Meyer v. Ruby-Trust Min. & Mill. Co.

• Decision Date: 22 November 1905
• Citation: 90 S.W. 821,192 Mo. 162
• Parties: MEYER v. RUBY-TRUST MIN. & MILL. CO. et al.
• Court: Missouri Supreme Court

90 S.W. 821

192 Mo. 162

MEYER v.RUBY-TRUST MIN. & MILL. CO. et al.

Supreme Court of Missouri, Division No. 1.

November 22, 1905.

1. APPEARANCE—EFFECT—WAIVER OF DEFECTS IN SUMMONS.

The defendant corporation appeared in court, and without questioning the sufficiency of the service of process or limiting or qualifying its appearance, moved to set aside the judgment against it, assigning as reason therefor that the judgment was rendered without notice, and that defendant had an offset, together with other reasons, and the court thereupon ordered that the motion be sustained on payment by defendant of the costs accruing after the date of the judgment by default, and in the event defendant failed to do so the motion should be overruled.Defendant failed to comply with the order as to costs, and subsequently the motion to set aside the judgment was overruled.Held, that defendant waived the objection that the summons or notice, although served on the president of the company, failed to show that it was served at the office of the company.

2.CORPORATIONS — LIABILITY OF STOCKHOLDERS FOR UNPAID SUBSCRIPTIONS—EXISTENCE OF CORPORATE PROPERTY AS DEFENSE.

In an action by the creditors of a corporation to enforce unpaid subscriptions to stock, the contention that at the date of the judgment against the corporation such corporation was solvent and that plaintiff could have made her debt by levying on certain property was without basis, where the evidence showed that other creditors attempted to seize the property to satisfy their claims and that it was found to have been forfeited by the corporation.

3.SAME—ACTION TO ENFORCE LIABILITY— PARTIES.

In an action by a creditor of a corporation to enforce unpaid subscriptions to stock under the Illinois statute, which expressly provides that the assignor of stock on which there remains an unpaid subscription, as well as the assignee, shall be jointly and severally liable for the unpaid portions thereof, the liability being joint and several, it is wholly immaterial whether all the stockholders whose stock has not been paid for in full, or only a part of them, are sued, and therefore it is immaterial that some of the original defendants have died pendente lite and that the suit has not been revived against them.

4.SAME—PAYMENT FOR STOCK BY TRANSFER OF PROPERTY.

A corporation, organized under the laws of Illinois, was capitalized for $8,000,000, and nearly all this stock was attempted to be paid up by a transfer to the company of an option on certain mines, for which the promoters had agreed to pay $125,000, but on which only $30,000 had been paid.Held, that persons taking such stock with knowledge of the facts are liable to bona fide creditors of the corporation for the difference between the amount actually paid in property and the par value of the stock.

5.SAME—VALIDITY OF JUDGMENT AGAINST CORPORATION.

In an action by a creditor of a corporation against stockholders to enforce liability for unpaid subscriptions, it was contended that the judgment against the corporation was obtained by fraud.It appeared that the judgment was obtained in garnishment proceedings, and that after an attachment suit had been instituted against the principal debtor, and after such debtor had left the country his attorney turned over to plaintiff certain shares of stock in defendant company owned by him, and after the service of the garnishment on defendant company, such attorney turned over to plaintiff a note of the company in favor of plaintiff's debtor.It did not appear that plaintiff undertook to claim any rights as assignee, either to the stock or the note.Held, that plaintiff did not perpetrate any fraud in procuring the judgment without disclosing to the court the fact that she held the stock and note.

6.SAME — PERSONS ENTITLED TO ENFORCE LIABILITY.

One of the original promoters of a corporation organized under the laws of Illinois agreed, with other stockholders, to a scheme whereby certain property of small value was turned over to the company in payment of shares of stock of the par value of nearly $8,000-000 as full and nonassessable stock.Subsequently such promoter loaned money to the company, taking a note therefor.Held, that he does not stand in the light of an innocent creditor, so as to entitle him, or his assignee by operation of law, to enforce the liability of the other stockholders for the difference between the value of the property and the par value of the stock.

Appeal from St. Louis Circuit Court; Horatio D. Wood, Judge.

Action by Wilhelmine Meyer against the Ruby-Trust Mining & Milling Company and others.From a judgment for plaintiff, defendants appeal.Reversed.

