Metropolitan Lead & Zinc Mining Co. v. Webster

• Decision Date: 22 February 1906
• Parties: METROPOLITAN LEAD & ZINC MINING CO. v. WEBSTER.
• Court: Missouri Supreme Court

92 S.W. 79

193 Mo. 351

METROPOLITAN LEAD & ZINC MINING CO. v. WEBSTER.

Supreme Court of Missouri, Division No. 1.

February 22, 1906.

1. APPEAL—ORDER GRANTING NEW TRIAL— REVIEW.

Where an order granting a new trial appealed from did not specify the grounds on which the new trial was granted the order would not be reversed if sustainable on any of the grounds alleged.

2. EVIDENCE — WRITTEN CONTRACT — PAROL EVIDENCE—FRAUD.

Where, in an action on a corporate stock subscription, defendant admitted signing the articles of incorporation and did not seek to alter or change any part of the same, nor to contradict his contract, but claimed that the articles of association were a fraud, and that his signature was obtained by fraud, parol evidence offered for the purpose of proving the fraud was not objectionable as an attempt to contradict or modify the contract by parol.

3. CORPORATIONS — FORMATION — FRAUD — STOCK CONTRACTS.

Plaintiff was a mere paper corporation. It never had any capital, money, or property, and never carried on the business for which it was incorporated or attempted to do so. It had no creditors, and those who subscribed to its articles never, in fact, paid any money or turned over any property of value to the corporation. Held, that plaintiff had no standing entitling it to recover on a subscription contract.

Appeal from Circuit Court, Jasper County; Hugh Dabbs, Judge.

Action by Metropolitan Lead & Zinc Mining Company against Elmer Webster. From an order granting plaintiff's motion for a new trial defendant appeals. Reversed.

C. H. Montgomery, for appellant. C. H. Nearing and C. V. Buckley, for respondent.

BRACE, P. J.

This is an appeal by the defendant from an order of the Jasper county circuit court granting a new trial in an action for the recovery of an alleged unpaid subscription to the capital stock of the plaintiff company, in which the verdict was for the defendant.

The petition and answer in the case are as follows:

Petition: "Plaintiff for cause of action states that it is a corporation organized and existing under and by virtue of the laws of the state of Missouri. That the above-named defendant was one of the original incorporators, and a member of the first board of directors of this plaintiff. That on or about the 3rd day of January, 1901, defendant subscribed for 100 shares of the capital stock of this plaintiff, of the par value of $100 each and thereupon became obligated to pay plaintiff the sum of $10,000. (1) That payment thereof has been demanded and no part of the same has been paid. Wherefore, plaintiff asks judgment against defendant for the sum of $10,000 and interest thereon from January 3, 1901, together with its cost herein expended."

Answer: "Defendant for answer to plaintiff's petition denies that on the 3rd day of January, 1901, or at any other time, defendant subscribed for 100 shares of the capital stock of the plaintiff, at the par value of $100 each, and thereupon became obligated to pay plaintiff the sum of $10,000, or any other sum. Defendant denies each and every other allegation of said petition, and, having fully answered, asks judgment for costs of suit. (2) Defendant, for a further defense and answer to plaintiff's petition, states: That at and before the signing of the articles of association of plaintiff, as hereinafter set out, and at and prior to the 3rd day of January, 1901, defendant was the owner of an undivided seven-twelfths interest in a mining lease, known as the `49 lease,' the same being a lease upon the following described 40 acres of land, described as follows, to wit: The northwest quarter of the southeast quarter of section 7, township 27 of range 33, in Jasper county, in the state of Missouri, and was also the owner of a 60 ton crushing and cleaning mill, situate upon said lease; which said interest in said mill was of the value of $6,000, and the said interest of the said defendant in the said lease and mill was of the value of $18,000. That at and before the signing by him of the articles of association of plaintiff as herein set out, M. W. Clay, a promoter of said plaintiff company, who was then engaged in inducing parties to subscribe for the stock of plaintiff corporation, falsely and fraudulently represented to defendant that said plaintiff company was the owner of mining leases on 1,500 acres of mining land, in Newton county, Mo., near the towns of Dayton and Spurgeon, Mo., and that ore had been developed on said land, and that said leases were for a period of 10 years, and at a royalty of 8 per cent. on all ores to be mined from said land, and that said leases had been delivered and were in the hands of persons to be conveyed to plaintiff corporation. And defendant avers that said representations were false and fraudulent, that said leases were never transferred to any one to hold for said plaintiff corporation, neither have they nor any of them ever been transferred to said corporation. That by reason of the false and fraudulent representations aforesaid defendant was induced to agree to trade his undivided seven-twelfths interest in said mining lease and mill for $10,000 fully paid up and nonassessable stock of the plaintiff corporation, and $1,500 in money, to be paid by plaintiff corporation to defendant, and in furtherance of said arrangement and by reason of the false and fraudulent representations above set out, the defendant was induced to sign the articles of association of plaintiff corporation, and in no other manner, and for no other purpose. That the said plaintiff, at all times, refused to comply with said agreement to issue any stock to defendant or pay defendant any money. And that no stock of plaintiff company was ever issued to defendant. And defendant alleges that no property or money was ever paid or delivered by any one to said corporation, in payment for the capital stock of said plaintiff corporation, or for any part thereof, and defendant having fully answered asks judgment for costs."

