Niedringhaus v. Investment Co., 29624.

• Decision Date: 01 December 1931
• Docket Number: No. 29625.,No. 29624.,29624.,29625.
• Parties: LOUISE NIEDRINGHAUS and MERCANTILE TRUST COMPANY, Trustees under Will of OLIVER B. NIEDRINGHAUS, and LOUISE NIEDRINGHAUS, Appellants, v. WILLIAM F. NIEDRINGHAUS INVESTMENT COMPANY, GEORGE HAYWARD NIEDRINGHAUS, Executor of GEORGE W. NIEDRINGHAUS, ALBERT W. NIEDRINGHAUS, LEE I. NIEDRINGHAUS and NATHANIEL B. RANDOLPH.
• Court: Missouri Supreme Court

46 S.W.2d 828 LOUISE NIEDRINGHAUS and MERCANTILE TRUST COMPANY, Trustees under Will of OLIVER B. NIEDRINGHAUS, and LOUISE NIEDRINGHAUS, Appellants,
v.
WILLIAM F. NIEDRINGHAUS INVESTMENT COMPANY, GEORGE HAYWARD NIEDRINGHAUS, Executor of GEORGE W. NIEDRINGHAUS, ALBERT W. NIEDRINGHAUS, LEE I. NIEDRINGHAUS and NATHANIEL B. RANDOLPH. No. 29624. No. 29625. Supreme Court of Missouri. Division Two, December 1, 1931.

[46 S.W.2d 829]

Appeal from Circuit Court of City of St. Louis. — Hon. George E. Mix, Judge.

AFFIRMED.

Douglas W. Robert for appellants.

