Meyer v. Ruby Trust Mining & Milling Company

• Decision Date: 21 December 1905
• Parties: WILHELMINE MEYER v. RUBY TRUST MINING & MILLING COMPANY et al., Appellants
• Court: Missouri Supreme Court

90 S.W. 821

191 Mo. 162

WILHELMINE MEYER v. RUBY TRUST MINING & MILLING COMPANY et al., Appellants

Supreme Court of Missouri, Division One

December 21, 1905

Appeal from St. Louis City Circuit Court. -- Hon. H. D. Wood, Judge.

Reversed.

W. B. & Ford W. Thompson for appellants.

(1) The court committed error in not holding that the judgment obtained againt the Ruby Trust Mining and Milling Company in the suit wherein the company was garnished by plaintiff for the alleged debt claimed to be due from said company to plaintiff's judgment debtor, Dieckmann, was void. (a) Because the evidence showed conclusively that the judgment was void for want of jurisdiction over said Ruby Trust Mining and Milling Company, garnishee. (b) Because the evidence showed conclusively that the judgment was obtained by fraud and collusion and that said Dieckmann had transferred and delivered his claim to plaintiff herself prior to the entry of said judgment against said Ruby Trust Mining and Milling Company. Foster v. Lumber Co., 23 L. R. A. 491; Bentliff v. London & Colonial Finance Corporation, 44 F. 667; St. Louis W. M. Co. v. Consolidated B. W Co., 32 F. 802; Latimer v. Railroad, 43 Mo 105; Railroad v. Rogers, 52 W.Va. 450, 12 L. R. A 178; Schmidlapp v. Ins. Co., 71 Ga. 246; 14 Am. and Eng. Ency. Law, 816; Bridge & Iron Works v. Breevoort, 73 Mich. 155; Moore v. Wayne Circuit Judge, 55 Mich. 84; McAlister v. Ins. Co., 28 Mo. 214; McNicholl v. Mercantile Rep. Agency, 74 Mo. 457; Fletcher v. Wear, 81 Mo. 524; Gates v. Tusten, 89 Mo. 13; Swallow v. Duncan, 18 Mo.App. 622; Bushel v. Ins. Co., 15 S. & R. 176; Dawson v. Campbell, 2 Miles 170; Wilson v. Seligman, 144 U.S. 41; Wilson v. Railroad, 108 Mo. 588; Smith v. McCutchen, 38 Mo. 415; Bissit v. Navigation Co., 15 F. 353; Warrington v. Ball, 90 F. 464; Bank v. Farnum, 176 U.S. 640; McBryan v. Elevator Co., 130 Mich. 111; Schroeder v. Bank, 133 U.S. 67; Slee v. Bloom, 20 Johns. 669; Saylor v. Banking Co., 38 Ore. 204; Mandeville v. Reynolds, 68 N.Y. 528; Conway v. Duncan, 28 Oh. St. 102; Wilson v. Kiesel, 9 Utah 397; Choat v. Boyd, 59 Kan. 682; Schertz v. Bank, 47 Ill.App. 124; Chestnut v. Pennell, 92 Ill. 55; Nichols v. Stevens, 123 Mo. 96; Moody v. Peyton, 135 Mo. 482; Hamilton v. McLean, 139 Mo. 678; Nelson v. Barnett, 123 Mo. 564; Covington v. Chamblin, 156 Mo. 574; 10 Cyclopedia of Law and Procedure, 733, 734; Young v. Farwell, 139 Ill. 326. (2) The court committed error in entertaining jurisdiction of plaintiff's bill because: (a) The evidence showed that no judgment against the corporation had been recovered in the State of its creation or domicile. (b) No valid judgment had been recovered against said corporation in the State of Missouri. (c) No proper and valid service had been obtained upon the company in this present bill, and none could be had in the State of Missouri. (d) There was a want of necessary parties defendant. Parkhurst v. Railroad, 102 Ill.App. 507; Pfaff v. Gruen, 92 Mo.App. 560; Luecke v. Treadway, 45 Mo. 507; Boeppler v. Menown, 17 Mo.App. 447; Jerman v. Benton, 79 Mo. 148; Shickle v. Watts, 94 Mo. 410; Wheelock v. Kost, 77 Ill. 296; Patterson v. Lynde, 112 Ill. 196, 106 U.S. 520; Bank v. Ellis, 172 Mass. 39; Howarth, Receiver, v. Lombard, 175 Mass. 570; Bank v. Baker, 176 Mass. 294; Clark v. Knowles, 187 Mass. 35; Witman v. Bank, 176 U.S. 559; Bank v. Farnum, 176 U.S. 640; Perry v. Turner, 55 Mo. 418; Friend v. Powers, 93 Ala. 114; Brobston v. Downing, 95 Ga. 505; DeWolf v. Mallet, 25 Ky. 401; Hodley v. Russell, 40 N.H. 109; Mann v. Pantz, 3 N.Y. 415; Story v. Wheaton, 38 Bard. 616; Griffith v. Mangam, 42 N.Y.S. 369; Smith v. Railroad, 8 Ohio C. C. 583; Carpenter v. Bank, 14 Wis. 705; Coleman v. White, 14 Wis. 700; Coleman v. Howe, 154 Ill. 458; Tipton v. Harris, 1 