The answer contained two other pleas, one of which was withdrawn, and upon the other no evidence was offered, and they are therefore omitted. The reply was a general denial.

The plaintiff to sustain the cause of action, introduced in evidence the following articles of association:

"State of Missouri, County of Jackson—ss.

"Know all men by these presents, that we whose names are hereunto subscribed, do hereby associate ourselves together for the purpose of forming a corporation under the provision of article nine, chapter twelve of the Revised Statutes of eighteen hundred and ninety-nine, and for that purpose do hereby adopt the following articles of association and incorporation, to wit:

"First. The name of the corporation shall be The Metropolitan Lead & Zinc Mining Company.

"Second. The principal office of this corporation shall be located at Kansas City, in the county of Jackson, State of Missouri.

"Third. The capital stock of said corporation shall be one hundred thousand ($100,000.00) dollars, divided into one thousand shares (1,000) of the par value of one hundred ($100.00) each. The same has been bona fide subscribed and one-half thereof actually paid up in lawful money of the United States, and is in custody of the persons hereafter named as the first Board of Directors.

"Fourth. The names and places of residence of the several shareholders and the number of shares subscribed by each are as follows: Elmer Webster, Joplin, Missouri 100 shares. A. M. Earhart, Kansas City, Mo., 300 shares. M. W. Clay, McElhaney, Mo., 300 shares. V. D. Snyder, Kansas City, Mo., 50 shares. Wm. A. Shuman, Kansas City, Mo., 250 shares.

"Fifth. The business of this corporation shall be managed by a board of directors, consisting of five (5); and the following named persons, to wit: W. M. Clay, Elmer Webster, V. D. Snyder, A. M. Earhart, Wm. A. Shuman, shall constitute the said board of directors for the first year.

"Sixth. This corporation shall continue a body corporate for the period of fifty years.

"Seventh. The purposes for which this corporation is formed are as follows: To carry on and conduct a general mining business, such as procuring lands by purchase or otherwise, and mineral leases thereon to prospect and operate the same for mineral substances and deposits, to sell, convey, or otherwise dispose of the same by deed, mortgage, lease, bond or otherwise; own and operate all machinery and improvements necessary to successfully prosecute and carry on said business, and carry on a general real estate business.

"Witness our hands and seals this 7th day of January, 1901.

                                   "Elmer Webster
                                   "A. M. Earhart
                                   "M. W. Clay
                                   "V. D. Snyder
                                   "Wm. A. Shuman."
                

The articles were duly acknowledged by the defendant on the 3d of January, 1901, and by the other parties on the 7th of January, 1901, and on the same day were duly recorded. The plaintiff then introduced the certificate of the Secretary of State of its incorporation thereon, dated January 8, 1901, duly recorded on the 9th of January, 1901, and rested its case. Thereupon the defendant demurred to plaintiff's evidence, his demurrer was overruled, and the defendant, over the objections of the plaintiff, introduced parol evidence to sustain his defense. The facts disclosed by this evidence are substantially stated in the brief of counsel for appellant as follows:

"Defendant is and was a hardware merchant in Joplin, Mo. In the year 1900...