Neidert v. Neidert

• Decision Date: 29 June 1982
• Docket Number: 12086,Nos. 12077,s. 12077
• Citation: Neidert v. Neidert, 637 S.W.2d 296 (Mo. App. 1982)
• Parties: George D. NEIDERT and Otto M. Neidert, Plaintiffs-Appellants, v. Charles A. NEIDERT, Defendant-Appellant, and Neidert, Inc., Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 296

637 S.W.2d 296

George D. NEIDERT and Otto M. Neidert, Plaintiffs-Appellants, v. Charles A. NEIDERT, Defendant-Appellant and Neidert, Inc., Defendant-Appellant.

Nos. 12077, 12086.

Missouri Court of Appeals, Southern District, Division One.

June 29, 1982.

Motion for Rehearing or to Transfer Denied July 20, 1982.

Application to Transfer Denied Sept. 13, 1982.

C. R. Rhoades, Rhoades & Perigo, Neosho, for plaintiffs-appellants.

John Sims, Ruyle, Sims & Lampo, Neosho, for defendants-appellants.

FLANIGAN, Judge.

A farm operation, conducted through a closely held family corporation, proved unprofitable and this shareholders' derivative action (Rule 52.09) ¹ is an aftermath. Plaintiffs are George D. Neidert and Otto M. Neidert, each a shareholder in Neidert, Inc., a Missouri corporation. Defendants are Neidert, Inc. and Charles A. Neidert. The parties, throughout the trial, referred to Charles A. Neidert by his nickname "Al" and this opinion will do so. At the material times, Al was president, sole director, and a shareholder of Neidert, Inc. ²

The first amended petition, on which this action was tried, was in three counts, each directed against defendant Al and each seeking judgment in favor of Neidert, Inc. Count I sought damages in the sum of $177,000 and claimed that Al wrongfully encumbered corporate assets, sold corporate assets for less than market value, operated the corporation at a loss, used corporate assets for his personal benefit, disposed of corporate assets "without just cause," and permitted improvements on the farm to deteriorate. Count II sought damages in the sum of $55,000 and claimed that Al received money for use of the corporation but failed to account for it or to pay it to the corporation. This count also alleged that Al kept the corporate records in a careless and fraudulent manner. Count III sought $100,000 in punitive damages and claimed that Al's conduct as alleged in Count II was willful, malicious and one with intent to harm "plaintiff."

Defendant Al filed a five-count crossclaim against defendant Neidert, Inc. Count I sought $10,800 for services rendered the corporation for the 36 months preceding January 1972. Count II sought $5,665.05 based on a loan in that amount made by Al to the corporation. Counts III, IV and V were brought by Al as assignee under three written assignments based on loans made to the corporation by the respective assignors.

The trial court, sitting without a jury, denied plaintiffs relief on Counts I, II and III of the petition and plaintiffs appeal from those rulings. On the crossclaim of Al against defendant Neidert, Inc., the trial court awarded Al $10,800 on Count I and $5,665.05 on Count II, ³ from which rulings defendant Neidert, Inc. appeals. On Counts III, IV and V of the crossclaim the trial court found in favor of Neidert, Inc. and against Al. Al appeals from the latter rulings.

None of the parties invoked Rule 73.01(a)(2) with respect to a request for findings of fact and a statement of the grounds for the trial court's decision. Although the trial court made voluntary findings and conclusions, they "are not the proper basis for assigning error and the general finding is the sole basis for review." Prudential Property & Cas. Ins. v. Cole, 586 S.W.2d 433, 435(4) (Mo.App.1979). To similar effect see Turpin v. Watts, 607 S.W.2d 895, 899 (Mo.App.1980); Key v. Gregory, 553 S.W.2d 329, 333(4) (Mo.App.1977); Swetnam v. U. S. By-Products Corporation, 510 S.W.2d 829, 830(1) (Mo.App.1974). The contentions raised on the appeals will be reviewed in light of the foregoing restriction. Plaintiffs' appeal will be considered first.

Plaintiffs' first point is that the trial court erred in denying plaintiffs relief on Counts I, II and III of the petition for the reason that the "weight of the evidence" showed that Al, as sole director and president of the corporation, engaged in "self-dealing," refused to deliver to plaintiffs their respective stock certificates, denied plaintiffs access to the corporate records, allowed "extensive waste" of the corporate assets, and sold the principal assets of the corporation, over plaintiffs' objection, at less than their fair market value.

"Appellate courts should exercise the power to set aside a decree or judgment on the ground that it is 'against the weight of the evidence' with caution and with a firm belief that the decree or judgment is wrong." Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. bank 1976). This court has no such firm belief.