Peck 414; Dell v. Mantell, 1 Abb. Pr. 130; Roger v. Weakley, 2 Part. 576; Angell v. Lawton, 14 Hun 70. (3) The court committed error in entertaining this bill and entering judgment thereon, because: (a) No judgment of the court of either the State of Illinois or Missouri has ever been recovered upon which an execution against the Ruby Trust Mining and Milling Company has issued and been returned nulla bona by the sheriff. (b) The evidence of both plaintiff and defendant shows that at the time of the entry of judgment in the garnishment against the Ruby Trust Mining & Milling Company said company was possessed of assets in Colorado more than sufficient to satisfy a valid judgment against said company. Pfaff v. Gruen, 92 Mo.App. 560; Guerney v. Moore, 131 Mo. 650; Union Svgs. Assn. v. Seligman, 11 Mo.App. 142; Marks v. Hardy, 86 Mo. 232; Knight v. Frost, 14 Mo.App. 331; McClaren v. Franciscus, 43 Mo. 452; Coquard v. Prendergast, 35 Mo.App. 237; Henderson v. Turngren, 9 Utah 432. (4) The court committed error in holding that the capital stock of the Ruby Trust Mining and Milling Company was not fully paid in fact under the laws of Illinois. Coleman v. Howe, 154 Ill. 468; Reclining Car Seat Co. v. Rankin, 45 Ill.App. 226; Mallinckrodt Chemical Works v. Glass Co., 34 Ill.App. 413; Sand Co. v. American Refuse Crematory Assn., 205 Ill. 46; Peck v. Coal Co., 11 Ill.App. 88; Dean v. Baldwin, 99 Ill.App. 582. (5) The court committed error in not finding that plaintiff had no higher or greater right than Dieckmann, her assignor, and that said Dieckmann was estopped from denying that the capital stock of the company was fully paid and unassessable, because: (a) The evidence shows conclusively that Dieckmann gave credit to the company with full knowledge of the manner in which the stock had been issued for property and not for cash, and that it had been taken and received as full payment for the capital stock. (b) The evidence conclusively shows that Dieckmann participated in and agreed to the issuance of the capital stock in exchange for property as full payment therefor. Schweitzer v. Tracy, 76 Ill. 345; Link v. Gibson, 93 Ill.App. 433; Taylor v. Mississippi Mils, 47 Ark. 247; Knapp-Stout & Co. v. Stanley, Garnishee, 45 Mo.App. 264; Walburn v. Chenault, 43 Kan. 352; Higgins v. Lansingh, 154 Ill. 301; Thayer v. Union Tool Co., 70 Mass. 75; Potter v. Stevens Machine Co., 127 Mass. 592; Thompson v. Bemis Bag Co., 127 Mass. 595; Scovill v. Thayer, 105 U.S. 143; Coffin v. Ransdall, 110 Ind. 417; Trust Co. v. Turner, 111 Iowa 664; Whitehill v. Jacobs, 75 Wis. 474; Coit v. Gold Amalgamated Co., 119 U.S. 343; Callahan v. Windsor, 78 Iowa 193; Ten Eyck v. Railroad, 114 Mich. 494; Northern Trust Co. v. Columbia Straw Paper Co., 75 F. 936; Woolfork v. January, 131 Mo. 620; Berry v. Rood, 168 Mo. 316; New Haven H. N. Co. v. Linden Spring Co., 142 Mass. 352. (6) The court committed error in not holding that all who held stock with notice of the manner and way in which the capital of the corporation was paid in exchange of property for shares of stock, and who were stockholders at the date of the recovery of the judgment against the corporation, were liable, in the alleged absence of assets of any kind out of which an execution could be satisfied, or partly satisfied by the sheriff; this bill not being filed until September 16, 1892, while the alleged judgment was obtained March 3, 1890. McClaren v. Franciscus, 43 Mo. 452; Skrainka v. Allen, 76 Mo. 384; Bagley v. Tyler, 43 Mo.App. 195; Miller v. Ins. Co., 50 Mo. 55; Brown v. Trail, 89 F. 641; Nixon v. Breen, 11 Exch. 549; Van Cleve v. Berkley, 143 Mo. 120; Trendley v. Railroad, 84 Ill.App. 109; Parkhurst v. Railroad, 102 Ill.App. 507; Coleman v. Howe, 154 Ill. 458; Sprague v. Bank, 172 Ill. 149; Florshein v. Trust Co., 192 Ill. 382; Higgins v. Bank, 193 Ill. 394; Foote v. Bank, 194 Ill. 600; Sand Co. v. Crematory Co., 205 Ill. 42; Bank v. Alden, 129 U.S. 372; Thompson v. Paper Co., 127 Mass. 595.

