Newman v. Mercantile Trust Co.

• Decision Date: 24 May 1905
• Citation: 189 Mo. 423,88 S.W. 6
• Parties: NEWMAN v. MERCANTILE TRUST CO. et al.
• Court: Missouri Supreme Court

88 S.W. 6

189 Mo. 423

NEWMAN v. MERCANTILE TRUST CO. et al.

Supreme Court of Missouri, Division No. 1.

May 24, 1905.

1. FRAUD — PLEADING.

A mere charge of fraud, without specification of the acts which constitute the alleged fraud, is not a good allegation of fraud.

2. CORPORATE STOCK — SALES — FRAUD.

A transaction by which a railroad attempted to procure through a trust company a majority of the stock of a ferry company by offering to shareholders who accepted the proposition a certain price per share for the stock, to be paid on the condition that a majority of the stock could be so acquired, was not rendered fraudulent by the act of the trust company in purchasing part of the desired stock at a higher price from outside parties and completing the contract with the accepting shareholders without divulging that fact.

3. TROVER — TITLE OF PLAINTIFF — RIGHT TO POSSESSION.

In order to maintain trover for shares of stock, plaintiff must have been the owner of the shares and entitled to their possession at the time of the alleged conversion.

4. SAME — DEMAND AND REFUSAL.

Demand and refusal are evidence of conversion.

5. CORPORATE STOCK — SALES — ACCEPTANCE — PAYMENT.

A stockholder in a corporation, together with other stockholders, surrendered his stock to a trust company, which executed an agreement to purchase the stock of the parties, accepting the same at a stipulated price, on condition that it could in that manner purchase a majority of the stock of the corporation. The trust company gave the stockholder a receipt for his stock, obligating it to deliver the same to him or pay him the price specified on or before a certain date. The trust company before the date specified exercised its option by accepting the stock and paying the stockholder the specified purchase price. Held, that by the acceptance of the stock and payment of the purchase price the sale was complete, and title to the stock passed to the trust company.

6. SAME — VALIDITY OF SALE — UNDISCLOSED PRINCIPAL.

A transaction by which a trust company acquires the stock of a ferry company for a foreign railroad company, which is not disclosed as a principal in the transaction, is not, as between the trust company and the vendors of the stock, rendered invalid because of any inability of the railroad to legally acquire the stock.

Appeal from St. Louis Circuit Court; Daniel D. Fisher, Judge.

Action by Louis E. Newman, trustee, against the Mercantile Trust Company. From an order overruling a motion to set aside a nonsuit, plaintiff appeals. Affirmed.

John W. Noble and George H. Shields, for appellant. Klein & Hough, Clinton Rowell, Joseph H. Zumbalen, and Joseph S. Laurie, for respondent.

BRACE, P. J.

This is an appeal from an order of the St. Louis circuit court overruling plaintiff's motion to set aside a nonsuit. The suit was instituted on the 13th of May, 1902. The defendants are the Mercantile Trust Company, the Chicago, Rock Island & Pacific Railway Company, John Scullin, and Festus J. Wade.