(1) The court had no jurisdiction, right or authority to set aside the judgment on the motion of Charles B. Williams, Esq. He was a stranger to the record. Ewart v. Peniston, 233 Mo. 695; Shuck v. Lawton, 249 Mo. 168; Marsala v. Marsala, 288 Mo. 501; State ex rel. v. St. Louis, 145 Mo. 551; Womach v. St. Joseph, 201 Mo. 467; Handlan v. Wycoff, 293 Mo. 682; Springfield v. Plumer, 89 Mo. App. 515; Green v. Bogue, 158 U.S. 478. (a) When the appeal was granted November 20, 1928, the circuit court parted with all jurisdiction over the case and, therefore, it had no jurisdiction thereafter to entertain the motion of the stranger to the record. State ex rel. v. Hall, 12 S.W. (2d) 91; State ex rel. v. Gates, 143 Mo. 63; State ex rel. v. Sale, 153 Mo. App. 273. (b) The order setting aside the judgment entered November 14, 1928, made on December 1, 1928, was made without notice to the plaintiffs, hence was void, Sec. 1268, R.S. 1919; State ex rel. v. Caldwell, 310 Mo. 397; Dougherty v. Rubber Mfg. Co., 29 S.W. (2d) 126; State v. Sutton, 232 Mo. 244; State ex rel. v. Small, 212 Mo. App. 48; State v. Biesemeyer, 136 Mo. App. 668. (c) Final judgment was entered November 14, 1928. The motion to set aside the judgment was filed December 1, 1928, more than four days after judgment. It was too late. Even parties to the record are required to file such motions within four days after judgment. Clancy v. Realty Co., 10 S.W. (2d) 914; Burton v. Railroad Co., 275 Mo. 185; Beecham v. Evans, 136 Mo. App. 418. (2) It was not the intention of the testator that his estate should be held together indefinitely. Such would violate the rule against perpetuities. The acts of the defendant in perpetuating the estate in the corporation violate the rule and also the intention of the testator. Plummer v. Brown, 315 Mo. 627; Mockbee v. Grooms, 300 Mo. 446; Loud v. Trust Co., 298 Mo. 148; Gates v. Seibert, 157 Mo. 254; Garesche v. Levering Inv. Co., 146 Mo. 436; Sec. 555, R.S. 1919; Quinlan v. Wickham, 233 Ill. 39; Seidler v. Syms, 56 N.J. Eq. 275; Miller v. Weston, 67 Colo. 534; In re Lilley's Estate, 272 Pa. 143; Fowler v. Ingersoll, 127 N.Y. 472; In re Ackermann's Will, 74 N.Y. Supp. 477; Hanley v. Coal Co., 110 Fed. 62; 1 Jar. Wills (7 Ed.) sec. 248; Gray on Perpetuities (3 Ed.) sec. 214; Perry on Trusts (6 Ed.) secs. 379, 381, 383, 384; 21 R.C.L. 295, sec. 19. (3) The evidence is conclusive that the court should have sustained the exceptions, and it justified the appointment of a receiver. Secs. 10169, 10170, R.S. 1919; Kienker v. Power Truck Co., 19 S.W. (2d) 1060; Buerck v. Iron Products Co., 295 Mo. 263; Ashton v. Penfield, 233 Mo. 391; Miner v. Belle Isle Ice Co., 93 Mich. 97; Howes v. Oakland, 104 U.S. 450; Cameron v. Grover Imp. Co., 20 Wash. 169, 72 Am. St. 26; Morawetz, Priv. Corp., sec. 281; 20 Am. & Eng. Ency. Law, 272. (4) The use of the 4,000 shares and 5,000 shares of the National Enameling & Stamping Company stock, owned by the Investment Company, in a speculative syndicate, was a conversion, was unlawful and constituted gross mismanagement, and waste. Jemison v. Citizens' Bank, 122 N.Y. 135; Proctor v. Farrar, 213 S.W. 469; Ward v. Davidson, 89 Mo. 445; 1 Perry on Trusts (6 Ed.), secs. 429, 454, 464. (a) The syndicate was not only speculative, but was a partnership into which the Investment Company was unauthorized to enter. Franz v. Barr D.G. Co., 132 Mo. App. 8; Moorshead v. United Rys. Co., 119 Mo. App. 541; Aurora Bank v. Oliver, 62 Mo. App. 390. (b) Neither the board of directors, nor the stockholders, had the power or authority to ratify void acts of the president or the board. To ratify a conversion unanimous consent is necessary. Putnam v. Juvenile Shoe Co., 307 Mo. 74; Calumet Paper Co. v. Printing Co., 144 Mo. 331; Ford v. Ford Products Co., 285 S.W. 538; Kissane v. Brewer, 208 Mo. App. 244; Milligan v. Grocer Co., 207 Mo. App. 472; State ex rel. v. Bank, 157 Mo. App. 557; Shoe Co. v. Stores Co., 132 Mo. App. 513; Brick Co. v. Schoeneich, 65 Mo. App. 283; 7 R.C.L. 663, sec. 664; Farmers Co. v. Ry. Co., 150 N.Y. 410; Ervin v. Oregon Co., 27 Fed. 625; Ives v. Smith, 3 N.Y. Supp. 645; Bank of Commerce v. Hart, 37 Neb. 197. (5) The agreements for the purchase and sale of gas, made with the National Enameling & Stamping Company, the Investment Company and the Granite City Gas Company, were unlawful, a fraud upon the public and the government, and constituted gross mismanagement. People v. Pullman Co., 175 Ill. 125; Cliff Chemical Co. v. Wis. Tax Com., 193 Wis. 295; Miner v. Belle Isle Ice Co., 93 Mich. 97. The Investment Company was not incorporated for the purpose of purchasing gas and supplying it to a public utility, or of operating a pipe