Rassieur, Schnurmacher & Rassieur and Schulenburg & Meyer for respondent.

(1) Regardless of statutory law, the capital stock of an insolvent corporation constitutes a trust fund or asset to which creditors have a right to look for the payment of their demands; and any agreement or arrangement between the stockholders and the corporation that stock which has not been actually paid for shall be treated as fully paid or non-assessable, is utterly void as to creditors. Banking Co. v. Wool Mfg. Co., 168 Mo. 645; Van Cleve v Berkley, 143 Mo. 109; Shields v. Hobart, 172 Mo. 491; Berry v. Rood, 168 Mo. 316; Ramsey v. Mfg. Co., 116 Mo. 323; Foster v. Planing Mill Co., 92 Mo. 79; Ins. Co., v. Floyd, 74 Mo. 286; Upton v. Tribilcock, 91 U.S. 45; Scovill v. Thayer, 105 U.S. 154; Camden v. Stuart, 144 U.S. 113. And a creditor has the right to presume that the stock subscribed has been, or will be, fully paid, and if it is not, the courts will, at the instance of the creditor, compel its payment. Van Cleve v. Berkey, 143 Mo. 109; Scovill v. Thayer, 105 U.S. 154; Adler v. Brick Mfg. Co., 13 Wis. 57. (2) Such capital stock may be paid for in property as well as in money, but in such case the property must be the fair equivalent in value to the par value of the stock issued therefor; and it is the duty of the stockholders, and not of the creditor, to see that it is so paid. Therefore, in a controversy between creditors and stockholders, where the capital has been paid for in property, the true inquiry is, whether the property possessed a value equal, or at least substantially equal, to the par value of the stock. Whether the stockholders acted in good faith or in bad faith, whether they believed or did not believe, or whether they had reason to believe or had not reason to believe, that the property possessed an equivalent value to the par of the stock, are all immaterial questions under the rules of the law as now firmly established. If it develops that the property delivered for the stock did not substantially equal...