Osmer v. Le May-Wegmann Brokerage Co.

• Decision Date: 24 January 1911
• Citation: 134 S.W. 65,155 Mo. App. 211
• Parties: OSMER v. LE MAY-WEGMANN BROKERAGE CO.
• Court: Missouri Court of Appeals

134 S.W. 65

155 Mo. A. 211

OSMER v. LE MAY-WEGMANN BROKERAGE CO.

St. Louis Court of Appeals. Missouri.

January 24, 1911.

Rehearing Denied February 7, 1911.

1. CORPORATIONS (§ 388)—CONTRACTS—RIGHT OF STOCKHOLDER TO URGE ULTRA VIRES.

If a contract of a corporation be ultra vires, a stockholder may object to its enforcement; but he must be prompt in raising the objection against a creditor, or he will be estopped by acquiescence.

2. CORPORATIONS (§ 388)—CONTRACTS— RIGHT OF CORPORATION TO URGE ULTRA VIRES.

A corporation cannot repudiate a contract as ultra vires, where the other party has changed his position in reliance on the validity of the contract.

3. PROPERTY (§ 9)—EVIDENCE—CONTINUANCE OF OWNERSHIP OF STOCK.

Where three persons are shown to have once owned stock of a corporation, and nothing to the contrary appears, the presumption is that the ownership still exists.

4. CORPORATIONS (§ 425)—OFFICERS—POWERS —NOTES.

Where three stockholders owned the entire capital stock of the corporation, and as its officers and directors managed its business, and one of them, who was president, with the knowledge of the others, entered into a contract on behalf of the corporation, giving notes signed by himself for the corporation, and another of

such persons, as treasurer of the corporation, procured an extension of time under a changed agreement, the notes and contract could not be repudiated, upon the ground that the board of directors had not authorized them.

5. CORPORATIONS (§ 388)—ULTRA VIRES ACTS—ESTOPPEL.

Where the possession of certain patent rights and tools was given to a corporation under an agreement providing that, in consideration of 24 notes of the corporation, the entire interest and title in the patent right shall be assigned to the corporation, but in case of nonpayment the title shall revert to the seller, the corporation received such a beneficial interest that it was estopped to rescind the transaction as ultra vires.

Appeal from St. Louis Circuit Court; George C. Hitchcock, Judge.

Action by William H. Osmer against the Le May-Wegmann Brokerage Company. From a judgment for plaintiff, defendant appeals. Affirmed.

George Safford, for appellant. Ernest C. Dodge, for respondent.

REYNOLDS, P. J.

