled to a salary would not authorize them to use the funds of the corporation for their private purposes unless the corporation actually received consideration for the checks. Bank v. Edwards, 243 Mo. 553; Reynolds v. Whittemore, 190 S.W. 594. (5) The agreed statement of facts does not show the consent, with full knowledge, of all the stockholders to the misappropriations of the corporation funds, and the trustee is entitled to recover in right of the corporation. Thompson on corporations (1 Ed.), secs. 4014, 4049; Brick Co. v. Schoeneich, 65 Mo.App. 283; Kitchens v. Teasdale Com. Co., 105 Mo.App. 463; Bank v. Investment Co., 160 Mo.App. 369; Pitts v. Steele Mercantile Company. (6) The trustee in bankruptcy is entitled to recover as the representative of the creditors of the corporation. Black on Bankruptcy, sec 392; Manufacturing Co. v. Carriage Co., 152 Mo. 401; National Tube Works Co. v. Machine Co., 118 Mo. 365; Coleman v. Stocke, 159 Mo.App. 43. (7) The jurisdiction of the court in this case is purely appellate, and it is confined to an examination of the record and the determination of the question as to whether or not error was committed by the trial judge in matters expressly decided by him. R. S. 1909, secs. 2081, 2082, 2083.
This is an action prosecuted by the trustee in bankruptcy of the Masters Lumber Company, a corporation, to recover the proceeds of forty-nine checks executed in the name of that company, as maker, by S. M. Masters, its president, payable to the order of defendant corporation, which were received and cashed by defendant in payment to it of the individual indebtedness of S. M. Masters and of Marcus Masters, the secretary of the Masters Lumber Company. The petition is in forty-nine counts, and seeks a recovery of the separate amounts so received by defendant, as for money had and received; the total amount sought to be recovered, exclusive of interest, being $ 5321.31.
The trial, upon an agreed statement of facts, before the court without a jury, a jury having been waived, resulted in a judgment for plaintiff in the sum of $ 5830.30--being the aggregated amount claimed in the forty-nine counts of the petition, with interest--and the case is here on defendant's appeal.
A summary of the facts appearing in the agreed statement may be stated as follows:
The Masters Lumber Company was incorporated under the laws of this State on May 18, 1909, with a capital stock of $ 10,000. At the outset there were but three stockholders who were the three directors. S. M. Masters and one Yewell Rice held all of the stock, with the exception of one share which was transferred to Rice soon after the date of the incorporation. Masters became president and Rice secretary. Later, in January, 1910, the two directors other than S. M. Masters were replaced by Marcus S. Masters and one Corrington who were nominal stockholders only; and Marcus S. Masters became secretary. Later, on October 13, 1911, the capital stock was increased to $ 18,000, and one Johnson acquired a stock interest and was chosen a director in lieu of Corrington who ceased to be a stockholder. Thereafter the board of directors consisted of S. M. Masters, Marcus S. Masters and Johnson.
It is recited that Rice "held various amounts of stock from the date of incorporation until October 13, 1911, and there appears in the stock certificate book two stubs showing that there was issued to him an aggregate of forty-nine shares of which there is no record of transfer...
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