line. Its acts were ultra vires. Mo. Constitution, art. 12, sec. 7; Sec. 971, R.S. 1899; Sec. 2990, R.S. 1909; Sec. 9748, R.S. 1919; In re Doe Run Lead Co., 283 Mo. 646; Prairie Slough Club v. Kessler, 252 Mo. 424; Bowman Dairy Co. v. Mooney, 41 Mo. App. 665. (6) The proving up of $190,000 in paid notes against the estate of William F. Niedringhaus in the name of Harry Hayward was a fraud, and the action of the president and secretary of the Investment Company, in reporting to the probate court, as executors, that the notes had been paid to Hayward, constituted a conversion of the assets and was a gross misrepresentation and constituted mismanagement. Fitzpatrick v. Stevens, 114 Mo. App. 497; Purdy v. Gault, 19 Mo. App. 191. (7) The pooling of the Investment Company stock and the inducing of the executors of Oliver Niedringhaus to sign the pooling agreement, without their having authority in law so to do, were wrongful acts done for the purpose of securing control of the corporation and constituted mismanagement. State ex rel. Wann v. Dickson, 213 Mo. 66; Beyers v. Weeks, 105 Mo. App. 72; Lewis v. Carson, 16 Mo. App. 342; Sec. 9726, R.S. 1919; 2 Woerner Admr. (2 Ed.) sec. 328; 11 R.C.L. 166; Hayes v. Pratt, 147 U.S. 557. (8) The gratuitous surrender of the assets, making misleading reports, concealment of payments and misapplication of assets, were acts of mismanagement and waste. Jorndt v. Hub & Spoke Co., 112 Mo. App. 341; Pressed Brick Co. v. Schoeneich, 65 Mo. App. 283. (a) The delivery to the president of the Investment Company of 250 shares of stock of the Belt Line Railway by the trustees of the Madison County lands, with the consent of the directors of the Investment Company, was a conversion of the assets and constituted mismanagement and waste. (b) The surrender of $100,000 of stock of the Belt Line Railway, pledged to the Investment Company as security for a $30,000 debt, constituted mismanagement and waste. (c) The loan of $25,000 by the Investment Company to the trustees of the Madison County lands to pay to F.G. Niedringhaus, was a conversion and constituted mismanagement and waste. Jorndt v. Hub & Spoke Co., 112 Mo. App. 341. (9) The transfer of 700 shares of National Enameling & Stamping Company stock to Fred Orthwein and 900 shares to Nat Randolph, was a fraud upon that company and constituted mismanagement. Holcomb v. Forsyth, 216 Ala. 486. (10) Furnishing stockholders with misleading reports of the company, concealing payments and refusing to furnish further accounts and information was a breach of trust. The estate never was insolvent. Kienker v. Power Truck Co., 19 S.W. (2d) 1060. (11) The retention of the income of the Investment Company, and misusing it instead of declaring dividends to the stockholders, constituted mismanagement. Miner v. Belle Isle Ice Co., 93 Mich. 97. (12) The purchase of the stock of the St. Louis Coke & Chemical Company was ultra vires, mismanagement and waste. Proctor v. Farrar, 213 S.W. 469; State ex rel. v. Peoples' Bank, 197 Mo. 574; State ex inf. v. Trust Co., 144 Mo. 562; State ex rel. v. Murphy, 130 Mo. 10; Ward v. Davidson, 89 Mo. 445; City of Goodland v. Bank, 74 Mo. App. 365; Hotel Co. v. Furniture Co., 73 Mo. App. 135; De La Vergne Co. v. Savg. Inst., 175 U.S. 40; Vandagrift v. Bank, 163 Fed. 823; Green v. Vuinlen Co., 148 Ill. App. 1; Bank of Commerce v. Hart, 37 Neb. 197; Matter of Hall, 164 N.Y. 196; In re Harmon's Estate, 61 N.Y. Supp. 50; 7 R.C.L. 553, sec. 535; 1 Perry on Trusts (6 Ed.) secs. 454, 459. (13) The purchase and delivery of 54 shares of stock of the National Enameling & Stamping Company, with $20,000 of dividends, was unauthorized and constituted mismanagement and waste. The bequest of this stock to George W. Niedringhaus was a specific legacy. Waters v. Hatch, 181 Mo. 262; In re Estate of Largue, 267 Mo. 104; Fidelity Natl. Bank v. Hovey, 5 S.W. (2d) 437; In re Calnane's Estate, 28 S.W. (2d) 420.

Gustave A. Stamm, Wm. R. Orthwein and Maurice L. Stewart for respondents.

(1) Appellant cannot, for the first time on appeal, raise the issue that the will of Wm. F. Niedringhaus violated the rule against perpetuities, as no such issue was presented or decided by the trial court and the point is not contained in appellant's motion for new trial or assignment of errors. Sec. 1512, R.S. 1919; In re Guardianship of McMenamy, 307 Mo. 98. (a) Appellant is estopped from questioning, for the first time on appeal, the legal existence of the Wm. F. Niedringhaus Investment Company or the validity of its creation or the title to the assets which it owns, by an attack upon the will of Wm. F. Niedringhaus as violating the rule against perpetuities, because appellant's suit, and the...