The petition is in two counts. The first count is as follows: "Plaintiff states: That the defendant the Mercantile Trust Company was at the time hereinafter stated, and now is, a corporation duly organized under the laws of the state of Missouri, providing for the incorporation of trust companies. That the Chicago, Rock Island & Pacific Railway Company was at the times hereinafter stated, and now is, a railroad corporation duly incorporated under the laws of the state of Illinois. That the plaintiff, Louis E. Newman, is, and was at the times hereinafter stated, the trustee appointed by and acting under the last will and testament of Socrates Newman, deceased, said will having been duly probated in the probate court in and for the city of St. Louis, Missouri, and that plaintiff brings this action in his capacity as said trustee. That heretofore, to wit, on the 23d day of April, 1902, plaintiff owned and held as such trustee 100 shares of the capital stock of the Wiggins Ferry Company, a corporation duly incorporated under the laws of the state of Illinois, and was lawfully possessed of the certificates duly issued for said 100 shares of stock. That on the 28th of April, 1902, the defendant John Scullin, a director and president, and defendant Festus J. Wade, a director, of the Wiggins Ferry Company, officially and individually illegally combined with said Mercantile Trust Company and said Chicago, Rock Island & Pacific Railway Company, defendants, to deceive and defraud plaintiff, and presented to this plaintiff a paper or offer to purchase said stock, as follows: "The Mercantile Trust Company, acting herein for other parties, offers to purchase a majority of all the shares of the capital stock of the Wiggins Ferry Company, a corporation existing under the laws of Illinois, and agrees to pay therefor on the delivery of the certificates for so many of said shares, not less than a majority, as shall be deposited with said trust company on or before May 5th, 1902, properly endorsed in blank for assignment and transfer on the books of said Ferry Company the sum of five hundred dollars per share. The Trust Company acting in the capacity as agent of other parties is to receive from such other parties for its services a commission of two and one-half per cent upon the purchase price of five hundred dollars per share in addition to said purchase price. The Mercantile Trust Company will not be obliged to accept any stock unless the owners of a majority of shares have agreed to sell the same to said Mercantile Trust Company, agent, on or before May 5th, 1902.' (Signed `Mercantile Trust Company, by Festus J. Wade, President.') That in connection with said offer to purchase there was prepared and attached to said offer as a part of the proposed contract an acceptance to be signed by the stockholders of said Wiggins Ferry Company, in words and figures as follows, to wit: "The under signed stockholders of the Wiggins Ferry Company, do hereby accept the foregoing proposition and sell to the Mercantile Trust Company on and subject to the terms therein stated, the number of shares of the capital stock of the Wiggins Ferry Company set opposite to our respective names.' Plaintiff says that, relying on the terms of said offer and acceptance, and that it was the intention of said trust company to purchase not less than a majority of said stock at and for the price of five hundred dollars a share, and no more, and that if said trust company did not obtain such majority of stock on or before the 5th day of May, 1902, at said price of five hundred dollars a share, that his said stock would be returned to him, plaintiff signed said acceptance and delivered his stock, or the certificates representing the same, to said trust company, and received a receipt therefor, being a receipt for certificates for one hundred shares of the capital stock of the Wiggins Ferry Company assigned in blanks; said shares being deposited with the Mercantile Trust Company under and in pursuance of said proposition made by said Trust Company as agent for other parties, and the acceptance thereof signed by L. E. Newman, trustee of Socrates Newman's estate, dated April 24, 1902, for the purchase of said shares. Plaintiff states that afterwards, to wit, on April 28, 1902, and before the time on which said contract could have become binding on the plaintiff, all said defendants, having so combined to deceive and defraud plaintiff, did further misrepresent the facts as to purchases of stock under said contract, and to illegally retain the same and withhold the same from plaintiff the said Mercantile Trust Company sent plaintiff by mail a letter inclosing to him its treasurer's check for the sum of fifty thousand dollars in payment, as stated in said letter, for one hundred shares of stock in the Wiggins Ferry Company, sold in accordance with the terms of the proposition made by said company and accepted by plaintiff, thereby representing that the terms and conditions of said proposal and acceptance had been fully complied with by said Mercantile Trust Company, and that a majority of the stock of the Wiggins Ferry Company had been acquired from the stockholders at the price named therein. Plaintiff states that he notified said Mercantile Trust Company that he accepted said check only on condition that said trust company had fully carried out said contract on its part, and had obtained the majority of said stock at and for the price of five hundred dollars a share, and that plaintiff waived no rights which he might have in the matter. Plaintiff states that said Mercantile Trust Company has at no time purchased, secured, and had a majority of said stock for itself, or for any principal represented by it — that is, over five thousand shares thereof; that, in order to obtain what shares it did have no said 5th day of May, 1902, said Mercantile Trust Company paid to other stockholders much more than five hundred dollars a share, and the purchaser has not kept and performed the offer and contract on its part, and that on the 5th day of May, 1902, said purchaser did not have a majority of said stock, and did not purchase what he did have at five hundred dollars a share, and thereby this plaintiff was released from said agreement, and said purchasers were bound to return said stock of this plaintiff to him. That on said 5th day of May plaintiff, learning of the failure of said purchasers to so keep said contract, and that the same had been so violated by them, he did then and there tender back to said trust company and said purchasers, in good and sufficient from, the full sum of fifty thousand dollars, which was the sum so sent plaintiff by checks as aforesaid. That the said Mercantile Trust Company, by said Wade as president, acknowledged the sufficiency of said tender as to amount and from, and plaintiff then and thereupon demanded the return to him of his certificates of stock, but said Wade, as...