The appellant, Le May-Wegmann Brokerage Company, was incorporated under article 9, c. 12, of the Revised Statutes of 1899 (Ann. St. 1906, pp. 1064, 1082), relating to the incorporation of manufacturing and business companies; the certificate of incorporation issued by the Secretary of State bearing date 28th of March, 1906. It was capitalized at $25,000; the stock divided into 250 shares, of the par value of $100 each. The incorporators and first board of directors named were George Wegmann, owner of 50 shares, Louis J. Le May, 130 shares, and Henry Wegmann, Jr., 70 shares; it being stated that all of the capital stock had been subscribed by these parties and 60 per cent. thereof actually paid in. The object and purpose of the corporation is stated to be "to buy, sell, and handle all kinds of groceries, teas, coffees, canned goods, dried fruits, candies, and all and singular the merchandise usually traded in by brokers selling to the grocer trade." On the 22d of March, 1907, a written agreement was entered into wherein it is recited that plaintiff (party of the first part) is the owner of certain patents covering improved washboards, and that defendant (party of the second part) is desirous of acquiring the sole and exclusive right to manufacture and sell the patented articles, and also the privilege of purchasing the letters patent, with any other inventions appertaining to them which the party of the first part may develop and patent. It thereupon recites: "The party of the first part tenders, transfers, and leases to the party of the second part, subject, however, to the conditions and stipulations hereinafter named and set forth, and made part of this agreement, the sole and exclusive control of all the letters patent aforesaid, as the same may appertain to the sole and exclusive right to manufacture and sell the said patent washboards throughout the United States and the territories thereof, granting to him [it] the same benefits, immunities, and privileges as would have accrued to the party of the first part, under like conditions, had this transfer and lease not have been made." Following this the agreement provides: "In consideration of the premises herein set forth and the benefits to be derived by this transfer and lease, party of the second part has this day given to the party of the first part their [its] 24 promissory notes, serially numbered from 1 to 24, inclusive, each due and payable in numerical rotation as follows." Proceeding, the agreement describes the notes, and continues: That it is further stipulated that upon default in payment or failure to pay any of the notes for a period of two days after they have become due and payable, then and in that event all the rights under the contract conferred on the party of the second part shall terminate at once and revert to the party of the first part, and the party of the second part agrees to forfeit and surrender to the party of the first part any and all claims for money paid, or of any character whatever in connection with this lease, the rights in which shall immediately revert to the party of the first part. It is then provided that, upon the payment of each of the promissory notes as they become due and payable, the party of the first part binds himself, his heirs, etc., upon payment of the last or final note, the preceding notes having been paid, to assign to the party of the second part all his right, title, and interest in and to the letters patent before referred to, by the assignment vesting in the party of the second part the sole and exclusive ownership thereof and all rights thereunder. It is further set out that the party of the first part loans and tenders the use of certain described tools to the party of the second part for a period of 34 months from date of the agreement, unless the agreement terminates before that time, in which case the tools, etc., are to be immediately returnable; the party of the second part agreeing to take care of these tools and keep them insured in the amount of $269, while the tools are committed to it, and that upon the payment of the 24 notes, the party of the first part agrees, by bill of sale, to transfer all these tools to the party of the second part. The party of the first part finally agrees to lease and sell to the party of the second part, and including the same in conditions of lease and agreement, any and all patents in relation to washboards that he may hereafter obtain. This agreement was signed by the plaintiff, Osmer, and in the name of the defendant corporation by Louis J. Le May as its president. On the same date of this agreement the 24 notes referred to in it were signed in the name of the corporation by Louis J. Le May, its president, being negotiable promissory notes payable to the order of plaintiff, and were delivered by the president of the defendant to plaintiff, who at the time delivered to the defendant—apparently the delivery being made to its president—the letters patent covering the invention, and also turned over to the officers of defendant the tools and machinery referred to in the agreement.

By a supplemental agreement of date December 21, 1907, to the effect that upon the payment upon the 15th of each succeeding month by defendant of 10 cents for each dozen of washboards manufactured and sold by it during each month from November 1, 1907, to June 1, 1908 (it appearing that only 6 of the notes had been paid, some of the remaining 18 being in default, and defendant desiring an extension on all of the unpaid notes), the time of payment of all was extended to June 22, 1908, providing, however, that any sums paid in the meantime, under the above provision for payment of what is practically a royalty, should be credited on the notes in the order of their maturity; it being stipulated that, with this exception, the agreement of March 22, 1907, should remain in full force. This agreement was signed by plaintiff, and in the name of the defendant by George Wegmann, its treasurer.

Among other notes which appear not to have been paid after the execution of this supplemental agreement was the last one, numbered 24, for $100. This action was accordingly commenced on it before a justice of the peace, resulting in a judgment for plaintiff, whereupon defendant appealed to the circuit court and the case was there tried before the court, a jury being waived. There were no pleadings in the case, the only papers filed before the justice, as well as in the circuit court, being the note itself and an affidavit of George Wegmann, as the treasurer of the company, in which it is set up that the words, "Le May-Wegmann Brokerage Company, per Louis J. Le May, President," written and printed on the note, were written and printed by Louis J. Le May, then the president of the defendant company, and delivered to plaintiff by him; that Le May never had any authority to sign or deliver the paper; that the execution and delivery of it was not authorized by the company; that the company never had any power under its charter to sign or deliver the paper or to transact the business, purchase or lease the property, or enter into the contract in consideration of which the paper was executed and delivered; and that the defendant corporation never signed, executed, or delivered the paper.

At the trial the note was introduced in evidence over the objection of defendant that it was beyond the scope of the authority of the company to make it, and it was not shown that the party who executed and delivered it had any authority from the corporation to do it. Defendant saved exception to the overruling of the objection. Plaintiff, testifying in his own behalf, identified the note and first...