W. B. and Ford W. Thompson, for appellants.Rassieur, Schnurmacher & Rassieur and Schulenburg & Meyer, for respondent.

MARSHALL, J.

This is a proceeding in equity, instituted on the 16th day of September, 1892, against the defendant corporation, a corporation organized under the laws of the state of Illinois, and 140 individuals alleged to be shareholders in the defendant corporation.The purpose of the suit is to charge the individual defendants with an alleged unpaid portion of their several subscriptions of the shares of stock owned by them, to satisfy a judgment obtained by the plaintiff against the company in the circuit court of St. Louis on the 28th day of May, 1889, for $3,691.33, with interest thereon, and which amount it was adjudged the company owed one Henry Dieckmann, against whom the plaintiff had theretofore, on the 18th of April, 1889, obtained a judgment for $40,038.44.The pleadings are very voluminous; the petition covering some seven printed pages, and the answers of the defendants covering 60 printed pages.The case was referred to a referee, who heard the same and recommended a judgment in favor of the plaintiff against certain of the defendants, certifying the amount which should be charged against each separately.The report of the referee was confirmed by the circuit court, and after proper steps the defendants appealed.

The Issues.

The petition, after stating the corporate capacity of the defendant company, and the fact that she had obtained a judgment against the company as garnishee of Dieckmann, and that such judgment was final, in full force, and unsatisfied, and pleading the Illinois statutes, under which the defendant company is organized, and the provisions of the laws of that state relating to the liability of stockholders for unpaid subscriptions of stock, alleges that on the 13th of July, 1888, the defendant company was organized under the laws of Illinois, with an alleged capital of 800,000 shares, of the par value of $10 each; that 15 persons, defendants herein, each subscribed for 10 shares of the capital stock; that two of them subscribed for five shares thereof, and the remaining 799,840 shares were subscribed for by one Charles F. Chandler, and that the 17 persons aforesaid had never paid more than 20 cents a share for their shares, nor had said Chandler paid more than 20 cents a share for the stock held by him; that thereafter the original subscribers, together with other persons, purchased from said Chandler large quantities of said 799,840 shares, specifying how many shares of stock were owned by each of the 140 individual defendants.The prayer of the petition is that the court ascertain the liability of the different defendants, and adjudge against each his proportionate share of the amount necessary to pay the plaintiff's judgment against the company, as an unpaid subscription of his stock.

The company and certain of the defendants filed answers setting up various defenses, which may be summarized as follows: First, that the judgment in favor of the plaintiff against the defendant corporation, as garnishee, is void; second, that at the date of said judgment the corporation was solvent, and the plaintiff could have made her debt out of the corporation by levying upon property alleged to have been then owned by it in the state of Colorado; third, that there is a defect of parties hereto, in that some of those who were originally brought in have since died, and this action has not been revived against their representatives; fourth, that the stock of the individual defendants is full-paid and nonassessable stock; fifth, that even if the judgment against the corporation, as garnishee, is valid, it cannot be legally enforced by this plaintiff against these defendants, or any of them, as stockholders, because Dieckmann, the original debtor to the plaintiff, could not have enforced it against his fellow stockholders, and therefore the plaintiff cannot do it, and, further, because the judgment against the corporation was obtained by fraud of the plaintiff in the very concoction thereof.

The facts in judgment necessary to be considered in this cause, are substantially undisputed, and may be briefly stated to be as follows:

In 1886 some gentlemen in St. Louis conceived the idea of engaging in mining.They selected one of their number, F. W. Buschman, to go to Colorado and find a mine.Buschman did so, and first acquired a mine, which, after being operated for a time at a loss, was abandoned.Buschman examined other mining property near Ouray, Colo., with the result that he acquired an option for the purchase of three mines, the Ada, the Ana, and the Ruby-Trust, of which the latter only had been at all developed, and which had been previously sold to other persons, and forfeited by them to the original sellers.The option secured by Buschman entitled him to purchase the mine for $125,000, of which $30,000 was to be paid, and was paid, in 1888, and the balance due to be paid in three installments, one for $30,000, on July 1, 1889, one for $30,000, on December 1, 1889, and the last for $35,000, on July 1, 1890.The contract provided that upon a failure to pay any one of the installments the property should be forfeited to the sellers, with all...