It is true that Al, as sole director and president of the corporation, did business with the corporation, but he did so as a benefactor and not as a predator. Al had his own business in Neosho, Missouri. The farm owned by the corporation was located near St. James, Missouri, about 180 miles from Neosho. From time to time Al lent money to the corporation. On one occasion he sold some copper tubing to the corporation but Al realized no profit on that transaction. "It was billed at my cost."

Al's dealings with the corporation were neither unconscionable nor cloaked in secrecy. As was the situation in Scott v. Potter Plumbing and Heating, Inc., 596 S.W.2d 492, 494 (Mo.App.1980), "This was a small, family-held corporation and all of the participants were well aware of the (transactions), ... all reflected in the corporate ledgers and tax returns." As pointed out in Scott, it is not inherently improper or illegal for a corporation to purchase property or borrow money from its stockholders, directors or officers. Moreover, "The relation alone of a director or officer of a corporation does not prevent the director or officer from doing business with the corporation at a profit.... The prohibition encompassed in the above general rules is directed at unconscionable and secret profits." Ramacciotti v. Joe Simpkins, Inc., 427 S.W.2d 425, 431-432 (Mo.1968).

The trial court found that Al accounted for all monies due the corporation, did not appropriate any corporate funds to his own use, and was not guilty of mismanagement, fraudulent or otherwise. The record supports these findings. In addition, although there was no express finding on these points, the record justified the trial court in finding, as inferentially it did, that Al did not refuse to deliver to plaintiffs their respective stock certificates, which they in fact received; that Al did not deny plaintiffs access to the corporate records, which they in fact inspected; and that Al was not guilty of waste of the corporate assets. ⁴

Some of the personal property of the corporation, primarily farm equipment, was sold at public auction on October 23, 1971. The sale was prompted by the death of Laurence Neidert, the manager of the corporate farm, and by the fact that the farming activities had proved unprofitable. Plaintiffs, and all the other shareholders, had advance notice of the sale and indeed plaintiffs themselves helped Al to prepare for the sale by hauling portable corrals and a loading chute from Neosho to St. James where the sale was held.

Sec. 351.400 sets forth certain procedures with respect to the sale "of all, or substantially all, the property and assets ... of a corporation, if not made in the usual and regular course of its business," and § 351.405 accords to a dissenting shareholder certain rights in the event of such a sale. These statutes are of no aid to plaintiffs here for the reason that plaintiffs failed to show, and their brief does not claim, that the October 23 sale involved "all, or substantially all, of the property and assets" of the corporation.

Plaintiffs' first point has no merit for the reason that the weight of the evidence, with respect to Counts I, II and III of the petition, not only was not in plaintiffs' favor but in fact favored Al.

Plaintiffs' second point is that the trial court erred in denying plaintiffs relief on Counts I, II and III of the petition because the ruling was based on a finding "that plaintiffs had not made demands for institution of legal proceedings on (Al) or other shareholders, as a prerequisite for a shareholders' derivative action, pursuant to the requirements of Rule 52.09, although the uncontroverted evidence showed that such requests were made or would have been obviously futile."

It is true that of the 36 voluntary "findings of fact" made by the trial court, finding 17 states that plaintiffs made no demand on any of the shareholders or directors of the corporation to institute the action against Al. The other voluntary findings, however, make it clear that finding 17 played no part in the trial court's judgment. When the instant action was commenced, Al had been replaced as president and sole director by original defendant Lerwick, mentioned in footnote 2. Lerwick was also the holder of the majority of shares. It is clear that the trial court felt that it would have been futile for plaintiffs to have made a demand upon Lerwick for the corporation to sue Al, and especially so because they sued Lerwick himself. A sufficient answer to plaintiffs' second point is that it is factually unsound and that the trial court's ruling was not based on finding 17.

The first point of defendant-appellant Neidert, Inc. is that the trial court erred in awarding Al judgment on Count I and Count II of the crossclaim "because said claims were made outside the five-year statute of limitations, § 516.120." The statute of limitations is an affirmative defense, Rule 55.08. The answer of defendant Neidert, Inc. to Count I of the crossclaim made no mention, even in general terms, of this affirmative defense. Accordingly it was not properly raised and this court "need not give it consideration." Tudor v. Tudor, 617 S.W.2d 610, 613 (Mo.App.1981). Tudor cites authorities holding that a party desiring to avail himself of the statute of limitations, "must plead the particular statute upon which he relies," ... "must plead the very provision...." In its answer to Count II of Al's...